<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
ONYX ACCEPTANCE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
ONYX ACCEPTANCE CORPORATION
8001 IRVINE CENTER DRIVE, 5TH FLOOR
IRVINE, CA 92618
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1998
To Our Stockholders:
The Annual Meeting of Stockholders of Onyx Acceptance Corporation, a
Delaware corporation (the "Company"), will be held at the Corporate Headquarters
of the Company located at 8001 Irvine Center Drive, 5th Floor, Irvine,
California, on May 20, 1998, at 10:00 a.m. for the following purposes:
1. To elect two directors, each to serve a three year term;
2. To ratify the appointment of Coopers & Lybrand, L.L.P. as
independent accountants of the Company for the fiscal year ending December
31, 1997; and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed March 31, 1998 as the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, DATE
AND SIGN THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE
ENCLOSED.
By Order of the Board of Directors
Regan E. Kelly
Assistant Secretary
Irvine, California
April 17, 1998
<PAGE> 3
ONYX ACCEPTANCE CORPORATION
8001 IRVINE CENTER DRIVE, 5TH FLOOR
IRVINE, CALIFORNIA 92618
------------------------
PROXY STATEMENT
------------------------
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Onyx Acceptance Corporation, a Delaware corporation (the
"Company"), in connection with the Annual Meeting of Stockholders to be held at
10:00 a.m. on May 20, 1998, at the Corporate Headquarters, 8001 Irvine Center
Drive, 5th Floor, Irvine, California, and at any and all postponements and
adjournments thereof.
This Proxy Statement and accompanying proxy will first be mailed to
stockholders on or about April 17, 1998. The costs of solicitation of proxies
will be paid by the Company. In addition to soliciting proxies by mail, the
Company's officers, directors and other regular employees, without additional
compensation, may solicit proxies personally or by other appropriate means. The
Company will reimburse brokers, banks, fiduciaries and other custodians and
nominees holding Common Stock in their names or in the names of their nominees
for their reasonable charges and expenses in forwarding proxies and proxy
materials to the beneficial owners of such Common Stock.
VOTING RIGHTS AND OUTSTANDING SHARES
Only stockholders of the Company's Common Stock of record as of March 31,
1998, will be entitled to vote at the Annual Meeting. On March 31, 1998, there
were outstanding 6,026,503 shares of Common Stock, which constituted all of the
outstanding voting securities of the Company. Each share of Common Stock is
entitled to one vote on all matters to come before the Annual Meeting.
Assuming a quorum is present, the affirmative vote of a plurality of the
votes cast will be required for approval of Proposal 1 (election of directors)
and the affirmative vote of a majority of the votes cast will be required for
the approval of Proposal 2 (ratification of the election of independent
accountants) and to act on all other matters to come before the Annual Meeting.
For purposes of determining the number of votes cast with respect to any voting
proposal, the sum of votes cast and abstentions are included. Abstentions with
respect to any proposal are counted as "shares present" and have the effect of a
vote "against" such proposal as to which they are specified. Broker non-votes
with respect to any proposal are not considered "shares present" and, therefore,
have the effect of reducing the number of affirmative votes required to achieve
a majority of the votes cast for such proposal. Broker non-votes will be counted
for the purpose of determining whether a quorum is present.
REVOCABILITY OF PROXIES
Proxies must be written, signed by the stockholder and returned to the
Assistant Secretary of the Company. Any stockholder who signs and returns a
proxy may revoke it at any time before it is voted by filing with the Assistant
Secretary of the Company a written revocation or a duly executed proxy bearing a
date later than the date of the proxy being revoked. Any stockholder attending
the Annual Meeting in person may withdraw such stockholder's proxy and vote such
stockholder's shares.
<PAGE> 4
ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, and their ages and
positions as of December 31, 1997, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas C. Stickel(1)(2) 48 Chairman of the Board
John W. Hall 36 President, Chief Executive Officer and
Director
Don P. Duffy 43 Executive Vice President and Chief
Financial Officer
Regan E. Kelly 46 Executive Vice President and General
Counsel
Frank Marraccino 42 Executive Vice President
Eugene J. Warner, Jr. 54 Executive Vice President
Bruce R. Hallett(1) 41 Secretary and Director
Robert A. Hoff(2) 45 Director
G. Bradford Jones(2) 42 Director
</TABLE>
- ---------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
The Company's Amended and Restated Certificate of Incorporation provides
for the Board of Directors to be divided into three classes, with each class to
be as nearly equal in number of directors as possible. At each annual meeting of
the stockholders, the successors to the class of directors whose term expires at
the time are elected to hold office for a term of three years, and until their
respective successors are elected and qualified, so that the term of one class
of directors expires at each such annual meeting. The terms of office expires as
follows: Mr. Stickel and Mr. Hall, 1998; and Mr. Hoff and Mr. Jones, 1999 and
Mr. Hallett and Mr. Duffy, 2000.
