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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: October 18, 1999
(Date of earliest event reported)
ONYX ACCEPTANCE FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 333-71045 33-0639768
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
27051 Towne Centre Dr., Suite 200
Foothill Ranch, California 92610
(Address of Principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (949) 465-3500
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Item 5. Other Events.
Reference is hereby made to the Registrant's Registration Statement on
Form S-3 (File No. 333-71045) filed with the Securities and Exchange Commission
(the "Commission") on January 22, 1999, and Amendment No. 1 thereto filed with
the Commission on February 12, 1999 (as amended, the "Registration Statement"),
pursuant to which the Registrant registered $1,500,000,000 aggregate principal
amount of its auto loan backed notes and auto loan backed certificates, issuable
in various series, for sale in accordance with the provisions of the Securities
Act of 1933, as amended. Reference is also hereby made to the Prospectus and the
related Prospectus Supplement (collectively, the "Prospectus"), which will be
filed with the Commission pursuant to Rule 424(b)(5), with respect to the
Registrant's Auto Loan Backed Notes and Auto Loan Backed Certificates, Series
1999-D (the "Offered Securities").
The Registrant is filing this Current Report on Form 8-K to provide
prospective investors with certain materials which constitute "ABS Term Sheets"
as described in the no-action letter dated February 27, 1995 issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association, the filing of which materials is a condition of the relief granted
in such letters (such materials being the "ABS Term Sheets"). The ABS Term
Sheets are set forth in Exhibit 99.4 hereto.
The assumptions used in preparing the ABS Term Sheets were based upon a
preliminary compilation of the underlying collateral and the estimated principal
amount and other features of the Offered Securities. The actual features of the
Offered Securities and a detailed description of the final constituency of the
underlying collateral will be set forth in the Prospectus and in a Current
Report on Form 8-K to be filed with the Commission.
Due to the preliminary nature of the information regarding the
collateral and the structure of the Offered Securities used in preparing the ABS
Term Sheets, no assurance can be given as to either the ABS Term Sheets' or the
underlying assumptions' accuracy, appropriateness or completeness in any
particular context; nor can assurance be given as to whether the ABS Term Sheets
and/or the assumptions upon which they are based reflect present market
conditions or future market performance. These ABS Term Sheets should not be
construed as either projections or predictions or as legal, tax, financial or
accounting advice.
The specific characteristics of the Offered Securities may differ from
those shown in the ABS Term Sheets due to differences between the actual
collateral and the preliminary collateral used in preparing the ABS Term Sheets.
As noted above, the principal amount and designation of any security described
in the ABS Term Sheets are subject to change prior to issuance.
Please be advised that auto loan backed securities may not be
appropriate for all investors. Potential investors must be willing to assume,
among other things, market price volatility, prepayments, yield curve and
interest rate risks. Investors should make every effort to consider the risks of
these securities.
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Any statement or information contained in the ABS Term Sheets shall be
deemed to be modified or superseded for purposes of the Prospectus and the
Registration Statement by statements or information contained in the Prospectus.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
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99.4 ABS Term Sheet
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ONYX ACCEPTANCE FINANCIAL CORPORATION
October 22, 1999 By: /s/ DON P. DUFFY
---------------------------------
Don P. Duffy
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
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99.4 ABS Term Sheet
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EXHIBIT 99.4
ABS Term Sheet
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Onyx Acceptance Owner Trust 1999-D
RETAIL AUTO ABS
$390,000,000 ASSET-BACKED SECURITIES
ONYX ACCEPTANCE FINANCIAL CORPORATION
SELLER
ONYX ACCEPTANCE CORPORATION
SERVICER
$59,000,000 Class A-1 [ ]% Asset-Backed Notes
$120,000,000 Class A-2 [ ]% Asset-Backed Notes
$ 100,000,000 Class A-3 [ ]% Asset-Backed Notes
$87,600,000 Class A-4 [ ]% Asset-Backed Notes
$23,400,000 [ ]% Asset-Backed Certificates
Term Sheet
The information herein is preliminary, and will be superseded by the applicable
prospectus supplement and by any other information subsequently filed with the
Securities and Exchange Commission. The information addresses only certain
aspects of the applicable security's characteristics and thus does not provide a
complete assessment. As such, the information may not reflect the impact of all
structural characteristics of the security. The assumptions underlying the
information, including structure and collateral, may be modified from time to
time to reflect changed circumstances. The attached term sheet is not intended
to be a prospectus and any investment decision with respect to the Notes or
Certificates should be made by you based solely upon all of the information
contained in the final prospectus and final prospectus supplement. Under no
circumstances shall the information presented constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of such
jurisdiction. The securities may not be sold nor may an offer to buy be accepted
prior to the delivery of a final prospectus and final prospectus supplement
relating to the securities. All information described herein is preliminary,
limited in nature and subject to completion or amendment. No representation is
made that the above referenced securities will actually perform as described in
any scenario presented. A final prospectus and final prospectus supplement may
be obtained by contacting the Salomon Smith Barney Syndicate Desk at (212)
723-6171.
