<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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[ ] 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.
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<PAGE> 2
ONYX ACCEPTANCE CORPORATION
27051 TOWNE CENTRE DRIVE
FOOTHILL RANCH, CA 92610
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1999
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 27051 Towne Centre Drive, Foothill Ranch, California,
on May 27, 1999, at 10:00 a.m. for the following purposes:
1. To elect a director to serve a three year term;
2. To ratify the appointment of PricewaterhouseCoopers as independent
accountants of the Company for the fiscal year ending December 31, 1999;
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, 1999 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
Foothill Ranch, California
April 17, 1999
<PAGE> 3
ONYX ACCEPTANCE CORPORATION
27051 TOWNE CENTRE DRIVE,
FOOTHILL RANCH, CALIFORNIA 92610
------------------------
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 27, 1999, at the Corporate Headquarters, 27051 Towne Centre
Drive, Foothill Ranch, 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 22, 1999. 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,
1999, will be entitled to vote at the Annual Meeting. On March 31, 1999, there
were outstanding 6,171,034 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, 1998, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas C. Stickel.................... 49 Chairman of the Board
John W. Hall......................... 37 President, Chief Executive Officer and
Director
Don P. Duffy......................... 44 Executive Vice President, Chief Financial
Officer and Director
Regan E. Kelly....................... 47 Executive Vice President and General Counsel
Frank Marraccino..................... 43 Executive Vice President
Eugene J. Warner, Jr................. 55 Executive Vice President
Bruce R. Hallett(1).................. 42 Secretary and Director
Robert A. Hoff(2).................... 46 Director
G. Bradford Jones(2)................. 43 Director
C. Thomas Meyers(1).................. 60 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. Hoff and Mr. Jones, Class 3, 1999; Mr. Hallett and Mr. Duffy, Class
1, 2000; and Mr. Stickel, Mr. Hall and Mr. Meyers, Class 2, 2001.
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, Robert A. Hoff and G. Bradford Jones, each a Class 3
director, were nominated for election, to serve until 2002 and until his
successor is elected and qualified. Nominee Jones has served as a Director of
the Company since November 1993. On April 12, 1999, Mr. Hoff advised the Company
that he will not stand for election at the Annual Shareholders Meeting and has
requested that the Company withdraw his name from nomination and the Company has
done so. Mr. Hoff is a Class 3 director and will serve until his term expires at
the Annual Shareholders Meeting on May 27th, 1999. The following information is
submitted concerning the directors and executive officers of the Company,
including the nominee for election, G. Bradford Jones.
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.
2
<PAGE> 5
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 Bank
("WFS"), developing and implementing operational technology with an emphasis on
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.
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.
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.
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.
C. Thomas Meyers has served as a Director since his appointment in June
1998 to fill a vacancy on the board of Onyx. Mr. Meyers was recently retired
from Capital Markets Assurance Corporation ("CapMAC") where he was Managing
Director, Credit Enhancement. A 1960 graduate of Notre Dame University, Mr.
Meyers has been in the financial services business most of his career including
13 years at General Electric Company where he held various positions. Mr. Meyers
was the Chief Financial Officer for the consumer division of GE Capital prior to
joining CapMAC in 1987. In 1992, Mr. Meyers and 7 others participated in the
acquisition of CapMAC, in a leveraged buy-out, from Citicorp. CapMAC went public
on the New York Stock Exchange in 1995 and was acquired in 1998 by MBIA.
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 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 Executive Vice President of the Company
since 1996 and was Senior Vice President from 1993 to 1996. Mr. Marraccino is
responsible for the operations of all the Auto Finance Centers and the purchase
of auto receivables nationwide. From 1981 to 1993, Mr. Marraccino worked for
Western Financial Bank and served in varying capacities, including Dealer Center
Manager and Collection
3
<PAGE> 6
Manager. In 1992 and 1993, Mr. Marraccino was responsible for production and
servicing of the auto receivables portfolio of Western Financial Bank.
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 extensive 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 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, 1998, December 31, 1997 and December
31, 1996 whose compensation was in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
YEAR ENDED -------------------- UNDERLYING
NAME AND PRESENT PRINCIPAL POSITION DECEMBER SALARY BONUS OPTIONS(1)(3)
----------------------------------- ---------- -------- -------- -------------
<S> <C> <C> <C> <C>
John W. Hall................................ 1998 $318,000 $165,100 65,000
President, Chief Executive Officer 1997 $318,000 -- 75,000
and Director 1996 $318,000 -- 51,021
Don P. Duffy................................ 1998 $194,565 $101,120 45,000
Chief Financial Officer, 1997 $178,600 -- 25,000
Executive Vice President and Director 1996 $161,083 -- 4,373
Frank Marraccino............................ 1998 $157,500 $ 78,750 45,000
Executive Vice President 1997 $157,500 $ 19,810 20,000
1996 $150,000 $ 19,775 29,373
Eugene J. Warner, Jr.(2).................... 1998 $144,200 $ 57,680 10,000
Executive Vice President 1997 $140,000 --
Regan E. Kelly.............................. 1998 $125,197 $ 31,299 10,000
Executive Vice President and 1997 $121,550 -- 5,000
General Counsel 1996 $115,762 $ 5,788 --
</TABLE>
- ---------------
(1) No restricted stock grants were made to any of the Named Executive Officers
during the 1998 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.