Officers are elected by, and serve at the discretion of, the Board of
Directors. There are no family relationships among the directors or executive
officers. In January, 1994, the Company established a Compensation Committee. In
March, 1995, the Company established an Audit Committee.
At the Annual Meeting, two nominees, Thomas C. Stickel and John W. Hall are
nominated for election, each Director to serve until 2001 and until his
successor is elected and qualified. Nominee Stickel has been a director since
1995 and Chairman of the Board since May, 1996. Nominee Hall has served as
President and a Director of the Company since August 1993 and as Chief Executive
Officer since September, 1996. The following information is submitted concerning
the directors and executive officers of the Company, including nominees for
election, Thomas C. Stickel and John W. Hall.
Thomas C. Stickel has served as a Director of the Company since April 1995
and as Chairman of the Board since May, 1996. Mr. Stickel is Chairman and
Founder of University Ventures Network, a company providing business and capital
interface between major universities. Mr. Stickel is also Chairman and Founder
of American Partners Capital Group, a corporation specializing in pension fund
investment, design and development. As Chairman of American Partners Capital
Group, Mr. Stickel is responsible for overseeing the company's core operations
as well as the activities of its board of directors. In 1992, Mr. Stickel
founded American Partners, Inc., a corporation specializing in Latin American
business development, and served as its Chairman until 1994. From 1983 to 1992,
Mr. Stickel served as the Chairman and Chief Executive Officer of TCS
Enterprises, Inc., a financial services holding company. Mr. Stickel served on
the Board of Directors of Catellus Development Corporation from 1993-1996. Mr.
Stickel also serves as a director of San Diego Gas and Electric Company and
several privately held companies.
John W. Hall has served as President, and as a Director of the Company
since August 1993 and as Chief Executive Officer since September, 1996. From
1988 to 1993, Mr. Hall was the M.I.S. Director of Western Financial Savings Bank
("WFS"), developing and implementing operational technology with an emphasis on
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<PAGE> 5
the Auto Finance Division. From 1985 to 1988, Mr. Hall was a founder and
president of Micro Advantage, a developer and seller of software products for
the business education industry. From 1983 to 1985, Mr. Hall was Assistant
Director of Data Processing for a Los Angeles school district in Southern
California.
Don P. Duffy has served as an Executive Vice President and as the Chief
Financial Officer of the Company since October 1993 and as a Director of the
Company since January, 1997. From 1988 to October 1993, Mr. Duffy was a Senior
Manager for Ernst & Young, specializing in the financial services industry. As a
senior manager at Ernst & Young, Mr. Duffy was responsible for managing
engagements to banks, savings institutions and finance companies with assets
ranging from $100 million to $3 billion. Mr. Duffy was responsible for public
offerings of over $2 billion of automobile collateralized bonds and pass-
through certificates. From 1981 through 1988, Mr. Duffy held other positions
with Ernst & Young and its predecessor.
Regan E. Kelly has served as an Executive Vice President and General
Counsel of the Company since August 1993. From 1985 to August 1993, Mr. Kelly
served as Vice President, Secretary and General Counsel for Westcorp, where he
was responsible for the legal aspects of all debt, equity, and securitization
offerings and coordinated all filings with the Securities and Exchange
Commission and Office of Thrift Supervision. Mr. Kelly was a member of the Board
of Directors of Western Financial Savings Bank ("WFS") from 1986 to 1993 and
from 1989 to August 1993, Mr. Kelly held the position of President of Western
Financial Auto Loans 2, Inc., the finance subsidiary of WFS through which WFS
securitized and sold its automobile receivables.
Frank Marraccino has served as a Senior Vice President of the Company since
1993 and as Executive Vice President since 1996. Mr. Marraccino is responsible
for all Auto Finance Centers and the purchase of auto receivables nationwide.