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Onyx Acceptance Owner Trust 1999-D
RETAIL AUTO ABS
$390,000,000 ASSET-BACKED SECURITIES
ONYX ACCEPTANCE FINANCIAL CORPORATION
SELLER
ONYX ACCEPTANCE CORPORATION
SERVICER
$59,000,000 Class A-1 [ ]% Asset-Backed Notes
$120,000,000 Class A-2 [ ]% Asset-Backed Notes
$100,000,000 Class A-3 [ ]% Asset-Backed Notes
$87,600,000 Class A-4 [ ]% Asset-Backed Notes
$23,400,000 [ ]% Asset-Backed Certificates
Term Sheet
The attached information (the "Term Sheet") is privileged and confidential and
is intended for use by the addressee only. The Term Sheet is furnished to you
solely by Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
and not by the issuer of the securities or any of its affiliates. The issuer of
these securities has not prepared or taken part in the preparation of these
materials. Neither Merrill Lynch, the issuer of the securities nor any of its
affiliates makes any representation as to the accuracy or completeness of the
information herein. The information herein is preliminary, and will be
superseded by the applicable prospectus supplement and by any other information
subsequently filed with the Securities and Exchange Commission. The information
herein may not be provided by the addressee to any third party other than the
addressee's legal, tax, financial and/or accounting advisors for the purposes of
evaluating said material.
Although a registration statement (including the prospectus) relating to the
securities discussed in this communication has been filed with the Securities
and Exchange Commission and is effective, the final prospectus supplement
relating to the securities discussed in this communication has not been filed
with the Securities and Exchange Commission. This communication shall not
constitute an offer to sell or the solicitation of any offer to buy nor shall
there be any sale of the securities discussed in this communication in any state
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
Prospective purchasers are referred to the final prospectus and prospectus
supplement relating to the securities discussed in this communication for
definitive information on any matter discussed in this communication. A final
prospectus and prospectus supplement may be obtained by contacting the Merrill
Lynch Trading Desk at (212) 449-3659.
Please be advised that asset-backed securities may not be appropriate for all
investors. Potential investors must be willing to assume, among other things,
market price volatility, prepayments, yield curve and interest rate risk.
Investors should fully consider the risk of an investment in these securities.
If you have received this communication in error, please notify the sending
party immediately by telephone and return the original to such party by mail.
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Onyx Acceptance Owner Trust 1999-D
RETAIL AUTO ABS
$390,000,000 ASSET-BACKED SECURITIES
ONYX ACCEPTANCE FINANCIAL CORPORATION
SELLER
ONYX ACCEPTANCE CORPORATION
SERVICER
$59,000,000 Class A-1 [ ]% Asset-Backed Notes
$120,000,000 Class A-2 [ ]% Asset-Backed Notes
$100,000,000 Class A-3 [ ]% Asset-Backed Notes
$87,600,000 Class A-4 [ ]% Asset-Backed Notes
$23,400,000 [ ]% Asset-Backed Certificates
Term Sheet
The information herein is preliminary, and will be superseded by the applicable
prospectus supplement and by any other information subsequently filed with the
Securities and Exchange Commission. The information addresses only certain
aspects of the applicable security's characteristics and thus does not provide a
complete assessment. As such, the information may not reflect the impact of all
structural characteristics of the security. The assumptions underlying the
information, including structure and collateral, may be modified from time to
time to reflect changed circumstances. The attached term sheet is not intended
to be a prospectus and any investment decision with respect to the Notes or
Certificates should be made by you based solely upon all of the information
contained in the final prospectus and final prospectus supplement. Under no
circumstances shall the information presented constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of such
jurisdiction. The securities may not be sold nor may an offer to buy be accepted
prior to the delivery of a final prospectus and final prospectus supplement
relating to the securities. All information described herein is preliminary,
limited in nature and subject to completion or amendment. No representation is
made that the above referenced securities will actually perform as described in
any scenario presented. A final prospectus and final prospectus supplement may
be obtained by contacting the Chase Securities Trading Desk at (212) 834-3720.