4
<PAGE> 7
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,
1998. No stock appreciation rights were granted to these individuals during such
year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANT POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO PER SHARE OPTION TERM(4)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR(1) PRICE(2) DATE(3) 5% 10%
---- ---------- -------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
John W. Hall.............. 65,000 16.6% $5.75 10/27/2008 $608,800 $969,411
Don P. Duffy.............. 45,000 11.5% $5.75 10/27/2008 $421,476 $671,131
Frank L. Marraccino....... 45,000 11.5% $5.75 10/27/2008 $421,476 $671,131
Eugene J. Warner, Jr...... 10,000 2.5% $5.75 10/27/2008 $ 93,661 $149,140
Regan E. Kelly............ 10,000 2.5% $5.75 10/27/2008 $ 93,661 $149,140
</TABLE>
- ---------------
(1) Percentage excludes the dilutive effects of option re-grants for re-pricing
made in 1998.
(2) The exercise price on these options was initially $7.25 upon issuance on
January 2, 1998. As a result of repricing options under the 1996 Stock
Option/Stock Issuance Plan on October 27, 1998, the option exercise price
was reduced to $5.75. 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, 1998 and reissued pursuant to repricing on
October 27, 1998 of which 25% is exercisable at the one year anniversary of
grant, with remainder vesting 25% annually over the next 3 anniversary dates
of the grant.
(4) 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 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.
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, 1998. 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>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Hall................ -- -- 157,856 95,886 $295,693 N/A
Don P. Duffy................ -- -- 46,831 44,432 $ 88,503 N/A
Frank L. Marraccino......... -- -- 42,023 52,350 N/A N/A
Eugene J. Warner, Jr. ...... -- -- 44,165 20,835 N/A N/A
Regan E. Kelly.............. -- -- 11,747 14,276 $ 32,084 N/A
</TABLE>
- ---------------
(1) Based on the fair market value of the option shares at fiscal year-end
($5.75 per share) less the average exercise price ($0.51 per share) payable
for such in the money shares.
5
<PAGE> 8
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, 1998 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 Stock Issuance 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, with the exception of the Chairman of the Board, 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
Amended and Restated 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 meeting will receive
an option grant to purchase 7,000 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. The initial
automatic option grants under the Automatic Option Grant Program will vest in a
series of twenty-four (24) successive equal monthly installments upon the
optionee's completion of each month of Board service over the twenty-four
(24)-month period measured from the grant date and that the annual automatic
option grants will vest in a series of twelve (12) equal monthly installments
upon the optionee's completion of each month of Board service over the twelve
(12) month period 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.
The non-employee directors will receive a grant of 7,000 shares each
following the Annual Shareholders Meeting in 1999.
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
6
<PAGE> 9
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, stock options (incentive
stock options and non-qualified 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.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In determining the Chief Executive Officer's compensation for 1998, the
Compensation Committee discussed and considered all of the factors discussed
above in the overall context of the Company's performance in 1998. The
Compensation Committee acknowledged the continued focus on purchasing quality
auto contracts, building infrastructure, managing the performance of the auto
contracts portfolio, 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. Ultimately, however, for the purpose
of achieving a bonus, the Committee relies primarily on earnings per share. The
Company significantly exceeded the objectives set out by the Committee at the
beginning of 1998 and as a result the Chief Executive Officer received a bonus
for 1998 reflective of this outstanding performance by the Company.