From 1981 to 1993, Mr. Marraccino worked for Western Financial Savings Bank and
served in varying capacities, including Dealer Center Manager and Collection
Manager. In 1992 and 1993, Mr. Marraccino was responsible for production and
servicing of the auto receivables portfolio of Western Financial Savings Bank.
Bruce R. Hallett has served as a Director and Secretary of the Company
since November 1993. Since February 1993, Mr. Hallett has been a partner in the
law firm of Brobeck, Phleger & Harrison LLP and Managing Partner at the firm's
Orange County office since 1995. From January 1989 until February 1993, Mr.
Hallett was a partner in the law firm of Morrison & Foerster LLP.
Robert A. Hoff has served as a Director of the Company since November 1993.
Since 1983, Mr. Hoff has been General Partner of Crosspoint Venture Partners, a
private venture capital investment company where he is responsible for making
capital investments into emerging companies and, thereafter, conducting
oversight of such investments through consulting and service on boards of
directors. Mr. Hoff also serves as a director of the National Venture Capital
Association and as a director of several privately-held companies.
G. Bradford Jones has been a Director of the Company since November 1993.
Mr. Jones is currently a General Partner in the venture capital firm of
Brentwood Associates, which he joined in 1981 and where he is responsible for
making capital investments into emerging companies and, thereafter, conducting
oversight of such investments through consulting and service on boards of
directors. Mr. Jones also currently serves as a Director of Interpore
International, a manufacturer of synthetic bone graft materials for orthopedic
use, Plasma & Materials Technologies, Inc., a manufacturer of advanced etching
and deposition equipment for the semiconductor industry, and ISOCOR, a vendor of
electronic information exchange software. Mr. Jones is also a director of
several privately-held companies.
Mr. Warner joined Onyx in December 1996 as Executive Vice President of
Collections. Mr. Warner has over 29 years experience in the financial services
industry in both lending and collections. He has helped to design and implement
a number of collection and operations systems and is a leader in the industry in
this area. He also has a depth of experience in automobile financing in both the
direct and indirect financing which brings added depth to his position and
enables him to be involved in helping to improve credit risk standards and
pricing as well as dealing with other related issues. Mr. Warner's prior
experience includes 6 1/2 years as Senior Vice President of Collections for
Consumer Portfolio Services, 3 1/2 years with Far Western Bank where
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<PAGE> 6
he served as Vice President of Collection Administration, 14 years in the Thrift
& Loan industry serving as Regional Vice President and 5 years in consumer
finance with Household Finance.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
four additional most highly compensated executive officers (the "Named Executive
Officers") for the years ended December 31, 1997, December 31, 1996 and December
31, 1995 whose compensation was in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
NAME AND PRESENT YEAR ENDED ---------------------------------- UNDERLYING
PRINCIPAL POSITION DECEMBER SALARY BONUS OPTIONS(1)(3)
------------------ ---------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
John W. Hall.................................... 1997 $ 318,000 -- 75,000
President, Chief Executive Officer 1996 $ 318,000 -- 51,021
and Director 1995 193,000 $ 110,542 6,293
Don P. Duffy.................................... 1997 178,600 -- 25,000
Chief Financial Officer and 1996 161,083 -- 4,373
Executive Vice President 1995 138,180 33,000 --
Frank Marraccino................................ 1997 167,302 15,000 20,000
Executive Vice President 1996 169,775 -- 29,373
1995 105,000 39,107 --
David Mac Innis................................. 1997 130,050 -- 5,000
Senior Vice President 1996 113,414 21,303 4,373
1995 100,000 18,542 3,207
Eugene Warner (2)............................... 1997 $ 140,000 -- --
</TABLE>
- ---------------
(1) No restricted stock grants were made to any of the Named Executive Officers
during the 1997 fiscal year.
(2) Joined Company in December, 1996.
(3) Stock options for shares of Onyx awarded in the year indicated and
exercisable in the future.