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ONYX ACCEPTANCE OWNER TRUST 1999-D
Subject to Revision
TERM SHEET DATED OCTOBER 18, 1999
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ISSUER ........................................ Onyx Acceptance Owner Trust 1999-D, a Delaware business trust (the
"TRUST"). The Trust will be established by a trust agreement among the
Seller, the Owner Trustee and the Trust Agent. The trust agreement is
referred to herein as the "TRUST AGREEMENT".
SELLER......................................... Onyx Acceptance Financial Corporation, a wholly-owned, limited purpose
subsidiary of Onyx Acceptance Corporation.
SERVICER....................................... Onyx Acceptance Corporation ("ONYX").
INDENTURE TRUSTEE.............................. The Chase Manhattan Bank, as trustee under the Indenture.
OWNER TRUSTEE.................................. Bankers Trust (Delaware), as trustee under the Trust Agreement.
TRUST AGENT.................................... The Chase Manhattan Bank, as agent of the Owner Trustee under the Trust
Agreement.
INSURER........................................ MBIA Insurance Corporation, as Insurer under the Insurance Agreement
("MBIA").
CLOSING DATE................................... On or about October 28, 1999.
THE NOTES...................................... The Trust will issue Auto Loan Backed Notes (the "NOTES") pursuant to
an indenture to be dated as of October 1, 1999 (the "INDENTURE")
between the Issuer and the Indenture Trustee. The Notes will include
the Class A-1 Auto Loan Backed Notes in the aggregate principal amount
of $59,000,000, the Class A-2 Auto Loan Backed Notes in the aggregate
principal amount of $120,000,000, the Class A-3 Auto Loan Backed Notes
in the aggregate principal amount of $100,000,000, and the Class A-4
Auto Loan Backed Notes in the aggregate principal amount of
$87,600,000. The Notes will be non-recourse obligations of the Trust
and will be secured by certain assets of the Trust pursuant to the
Indenture.
THE CERTIFICATES............................... The Trust will issue Auto Loan Backed Certificates (the "CERTIFICATES"
and, together with the Notes, the "SECURITIES"), in the aggregate
principal amount of $23,400,000. The Certificates will represent
undivided beneficial ownership interests in the Trust and will be
issued pursuant to the Trust Agreement.
THE RESIDUAL INTERESTS......................... The Trust will issue certificates representing the Residual Interests
in the Trust. The Residual Interests are not offered for sale.
TRUST PROPERTY................................. As of the Closing Date, the Trust's assets will include:
o a pool of fixed rate motor vehicle retail installment sales
contracts and installment loan agreements (the "FUNDED CONTRACTS"),
each of which was purchased from the Seller and
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each of which is secured by a new or used automobile, light-duty
truck or van;
o certain documents relating to the Funded Contracts;
o certain monies received with respect to the Funded Contracts on or
after the related Cut-Off Date for such Funded Contracts;
o security interests in the financed vehicles and the rights to
receive proceeds from claims on certain insurance policies covering
the financed vehicles or the individual obligors under each related
Funded Contract;
o all amounts on deposit in certain specified accounts (excluding any
investment income credited to the Collection Account, which will be
paid to the Servicer and excluding any investment income credited
to the Capitalized Interest Account, which may be released to the
Seller under certain circumstances);
o the right of the Seller to cause Onyx to repurchase certain Funded
Contracts under specified circumstances; and
o all proceeds of the foregoing.
On the Closing Date, the Seller will deposit approximately $117,422,910
into a segregated trust account (the "PREFUNDING ACCOUNT") for the
purchase of additional fixed rate motor vehicle retail installment
sales contracts and/or installment loan agreements (the "PREFUNDED
CONTRACTS", and, together with the Funded Contracts, the "CONTRACTS").
Each day on which such a purchase is made is referred to in the
Prospectus Supplement and herein as a "PREFUNDING TRANSFER DATE".
Pursuant to the Indenture, the Trust will grant a security interest in
the Trust Property (excluding the Certificate Distribution Account) in
favor of the Indenture Trustee, on behalf of the Noteholders, and for
the benefit of MBIA in support of the obligations owing to MBIA under
the Insurance Agreement.