7
<PAGE> 10
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 the 1996 Stock Option/ Stock Issuance 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 1998 to some executives as shown in the Summary Compensation
Table, and to other key employees, which are in the appropriate tables. Also in
1998, the Company adopted certain amendments to 1996 Stock Option/Stock Issuance
Plan which were ratified by a vote of the shareholders at the Annual
Shareholders Meeting in 1998. The key amendments provided the following:
(i) increased the maximum number of shares of Common Stock authorized
for issuance over the term of the 1996 Plan by 200,000 shares, from
1,133,304 shares to 1,333,304 shares,
(ii) implemented an automatic share increase feature pursuant to which
the number of shares available for issuance under the 1996 Plan will
automatically increase on the first trading day of each calendar year,
beginning in calendar year 1999, by an amount equal to three percent (3%)
of the total number of shares of Common Stock outstanding on the last
trading day of the immediately preceding calendar year,
(iii) allowed unvested shares issued under the 1996 Plan and
subsequently repurchased by the Company at the purchase price paid per
share to be reissued under the 1996 Plan,
(iv) increased the number of shares of Common Stock subject to the
automatic option grants to be made to the non-employee Board members under
the Automatic Option Grant Program from 8,000 shares to 10,000 shares for
the initial automatic grants and from 2,000 shares to 7,000 shares for the
annual automatic grants,
(v) provided that the initial automatic option grants under the
Automatic Option Grant Program will vest in a series of twenty-four (24)
successive equal monthly installments upon the optionee's completion of
each month of Board service over the twenty-four (24)-month period measured
from the grant date and that the annual automatic option grants will vest
in a series of twelve (12) equal monthly installments upon the optionee's
completion of each month of Board service over the twelve (12) month period
measured from the grant date,
(vi) made the non-employee Board members who are serving as Plan
Administrator eligible for discretionary grants and direct stock issuances
under the Discretionary Option Grant and Stock Issuance Programs in effect
under the 1996 Plan;
(vii) removed certain restrictions on the eligibility of non-employee
Board members to serve as Plan Administrator, and
(viii) effected a series of additional changes to the provisions of
the 1996 Plan, including the stockholder approval requirements, the
transferability of non-statutory stock options and the elimination of the
six (6)-month holding period requirement as a condition to the exercise of
stock appreciation rights, in order to take advantage of the most recent
amendments to Rule 16b-3 of the Securities and Exchange Commission which
exempts certain officer and director transactions under the 1996 Plan from
the short-swing liability provisions of the federal securities laws.
The share increase provisions (including the annual three percent (3%)
increase) will assure that a sufficient reserve of Common Stock is available
under the 1996 Plan to attract and retain the services of key individuals
essential to the Company's long-term growth and success. The remaining
amendments will provide the Company with more opportunities to make equity
incentives available to the non-employee Board members as an inducement for
their continued service and will facilitate plan administration by eliminating a
number of limitations and restrictions previously incorporated into the 1996
Plan to comply with the applicable requirements of SEC Rule 16b-3 prior to its
most recent amendment.
8
<PAGE> 11
The 1996 Plan is the successor to the Company's 1994 Stock Option Plan and
1994 Special Performance Option Grant Plan (the "Predecessor Plans"). The 1996
Plan became effective upon its adoption by the Board on February 28, 1996 (the
"Effective Date") and was approved by the Company's stockholders on February 28,
1996. The Board adopted the amendments to the 1996 Plan on January 2, 1998, and
the stockholders approved the amendments at the Annual Meeting Shareholders on
May 20, 1998.
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
9
<PAGE> 12
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,
2000 pursuant to an 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, 2000.
RELATIONSHIP OF COMPANY TO BROBECK, PHLEGER & HARRISON LLP
Bruce R. Hallett, a director, is a partner in the law firm of Brobeck,
Phleger & Harrison LLP ("Brobeck"). As of December 31, 1998, members of Brobeck
beneficially owned 24,899 shares of the Company's Common Stock. Brobeck has
served as the Company's counsel since inception. For the year ended December 31,
1998, the Company paid Brobeck approximately $75,000 for legal services and
costs incurred in connection with the Company's operations.
COMPANY PROPOSALS
The following proposals will be submitted for stockholder consideration and
voting at the Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The following person is nominated for election as director, to hold office
for a term of three years expiring at the third succeeding Annual Meeting:
G. Bradford Jones
The nominee above is a current member of the Board of Directors. All
proxies received by the Board of Directors will be voted for the nominee if no
directions to the contrary are given. In the event that the nominee is unable or
declines 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 nominee receiving the highest number of affirmative votes of the shares
entitled to be voted shall be elected as director. 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 NOMINEE.
PROPOSAL 2
RATIFICATION OF THE SELECTION OF
INDEPENDENT ACCOUNTANTS
The Company's Board of Directors has selected PricewaterhouseCoopers LLP as
the Company's independent accountants for the fiscal year ending December 31,
1999. Although the appointment of PricewaterhouseCoopers LLP is not required to
be submitted to a vote of the stockholders, the Board of
10
<PAGE> 13
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 PricewaterhouseCoopers LLP 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 PricewaterhouseCoopers
LLP as independent accountants. THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" PROPOSAL 2.