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers for the year ended December 31,
1997. No stock appreciation rights were granted to these individuals during such
year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANT
---------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO PER SHARE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN EXERCISE ---------------------------
NAME GRANTED FISCAL YEAR PRICE(2) EXPIRATION DATE 5% 10%
---- ---------- -------------- ---------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Hall........... 75,000(3) 18.6% $ 8.00 January 2, 2007 $977,337 $1,556,245
Don P. Duffy........... 25,000(3) 6.2% $ 8.00 January 2, 2007 322,102 518,748
Frank L. Marraccino.... 20,000(3) 5.0% $ 8.00 January 2, 2007 260,623 414,999
David Mac Innis........ 5,000(3) 1.2% $ 8.00 January 2, 2007 65,156 103,750
Eugene J. Warner,
Jr................... -- -- -- -- -- --
</TABLE>
- ---------------
(1) The 5% and 10% assumed annual rates of compounded stock price appreciation
are permitted by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of the
Company's securities that the actual stock price appreciation over the
10-year
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<PAGE> 7
option term will be at the assumed 5% and 10% levels or at any other defined
level. Unless the market price of the Common Stock appreciates over the
option term, no value will be realized from the option grants made to the
executive officers.
(2) The exercise price may be paid in cash, in shares of Common Stock valued at
fair market value on the date of exercise or pursuant to a cashless exercise
procedure involving a same-day sale of the purchased shares.
(3) Option was granted on January 2, 1997 of which 25% was exercisable at the
one year anniversary of grant, with remainder vesting ratably over a 36
month period.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information concerning the value of
unexercised options held by each of the Named Executive Officers for the year
ended December 31, 1997. No options or stock appreciation rights were exercised
during such year and no stock appreciation rights were outstanding at the end of
that year.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT FISCAL YEAR
OPTIONS AT FISCAL YEAR END END(1)
SHARES ACQUIRED VALUE ------------------------------ ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Hall.............. -- -- 85,043 103,699 $408,553 --
Don P. Duffy.............. -- -- 29,307 29,222 $198,339 $12,749.64
Frank L. Marracino........ -- -- 10,767 38,606 -- --
David Mac Innis........... -- -- 10,951 7,460 $ 48,069 --
Eugene J. Warner, Jr...... -- -- 26,042 33,958 -- --
</TABLE>
- ---------------
(1) Based on the fair market value of the option shares at fiscal year-end
($7.75 per share) less the exercise price ($.51 per share) payable for such
shares.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors are Messrs. Hoff and Jones. None of these individuals was at any time
during the year ended December 31, 1997 or at any other time an officer or
employee of the Company.
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
None of the Company's executive officers have employment agreements with
the Company, and their employment may be terminated at any time at the
discretion of the Board of Directors. Stock options granted under the Company's
1996 Plan may be accelerated at the discretion of the Board in the event of a
change of control of the Company or in the event of an involuntary termination
following a change of control.
DIRECTOR REMUNERATION
The directors do not receive compensation for services on the Board of
Directors or any committee thereof but are reimbursed for their out-of-pocket
expenses in serving on the Board of Directors. Certain non-employee members of
the Board of Directors have been granted options to purchase shares of the
Company's Common Stock from time to time in connection with their appointment to
and performance on the Board of Directors. Additionally, each of the
non-employee members of the Board of Directors is eligible to receive options to
purchase Common Stock under the 1996 Plan's Automatic Option Grant Program.
Under the Automatic Option Grant Program, at each annual Stockholders
Meeting each individual with at least six months of Board service who is to
continue to serve as a non-employee Board Member after the
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<PAGE> 8
meeting will receive an option grant to purchase 2,000 shares of Common Stock,
whether or not such individual has been in the prior employ of the Company or
joined the Board prior to the Offering.
Each automatic grant will have a term of 10 years, subject to earlier
termination following the optionee's cessation of Board service. Each automatic
option will be immediately exercisable; however, any shares purchased upon
exercise of the option will be subject to repurchase should the optionee's
service as a non-employee Board member cease prior to vesting in the shares. The
initial 8,000-share grant will vest in successive equal quarterly installments
over the optionee's initial four year period of Board service. Each additional
2,000-share grant will vest upon the optionee's completion of one year of Board
service measured from the grant date. However, each outstanding option will
immediately vest upon (i) certain changes in the ownership or control of the
Company or (ii) the death or disability of the optionee while serving as a Board
member.
Director Hallett received a grant in 1997 in the amount of 2,000 shares.
The non-employee directors will receive a grant of 2,000 shares each following
the Annual Shareholders Meeting in 1998.
REPORT OF THE COMPENSATION COMMITTEE
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives.