CONTRACTS...................................... The Trust's main source of funds for making payments on the Securities
will be collections on the Contracts. The Trust will acquire certain
Contracts with a total principal balance of $172,577,090.48 as of
October 1, 1999. Such Contracts are referred to herein as the "INITIAL
CONTRACTS" and October 1, 1999 is referred to as the "INITIAL CUT-OFF
DATE". The total principal balance of the Initial Contracts as of the
Initial Cut-Off Date is referred to as the "INITIAL CUT-OFF POOL
BALANCE".
Prior to the Closing Date, the Trust will acquire certain additional
Contracts with a total principal balance of approximately $100,000,000.
Such additional Contracts will be originated or purchased after the
Initial Cut-Off Date but on or before October 27, 1999. Such Contracts
are referred to herein as the "SUBSEQUENT CONTRACTS" and October 27,
1999 is referred to as the "SUBSEQUENT CUT-OFF DATE".
Subsequent to the Closing Date, the Trust will use funds available in
the Prefunding Account to acquire Prefunded Contracts. On each
Prefunding Transfer Date, the Seller will deliver a transfer
certificate to the Trust, which certificate will set forth certain
information with respect to the Prefunded Contracts transferred on that
date, including a cut-off date for such Prefunded Contracts. The
cut-off date
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specified in the transfer certificate is referred to in the Prospectus
Supplement and herein as the "PREFUNDING CUT-OFF Date".
The total principal balance of the Initial Contracts as of the Initial
Cut-Off Date, the total principal balance of the Subsequent Contracts
as of the Subsequent Cut-Off Date, and the initial deposit in the
Prefunding Account, which will total approximately $390,000,000, is
referred to as the "ORIGINAL POOL BALANCE".
The Trust will acquire the Contracts from the Seller pursuant to a Sale
and Servicing Agreement dated as of October 1, 1999 (the "SALE AND
SERVICING AGREEMENT").
The term "CUT-OFF DATE" as used herein refers to the Initial Cut-Off
Date for the Initial Contracts, the Subsequent Cut-Off Date for the
Subsequent Contracts and the related Prefunding Cut-Off Date for the
Prefunded Contracts.
As of the Initial Cut-Off Date, the Initial Contracts had the following
characteristics:
Weighted average annual percentage rate: 15.09%
Weighted average remaining term: 56.07 months
Contracts that allocate interest and principal
by the rule of 78's or actuarial method: 10.31%
(by Initial Cut-Off Pool Balance)
Contracts that allocate interest and principal
by the simple interest method: 89.69%
(by Initial Cut-Off Pool Balance)
Contracts secured by new vehicles: 16.75%
(by Initial Cut-Off Pool Balance)
Contracts secured by used vehicles: 83.25%
(by Initial Cut-Off Pool Balance)
Contracts originated in California:* 31.04%
(by Initial Cut-Off Pool Balance)
* As of the Initial Cut-Off Date, the aggregate principal balances of
Initial Contracts originated in any single state other than
California did not exceed 8.90% of the Initial Cut-Off Pool
Balance.
No Initial Contract has, and no Subsequent Contract or Prefunded
Contract will have, a scheduled maturity date later than January 20,
2006.
Because the financial and other data for the Subsequent Contracts and
the Prefunded Contracts will differ from the characteristics of the
Initial Contracts set forth above, the characteristics of the Contracts
are likely to vary from the characteristics of the Initial Contracts.
Periodically during the Funding Period, Onyx will sell, and the Seller
will purchase for subsequent sale to the Trust, motor vehicle retail
installment sales contracts and installment loan agreements originated
or acquired by Onyx that meet the eligibility requirements for
Prefunded Contracts. The purchase price for such Prefunded Contracts
will equal the aggregate principal amount of the Prefunded Contracts as
of the related Prefunding Cut-Off Date. The purchase of the Prefunded
Contracts by the Trust will be subject to the satisfaction of certain
conditions set forth in the Sale and Servicing Agreement. The aggregate
principal balance of the Prefunded
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Contracts to be conveyed to the Trust during the Funding Period will
not exceed the original amount deposited in the Prefunding Account.
DISTRIBUTION DATE............................ Interest and principal on the Notes and the Certificates will be
payable on the 15th day of each month. If the 15th day of a month is
not a business day, then the payment for that month will be made on the
next succeeding business day. The first payment will be due on November
15, 1999.