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, 1999, 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>
The Bass Group(12)....................................... 668,275 10.8%
G. Bradford Jones(4)..................................... 660,402 10.7%
Robert A. Hoff(3)........................................ 614,346 10.0%
Wellington Management Company, LLP(13)................... 609,700 9.9%
John W. Hall(5).......................................... 409,306 6.6%
Regan E. Kelly(6)........................................ 117,704 1.9%
Don P. Duffy(7).......................................... 59,097 1.0%
Thomas C. Stickel(10).................................... 51,849 0.8%
Frank Marraccino(8)...................................... 42,023 0.7%
Eugene J. Warner, Jr.(15)................................ 44,165 0.7%
Bruce R. Hallett(9)...................................... 20,456 0.3%
C. Thomas Meyers(14)..................................... 4,166 *
All executive officers and directors as a group
(10 persons)(11)....................................... 2,023,514 32.8%
</TABLE>
- ---------------
* Less than one tenth percent.
(1) Percentage of ownership is based on 6,171,034 shares of Common Stock
outstanding as of March 31, 1999.
(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, 1999: 13,833 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, 1999: 13,833 shares of Common Stock issuable upon
the exercise of immediately exercisable shares by Mr. Jones. Mr. Jones, as
a general partner of Brentwood Associates
11
<PAGE> 14
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, 1999: 157,856 shares of Common Stock issuable
upon the exercise of immediately exercisable options. Mr. Hall is President
and CEO of Onyx Acceptance Corporation, 27051 Towne Centre Drive, Foothill
Ranch, Ca. 92610.
(6) Includes, as of March 31, 1999: (i) 11,747 shares of Common Stock issuable
upon the exercise of immediately exercisable options.
(7) Includes, as of March 31, 1999: (i) 46,831 shares of Common Stock issuable
upon the exercise of immediately exercisable options.
(8) Includes, as of March 31, 1999, 42,023 shares of Common Stock, issuable
upon the exercise of immediately exercisable options.
(9) Includes, as of March 31, 1999, 20,456 shares of Common Stock issuable upon
the exercise of immediately exercisable options.
(10) Includes, as of March 31, 1999, 51,849 shares of Common Stock issuable upon
the exercise of immediately exercisable options.
(11) Includes, as of March 31, 1999, (i) 614,346 shares of Common Stock held by
Crosspoint Venture Partners 1993, and/or Crosspoint Venture Partners
Entrepreneurs 1993, (ii) 660,402 shares of Common Stock held by Brentwood
Associates VI, L.P., and (iii) an aggregate of 362,594 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 or Wellington Management Company.
(12) The Bass Group as used herein consists of The Bass Management Trust
(163,855 shares; 2.7%), Sid R. Bass Management Trust (252,210 shares;
4.1%), Lee M. Bass (252,210 shares; 4.1%). The above persons are
collectively referred to as the "Reporting Persons" pursuant to Amendment
No. 1 to Schedule 13G Statement filed January 4, 1998 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 609,700 shares of Onyx which are held of record by clients
at WMC.
(14) Includes as of March 31, 1999, 4,166 shares of Common Stock, issuable upon
the exercise of immediately exercisable options.
(15) Includes as of March 31, 1999, 44,165 shares of Common Stock, issuable upon
the exercise of immediately exercisable options.
12
<PAGE> 15
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, 1997, and ending December 31, 1998.
The following graph compares the value of a $100 investment made on
12/31/97 in each of Onyx, Onyx Peer Group, and the NASDAQ Composite Index as of
3/31/98, 6/30/98, 9/30/98 and 12/31/98.
<TABLE>
<CAPTION>
ONYX ACCEPTANCE CORP. PEER GROUP NASDAQ COMPOSITE
--------------------- ---------- ----------------
<S> <C> <C> <C>
'12/31/97' 100.00 100.00 100.00
'3/31/98' 140.32 97.59 116.90
'6/30/98' 116.13 86.57 120.66
'9/30/98' 87.10 65.70 107.86
'12/31/98' 74.19 56.60 139.63
</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.
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, 1998, with the exception
of Frank Marraccino, who is Executive Vice President of the Company. The filing
of Mr. Marraccino's Form 5 dated February 16, 1999 and Amendment to Form 5 dated
April 8, 1999 has brought him into compliance with all Section 16(a) filing
requirements.
13
<PAGE> 16
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 2000 Annual Meeting must
submit such proposal so that it is received by the Company no later than January
5, 2000. 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,
1998 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, 1999
14
<PAGE> 17
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 27, 1999.
The undersigned hereby appoints John W. Hall 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 27, 1999, 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> 18
PLEASE DATE, SIGN AND MAIL
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ONYX ACCEPTANCE CORPORATION
MAY 27, 1999
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
WITHHOLD
AUTHORITY
to vote for all
FOR nominees listed NOMINEE:
1. Election of Directors: [ ] [ ] G. Bradford Jones
2. Ratification of Independent Accountants: PricewaterhouseCoopers LLP
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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:________________________ ___________________________________
Signature if held jointly
DATE:________________________, 1999
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.