COMPENSATION PHILOSOPHY
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies,
plans and programs which seek to enhance the profitability of the Company, and
thus shareholder value, by aligning closely the financial interests of the
Company's senior managers and employees with those of its shareholders. The
Compensation Committee endorses the belief that stock ownership by a significant
percentage of the Company's employees including the granting of stock options to
employees furthers that goal and fosters decision-making by its employees with
the Company's long-term performance in mind.
The compensation plans and programs are structured to integrate pay with
the Company's annual and long-term performance goals. The plans and programs are
designed to recognize initiative and achievement and to assist the Company in
attracting and retaining qualified employees. In furtherance of these goals,
annual base salaries are generally set at competitive levels and the Company
relies to a large degree on annual incentive compensation to attract and retain
key employees with outstanding abilities and to motivate them to perform to the
full extent of their abilities. For the longer term, incentive stock options are
awarded by the Company, the stock of which is traded on NASDAQ. Incentive
compensation is variable and closely tied to corporate, business unit and
individual performance in a manner that encourages a sharp and continuing focus
on building profitability and shareholder value. As a result of the increased
emphasis on tying executive compensation to corporate performance, in any
particular year the total compensation of the Company's executives may be more
or less than the executives of the Company's competitors, depending upon the
Company's or the individual business unit's performance.
In evaluating the performance and setting the incentive compensation of the
Chief Executive Officer and other senior executives, the Compensation Committee
takes into account their commitment to long-term success of the Company through
management of their respective units as dictated by existing and anticipated
market conditions. Certainly, the Compensation Committee expects and rewards
recognition by the Chief Executive Officer and senior executives of managing in
both adverse and advantageous market conditions for each of the Company's major
divisions.
At the beginning of each year, performance goals to determine annual
incentive compensation are established for each executive. Financial goals
include loan volume growth, operating earnings, loan losses, delinquency levels,
cost controls, productivity and profitability. Certain members of senior
management have their bonuses tied exclusively to earnings per share.
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<PAGE> 9
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In determining the Chief Executive Officer's compensation for 1997, the
Compensation Committee discussed and considered all of the factors discussed
above in the overall context of the Company's performance in 1997. The
Compensation Committee acknowledged the continued focus on purchasing quality
auto contracts, building infrastructure, managing the performance of the auto
contracts portfolio, especially in light of the Company's North Hollywood Office
difficulties, and the Company's continued expansion and growth. Significant
emphasis is placed on the above relative to measuring the quality of the Chief
Executive Officer's performance. However, for the purpose of achieving a bonus,
the Committee relies exclusively on earnings per share and the Company did not
meet the objectives set out by the Committee at the beginning of 1997 and
therefore the Chief Executive Officer did not receive a bonus for 1997.
STOCK OPTION GRANTS
Onyx Acceptance Corporation uses stock options as long-term incentives and
expects that it will continue to issue this compensation alternative in the
future. In 1996, the Company adopted a new stock option plan that made 600,000
shares of Common Stock of the Company available for just such purposes. The Onyx
Compensation Committee grants incentive stock options and, in certain
circumstances, non-qualified stock options to employees of the Company and views
such grants less as compensation and more as an incentive mechanism. Grants were
made in 1997 to some executives as shown in the Summary Compensation Table, and
to other key employees, which are in the appropriate tables.
POLICY REGARDING COMPLIANCE WITH I.R.C. SECTION 162(M)
Section 162(m) of the Internal Revenue Code, as enacted by the Omnibus
Budget Reconciliation Act of 1993, provides in general that, beginning in 1994,
compensation paid to certain executives of publicly held corporations will not
be deductible for federal income tax purposes to the extent it exceeds
$1,000,000 per year unless certain conditions are met. It is the present policy
of the Compensation Committee that individual compensation shall not exceed the
deductibility requirements of Internal Revenue Code, Section 162(m) and the
Company intends to take the necessary steps to comply, but also reserves the
right to enter into incentive and other compensation arrangements that do not
comply when it determines that the benefits to the Company outweigh the cost of
the possible loss of federal income tax deductions.
COMPENSATION COMMITTEE
Robert A. Hoff
G. Bradford Jones
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH OFFICERS AND DIRECTORS
In December 1994, the Company loaned $175,000 to John Hall, who is the
Company's Chief Executive Officer, President and a director of the Company. This
loan is evidenced by a promissory note (the "Note") with interest at 6.66% per
annum. All principal and accrued interest under the Note is due on December 20,
1998 pursuant to a one year extension granted by the Company's Board of
Directors. In connection with this loan, Mr. Hall granted the Company an option
(the "Company Option") to repurchase, at a price per share of $18.87, up to
9,277 shares of Common Stock owned by Mr. Hall. The Company Option is
exercisable through December 20, 1998.