A business day is a day other than a Saturday, Sunday or other day on
which commercial banks located in California or New York are authorized
or required to be closed.
TERMS OF THE NOTES:
A. INTEREST................................. Class A-1 Rate: % per annum.
Class A-2 Rate: % per annum.
Class A-3 Rate: % per annum.
Class A-4 Rate: % per annum.
With respect to each Distribution Date, interest on the principal
balance of each class of Notes will accrue at its respective per annum
interest rate during the period from and including the prior
Distribution Date (or, in the case of the first Distribution Date, from
and including the Closing Date) to but excluding the applicable
Distribution Date and will be payable to the related Noteholders
monthly on each related Distribution Date commencing November 15, 1999.
Interest on the Notes will be calculated on the basis of a 360-day year
of twelve 30-day months, with the exception of the Class A-1 Notes,
with respect to which interest will be calculated on the basis of a
360-day year and the actual number of days in the related accrual
period.
B. PRINCIPAL................................ The Trust will make payments of principal on the Notes monthly, on each
Distribution Date, in an amount generally equal to the Note Principal
Distributable Amount for such Distribution Date. No principal payments
will be made on the Class A-2 Notes until the Class A-1 Notes have been
paid in full; no principal payments will be made on the Class A-3 Notes
until the Class A-2 Notes have been paid in full; and no principal
payments will be made on the Class A-4 Notes until the Class A-3 Notes
have been paid in full.
The Trust must pay the outstanding principal amount of each class of
Notes, to the extent not previously paid, by the Distribution Date
occurring in the following months:
CLASS FINAL SCHEDULED DISTRIBUTION DATE
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A-1 November 15, 2000
A-2 September 15, 2002
A-3 November 15, 2003
A-4 November 15, 2004
The final scheduled Distribution Dates set forth above are referred to
herein as the "FINAL SCHEDULED DISTRIBUTION DATE" for each class of
Notes. The outstanding principal balance of each class of Notes is
expected be paid in full earlier, and could be paid significantly
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earlier, than the Final Scheduled Distribution Date for such class,
depending on a variety of factors.
The "ACCELERATED PRINCIPAL COMMENCEMENT DATE" means the first
Distribution Date on which (i) the aggregate principal balance of the
Contracts (the "POOL BALANCE") as of such Distribution Date is equal to
or less than 15% of the Original Pool Balance, and (ii) the amount on
deposit in the Spread Account is equal to or greater than the Spread
Account Maximum (after giving effect to any deposit thereto on such
Distribution Date).
The "ACCELERATED PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date occurring on or after the Accelerated Principal
Commencement Date, the amount which would remain on deposit in the
Payment Account for such Distribution Date after making all other
payments required to be made on such Distribution Date pursuant to the
Sale and Servicing Agreement without regard to the inclusion of such
amount as part of the Note Principal Distributable Amount. The
Accelerated Principal Distributable Amount shall only be included in
the Note Principal Distributable Amount until all of the Notes have
been paid in full, and shall not be included in the Certificate
Principal Distributable Amount at any time.
A "COLLECTION PERIOD" with respect to a Distribution Date will be the
calendar month preceding the month in which such Distribution Date
occurs; provided, that with respect to Liquidated Contracts the
Collection Period will be the period from but excluding the sixth
business day preceding the immediately preceding Distribution Date to
and including the sixth business day preceding such Distribution Date.
With respect to the first Distribution Date, the "COLLECTION PERIOD"
for Liquidated Contracts will be the period from and including the
related Cut-Off Date to and including the sixth business day preceding
such first Distribution Date.
A "CRAM DOWN LOSS" means, with respect to a Contract, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on such Contract or otherwise
modifying or restructuring the scheduled payments to be made on such
Contract, an amount equal to (i) the excess of the Principal Balance of
such Contract immediately prior to such order over the Principal
Balance of such Contract as so reduced and/or (ii) if such court shall
have issued an order reducing the effective rate of interest on such
Contract, the excess of the Principal Balance of such Contract
immediately prior to such order over the net present value of the
scheduled payments as so modified or restructured.
A "DEFAULTED CONTRACT" with respect to any Collection Period is a
Contract (i) which is, at the end of such Collection Period, delinquent
in the amount of at least two monthly installments of monthly principal
and interest or (ii) with respect to which the related financed vehicle
has been repossessed or repossession efforts with respect to the
related financed vehicle have been commenced.