RELATIONSHIP OF COMPANY TO BROBECK, PHLEGER & HARRISON LLP
Bruce R. Hallett, the Company's Secretary and a director, is a partner in
the law firm of Brobeck, Phleger & Harrison LLP ("Brobeck"). As of December 31,
1997, members of Brobeck beneficially owned 24,899 shares of the Company's
Common Stock. Brobeck has served as the Company's counsel since
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<PAGE> 10
inception. For the year ended December 31, 1997, the Company paid Brobeck
approximately $400,000 for legal services and costs incurred in connection with
the Company's operations, including its securitizations.
COMPANY PROPOSALS
The following proposals will be submitted for stockholder consideration and
voting at the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The following persons are nominated for election as directors, to hold
office for a term of three years expiring at the third succeeding Annual
Meeting:
Thomas C. Stickel
John W. Hall
The nominees listed above are current members of the Board of Directors.
All proxies received by the Board of Directors will be voted for the nominees if
no directions to the contrary are given. In the event that the nominees are
unable or decline to serve, an event that is not anticipated, the proxies will
be voted for the election of nominees designated by the Board of Directors, or
if none are so designated, will be voted according to the judgment of the person
or persons voting the proxy.
VOTE REQUIRED
The two nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected as directors. Votes withheld from
any director are counted for purposes of determining the presence or absence of
a quorum for the transaction of business, but have no other legal effect. THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE NOMINEES.
PROPOSAL 2
RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
The Company's Board of Directors has selected Coopers & Lybrand L.L.P. as
the Company's independent accountants for the fiscal year ending December 31,
1998. Although the appointment of Coopers & Lybrand L.L.P. is not required to be
submitted to a vote of the stockholders, the Board of Directors believes it
appropriate as a matter of policy to request that the stockholders ratify the
appointment for the current fiscal year. In the event a majority of the votes
cast at the meeting are not voted in favor of the appointment, the Board of
Directors will reconsider its selection. Proxies solicited by the Board of
Directors will be voted in favor of the appointment unless stockholders specify
otherwise in such proxies.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting with the opportunity to make a statement if the
representative so desires and to respond to appropriate questions.
VOTE REQUIRED
The affirmative vote of a majority of the shares of Common Stock voting at
the Annual Meeting is required to ratify the selection of Coopers & Lybrand
L.L.P. as independent accountants. THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" PROPOSAL 2.
8
<PAGE> 11
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Company's Common Stock as of
March 31, 1998, by: (i) each person (or group of affiliated persons) who is
known by the Company to own beneficially 5% or more of any class of the
Company's Securities; (ii) each of the Company's directors; (iii) the Company's
Chief Executive Officer and each of the Named Executive Officers; and (iv) the
Company's directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED OFFERING(1)
--------------------
NAME AND ADDRESS(2) NUMBER PERCENT
------------------- ------ -------
<S> <C> <C>
Robert A. Hoff(3)........................................... 752,113 12.5%
G. Bradford Jones(4)........................................ 647,569 10.7%
The Bass Group(12).......................................... 618,200 10.3%
Wellington Management Company, LLP(13)...................... 564,400 9.4%
BayView Capital Corporation(14)............................. 330,530 5.5%
John W. Hall(5)............................................. 361,556 6.0%
Regan E. Kelly(6)........................................... 112,517 2.0%
Don P. Duffy(7)............................................. 38,248 *
Frank Marraccino(8)......................................... 35,476 *
Bruce R. Hallett(9)......................................... 16,123 *
Thomas C. Stickel(10)....................................... 46,016 *
All executive officers and directors
as a group (10 persons)(11)............................... 2,007,618 33.3%
</TABLE>
- ---------------
* Less than one percent.
(1) Percentage of ownership is based on 6,026,563 shares of Common Stock
outstanding as of March 31, 1998.
(2) Unless otherwise indicated, the persons named in the table have sole voting
and sole investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
(3) Includes, as of March 31, 1998: 8,000 shares of Common Stock issuable upon
the exercise of immediately exercisable shares by Mr. Hoff. Mr. Hoff, as a
general partner of Crosspoint Venture Partners since 1993, 18552 MacArthur
Boulevard, Suite 400, Irvine, California 92714 may be deemed to share
voting and dispositive power with respect to these shares. Mr. Hoff
disclaims beneficial ownership of these shares except for his proportional
interest therein.
(4) Includes, as of March 31, 1998: 8,000 shares of Common Stock issuable upon
the exercise of immediately exercisable shares by Mr. Jones. Mr. Jones, as
a general partner of Brentwood Associates VI, L.P., 2730 Sand Hill Road,
suite 250, Menlo Park, California 94025 may be deemed to share voting and
dispositive power with respect to these shares. Mr. Jones disclaims
beneficial ownership of these shares except for his proportional interest
therein.
(5) Includes, as of March 31, 1998: 110,106 shares of Common Stock issuable
upon the exercise of immediately exercisable options, none of which would
be subject to repurchase by the Company. Mr. Hall is President and CEO of
Onyx Acceptance Corporation, 8001 Irvine Center Drive, 5th Floor, Irvine,
Ca. 92618.
(6) Includes, as of March 31, 1998: (i) 6,361 shares of Common Stock issuable
upon the exercise of immediately exercisable options.
(7) Includes, as of March 31, 1998: (i) 38,148 shares of Common Stock issuable
upon the exercise of immediately exercisable options, of which 1,093 shares
of Common Stock would be subject to repurchase by the Company under certain
circumstances.
(8) Includes, as of March 31, 1998, 18,436 shares of Common Stock, issuable
upon the exercise of immediately exercisable options.
(9) Includes, as of March 31, 1998, 16,123 shares of Common Stock issuable upon
the exercise of immediately exercisable options, some of which may be
subject to repurchase by the Company under certain circumstances.
(10) Includes, as of March 31, 1998, 46,016 shares of Common Stock issuable upon
the exercise of immediately exercisable options, some of which may be
subject to repurchase by the Company under certain circumstances.
(11) Includes, as of March 31, 1998, (i) 752,113 shares of Common Stock held by
Crosspoint Venture Partners 1993, and/or Crosspoint Venture Partners
Entrepreneurs 1993, (ii) 639,569 shares of Common Stock held by Brentwood
9
<PAGE> 12
Associates VI, L.P., and (iii) an aggregate of 244,810 shares issuable to
the Company's executive officers and directors upon the exercise of
immediately exercisable option some of which may be subject to repurchase
by the Company under certain circumstances, and (v) does not include shares
owned by the Bass Group, Wellington Management Company, or BayView Capital
Corporation.
(12) The Bass Group as used herein consists of The Bass Management Trust
(154,550 shares; 2.6%), Perry R. Bass (154,550 shares; 2.6%), Nancy L. Bass
(0 shares; 0.0%), Sid R. Bass Management Trust (154,550 shares; 2.6%), Sid
R. Bass (154,550 shares; 2.6%), Lee M. Bass (154,550 shares; 2.6%), Edward
P. Bass (154,550 shares; 2.6%). The above persons are collectively referred
to as the "Reporting Persons" pursuant to Amendment No. 2 to Schedule 13D
Statement filed November 10, 1997 and made a single, joint filing because
they may be deemed to constitute a "group" within the meaning of Section
13(d)(3) of the Act, although neither the fact of that filing nor anything
therein should be deemed to be an admission by the Reporting Persons that a
group exists.
(13) Wellington Management Company, LLP ("WMC"), 75 State Street, Boston,
Massachusetts 02109 in its capacity as investment advisor, may be deemed to
beneficially own 564,400 shares of Onyx which are held of record by clients
at WMC.
(14) Bay View Capital Corporation, 1840 Gateway Drive, San Mateo, CA 94404 has
acquired 330,530 shares of Onyx Common Stock. 150,000 shares were purchased
on the open market and 180,530 shares are purchasable pursuant to a Common
Stock Purchase Warrant.
STOCK PRICE PERFORMANCE GRAPH (2)
Set forth below is a line graph depicting the quarterly percentage change
in the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the NASDAQ composite and a compiled peer group
for the period commencing December 31, 1996, and ending December 31, 1997.
The following graph compares the value of a $100 investment made on
12/31/96 in each of Onyx, Onyx Peer Group, and the NASDAQ Composite Index as of
3/31/97, 6/30/97, 9/30/97 and 12/31/97.