A "LIQUIDATED CONTRACT" is a Contract that (i) is the subject of a full
prepayment; (ii) is a Defaulted Contract with respect to which
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liquidation proceeds constituting, in the Servicer's reasonable
judgment, the final amounts recoverable have been received and
deposited in the Collection Account; (iii) is paid in full on or after
its maturity date; or (iv) has been a Defaulted Contract for four or
more Collection Periods and as to which liquidation proceeds have not
been deposited in the Collection Account; provided, however, that in
any event a Contract that is delinquent in the amount of five monthly
installments of monthly principal and interest at the end of a
Collection Period shall be deemed to be a Liquidated Contract and shall
be deemed to have a balance of zero.
The "NOTE PERCENTAGE" means (i) for each Distribution Date prior to the
Distribution Date on which the principal amount of the Class A-4 Notes
is reduced to zero, 100%, (ii) on the Distribution Date on which the
principal amount of the Class A-4 Notes is reduced to zero, (a) 100%
until the principal amount of the Class A-4 Notes has been reduced to
zero and (b) with respect to any remaining portion of the Regular
Principal Distributable Amount, 0%; and (iii) for each Distribution
Date after the Distribution Date on which the principal amount of the
Class A-4 Notes is reduced to zero, 0%.
The "NOTE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of the Note Principal Distributable
Amount for such Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account
on such Distribution Date.
The "NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Note Percentage of the Regular
Principal Distributable Amount for such Distribution Date, (ii) the
Accelerated Principal Distributable Amount, if any, for such
Distribution Date and (iii) any outstanding Note Principal Carryover
Shortfall for the immediately preceding Distribution Date; provided,
however, that the Note Principal Distributable Amount shall not exceed
the aggregate outstanding principal amount of the Notes.
Notwithstanding the foregoing, the Note Principal Distributable Amount
on the Final Scheduled Distribution Date for each class of Notes shall
not be less than the amount that is necessary to reduce the outstanding
principal amount of the related class of Notes to zero.
The "PRINCIPAL BALANCE" means, with respect to a Contract, as of any
date, the amount financed under the terms of such Contract minus (i)
that portion of monthly principal and interest payments in respect of
such Contract received on or prior to the end of the most recently
ended Collection Period and allocable to principal as determined by the
Servicer and (ii) any Cram Down Loss incurred in respect of such
Contract on or prior to the end of the most recently ended Collection
Period. For purposes of this definition, allocations of monthly
principal and interest payments on each Contract by the Servicer shall
be made in accordance with the terms of such Contract, in the case of a
simple interest contract or actuarial contract, or in accordance with
the recomputed actuarial method, in the case of a rule of 78's
contract.
A "PURCHASED CONTRACT" means a Contract that (i) has been purchased by
Onyx or the Seller because of certain material defects
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in documents related to such Contract or certain breaches of
representations and warranties regarding such Contract made by the
Seller in the Sale and Servicing Agreement that materially and
adversely affect the interests of the securityholders or the Insurer,
(ii) has been purchased by the Servicer because of certain breaches of
servicing covenants or (iii) has been purchased by the Servicer in the
event of an Optional Purchase.
The "REGULAR PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the amount equal to the sum of the following amounts
with respect to the related Collection Period: (i) collections received
on Contracts (other than Liquidated Contracts and Purchased Contracts)
allocable to principal as determined by the Servicer, including full
and partial principal prepayments (other than partial prepayments on
Contracts that allocate principal and interest based on the rule of
78's or the actuarial method, representing payments not due in such
Collection Period, which will be deposited into the Payahead Account),
(ii) the Principal Balance of all Contracts (other than Purchased
Contracts) that became Liquidated Contracts during the related
Collection Period, (iii) the Principal Balance as of the date of
purchase of all Contracts that became Purchased Contracts as of the
immediately preceding record date and (iv) the aggregate amount of Cram
Down Losses incurred during the related Collection Period.
C. MANDATORY PARTIAL REDEMPTION............. If an amount equal to or less than $50,000 remains on deposit in the
Prefunding Account at the end of the Funding Period, the Class A-1
Notes will be prepaid in part on the Distribution Date immediately
following the end of the Funding Period. If an amount in excess of
$50,000 remains on deposit in the Prefunding Account at the end of the
Funding Period, the Notes will be prepaid in part, pro rata based on
the then current principal balance of the Notes, on the Distribution
Date immediately following the end of the Funding Period. The amount of
any such prepayment will be equal to the balance remaining on deposit
in the Prefunding Account after giving effect to the sale to the Trust
of all Prefunded Contracts during the Funding Period, including any
such sale on the date the Funding Period ends.