<TABLE>
<CAPTION>
Measurement Period Onyx Acceptance
(Fiscal Year Covered) Corp. Peer Group Nasdaq Composite
<S> <C> <C> <C>
12/31/96 100 100 100
3/31/97 94.12 79.19 94.63
6/30/97 89.76 85.68 111.7
9/30/97 88.24 100.14 130.57
12/31/97 91.28 60.28 121.64
</TABLE>
(1) Companies in peer group are WFS Financial, Inc., Union Acceptance
Corporation and Arcadia Financial Corporation.
(2) This section is not "soliciting material," is not deemed filed with the SEC
and is not to be incorporated by reference into any filing of the Company
under the Securities Act or the Exchange Act whether made before or after
the date hereof and irrespective of any general incorporation language in
such filing.
10
<PAGE> 13
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more then ten percent of the Company's
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of the Common Stock of the
Company. To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, the Company believes that all of its officers and
directors and greater than ten percent beneficial owners complied with all
Section 16(a) filing requirements applicable to them with respect to
transactions during the fiscal year ended December 31, 1997.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Any stockholder intending to submit to the Company a proposal for inclusion
in the Company's Proxy Statement and proxy for the 1999 Annual Meeting must
submit such proposal so that it is received by the Company no later than January
2, 1999. Stockholder proposals should be submitted to the Secretary of the
Company. No stockholder proposals were received for inclusion in this proxy
statement.
Pursuant to the Company Bylaws, no business proposal will be considered
properly brought before the next annual meeting by a stockholder, and no
nomination for the election of directors will be considered properly made at the
next annual meeting by a stockholder, unless notice thereof, which contains
certain information required by the Bylaws, is provided to the Company no later
than 90 days prior to the next annual meeting.
OTHER MATTERS
While the Notice of Annual Meeting of Stockholders calls for the
transaction of such other business as may properly come before the meeting, the
Board of Directors has no knowledge of any matters to be presented for action by
the stockholders other than as set forth above. The enclosed proxy gives
discretionary authority to the Board of Directors, however, to consider and vote
on any additional matters that may be presented.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report on Form 10-K for the year ended December 31,
1997 is being mailed to stockholders together with this Proxy Statement.
STOCKHOLDERS ARE URGED TO IMMEDIATELY MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
By Order of the Board of Directors
Regan E. Kelly
Assistant Secretary
Irvine, California
April 17, 1998
11
<PAGE> 14
ONYX ACCEPTANCE CORPORATION
PROXY
THIS PROXY IS SOLICITED BY THE COMPANY'S BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON WEDNESDAY, MAY 20, 1998.
The undersigned hereby appoints G. Bradford Jones and Don P. Duffy as
proxies with full power of substitution, and authorizes them, or any one or
more of them, to vote all shares of Common Stock of Onyx Acceptance Corporation
(the "Company") which the undersigned is entitled to vote at the Company's
Annual Meeting of Stockholders to be held on May 20, 1998, and at any and all
postponements, continuations and adjournments thereof, with all powers that the
undersigned would possess if personally present, upon the matters specified on
the reverse side of this card and in accordance with the following
instructions, with discretionary authority as to any other matters that may
properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER ON THE REVERSE SIDE. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ON THE
REVERSE SIDE AND FOR PROPOSAL 2 AND, AS TO ANY OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
DISCRETION OF THE PROXIES.
(CONTINUED ON REVERSE SIDE)
<PAGE> 15
PLEASE DATE, SIGN AND MAIL
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ONYX ACCEPTANCE CORPORATION
MAY 20, 1998
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
WITHHOLD
AUTHORITY
to vote for all
FOR nominees listed
1. Election of [ ] [ ] NOMINEES: Thomas C. Stickel
Directors: John W. Hall
2. Ratification of Independent Accountants: Coopers FOR AGAINST ABSTAIN
& Lybrand, L.L.P. [ ] [ ] [ ]
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED FOR DOMESTIC MAILING.
PLEASE CHECK THIS [ ]
BOX IF YOU PLAN TO
ATTEND THE MEETING.
SIGNATURES:________________________ _________________________ DATE:_______, 1998
Signature if held jointly
NOTE: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as an attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in
full corporate name by authorized officer. If a partnership, please sign
in partnership name by authorized person.