TERMS OF THE CERTIFICATES:
A. INTEREST................................ Certificate Rate: % per annum.
Interest on the Certificates will accrue monthly at the Certificate
Rate and will be payable to Certificateholders monthly on each related
Distribution Date commencing November 15, 1999. Interest on the
Certificates will be calculated on the basis of a 360-day year of
twelve 30-day months.
The "CERTIFICATE PRINCIPAL BALANCE" will equal $23,400,000 (the
"ORIGINAL CERTIFICATE BALANCE") on the Closing Date and on any date
thereafter will equal the Original Certificate Balance reduced by all
distributions of principal previously made in respect of the
Certificates. Distributions of interest on the Certificates will be
subordinated to payments of interest on the Notes on each Distribution
Date. On the Final Scheduled Distribution Date for a
</TABLE>
8
<PAGE> 12
<TABLE>
<S> <C>
class of Notes, interest on the Certificates will be subordinated to
payments of principal then due on such class of Notes.
B. PRINCIPAL................................ No principal will be paid on the Certificates until all of the Notes
have been paid in full. On the Distribution Date that the Notes are
paid in full, and on each succeeding Distribution Date, the Trust will
make payments of principal on the Certificates in an amount equal to
the Certificate Principal Distributable Amount for such Distribution
Date.
The "CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of (i) the Certificate Percentage of the
Regular Principal Distributable Amount for such Distribution Date and
(ii) any outstanding Certificate Principal Carryover Shortfall for the
immediately preceding Distribution Date; provided, however, that the
Certificate Principal Distributable Amount shall not exceed the
Certificate Principal Balance. Notwithstanding the foregoing, the
Certificate Principal Distributable Amount on the Final Scheduled
Distribution Date for the Certificates shall not be less than the
amount that is necessary to reduce the outstanding principal amount of
the Certificates to zero.
The "CERTIFICATE PERCENTAGE" means (i) for each Distribution Date prior
to the Distribution Date on which the principal amount of the Class A-4
Notes is reduced to zero, 0%, (ii) on the Distribution Date on which
the principal amount of the Class A-4 Notes is reduced to zero, (a) 0%
until the principal amount of the Class A-4 Notes has been reduced to
zero and (b) with respect to any remaining portion of the Regular
Principal Distributable Amount, 100%; and (iii) for each Distribution
Date after the Distribution Date on which the principal amount of the
Class A-4 Notes is reduced to zero, 100%.
The "CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
of any Distribution Date, the excess of the Certificate Principal
Distributable Amount over the amount in respect of principal that is
actually deposited in the Certificate Distribution Account on such
Distribution Date.
The Trust must pay the outstanding principal amount of the
Certificates, to the extent not previously paid, by the Distribution
Date occurring in June, 2006. This date is referred to herein as the
"FINAL SCHEDULED DISTRIBUTION DATE" for the Certificates. The
outstanding principal balance of the Certificates is expected to be
paid in full earlier, and could be paid significantly earlier, than the
Final Scheduled Distribution Date for the Certificates, depending on a
variety of factors.
OPTIONAL PURCHASE............................ The Servicer may, but is not obligated to, purchase the Contracts on
any Distribution Date on which the principal balance of the Contracts
has declined to 10% or less of the Original Pool Balance. If the
Servicer exercises this purchase option (an "OPTIONAL PURCHASE"), all
of the Notes then outstanding will be redeemed, and all of the
Certificates then outstanding will be prepaid.
THE PREFUNDING ACCOUNT....................... The Prefunding Account will be maintained in the name of the Indenture
Trustee for the benefit of the Securityholders and MBIA
</TABLE>
9
<PAGE> 13
<TABLE>
<S> <C>
and is designed solely to hold funds to be applied by the Indenture
Trustee during the Funding Period to pay to the Seller the purchase
price for the Prefunded Contracts. Interest on the portion of the Pool
Balance represented by the balance in the Prefunding Account will be
payable from earnings on the Prefunding Account or from the Capitalized
Interest Account, and will not be payable from collections on the
Contracts.
The Prefunding Account will be created with an initial deposit by the
Seller of the amount by which the proceeds from the sale of the
Securities (prior to deducting any expenses or underwriting
commissions) exceeds the principal balance of the Funded Contracts,
which amount is expected to be approximately $117,422,910.
The "FUNDING PERIOD" will be the period from the Closing Date until the
earliest to occur of (i) the date on which the balance remaining in the
Prefunding Account is less than $2,500.00, (ii) the date on which a
Servicer Default or an Indenture Event of Default (each as defined in
the Sale and Servicing Agreement) occurs or (iii) the close of business
on December 31, 1999. During the Funding Period, on one or more
Prefunding Transfer Dates, the balance on deposit in the Prefunding
Account will be applied to purchase Prefunded Contracts from the
Seller. Any balance remaining on deposit in the Prefunding Account at
the end of the Funding Period will be payable as principal to
Noteholders as herein described.
THE CAPITALIZED INTEREST ACCOUNT............. On the Closing Date, the Seller will deposit an amount in a segregated
trust account to be maintained for the benefit of the Securityholders
and MBIA (the "CAPITALIZED INTEREST ACCOUNT") from a portion of the
proceeds received upon the sale of the Securities. The Capitalized
Interest Account will be available to cover the projected interest
shortfall in respect of amounts on deposit in the Prefunding Account
during the Funding Period. The Capitalized Interest Account will be an
asset of the Trust.
THE SPREAD ACCOUNT........................... The Indenture Trustee will establish a segregated trust account,
entitled "Spread Account - OT 1999-D, The Chase Manhattan Bank,
Indenture Trustee", for the benefit of the securityholders and MBIA
(the "SPREAD ACCOUNT"). The Spread Account will be an asset of the
Trust. The securityholders will be afforded certain limited protection
against losses on the Contracts by the establishment of the Spread
Account.
On each Distribution Date, net collections remaining after required
distributions have been made in respect of the Servicer, the Owner
Trustee, the Indenture Trustee, the Trust Agent, the Noteholders, the
Certificateholders and the Insurer will be deposited in the Spread
Account, up to a maximum amount calculated as the parties to the
Insurance Agreement and the rating agencies may agree (the "SPREAD
ACCOUNT MAXIMUM"). On each Distribution Date, funds will be withdrawn
from the Spread Account to cover any shortfalls in amounts available to
pay (i) the Servicing Fee and certain fees of the Indenture Trustee,
the Owner Trustee and the Trust Agent, and (ii) interest and principal
on the Securities. If the amount on deposit in the Spread Account on
any Distribution Date (after giving effect to
</TABLE>
10
<PAGE> 14
<TABLE>
<S> <C>
all deposits thereto and withdrawals therefrom on such Distribution
Date) is greater than the Spread Account Maximum, the Indenture Trustee
will distribute any excess first, to the Insurer, to the extent of any
amounts owing to the Insurer pursuant to the Insurance Agreement, and
then to the holders of the Residual Interests in the Trust. Upon any
such distributions to the Insurer or the holders of the Residual
Interests, the securityholders will have no further rights in, or
claims to, such amounts.
THE INSURANCE POLICY......................... On the Closing Date, MBIA will issue an insurance policy in favor of
the Indenture Trustee, for the benefit of the securityholders. The
insurance policy issued by MBIA is referred to herein as the "POLICY",
and the insurance agreement pursuant to which the Policy is issued is
referred to as the "INSURANCE AGREEMENT".
Pursuant to the Policy, MBIA will irrevocably and unconditionally
guarantee timely payment of interest and ultimate payment of principal
due on the Notes and the Certificates. MBIA's obligations under the
Policy will be discharged to the extent that amounts due under the
Policy are received by the Indenture Trustee, whether or not such
amounts are properly applied by the Indenture Trustee.
MBIA will not guarantee payments of principal on any class of Notes or
on the Certificates at any time other than the payment of the
outstanding principal amount of a class of Notes or of the Certificates
on the Final Scheduled Distribution Date for such class of Notes or the
Certificates, and will not guarantee payment of any Accelerated
Principal Distributable Amount or any amounts which become due on an
accelerated basis as a result of (a) a default by the Trust, (b) the
occurrence of an event of default under the Indenture or (c) any other
cause. MBIA may elect, in its sole discretion, to pay in whole or in
part such principal due upon acceleration. In addition, MBIA may elect,
in its sole discretion, to pay all or a portion of certain shortfalls
of funds available to make certain distributions of principal on the
Notes or the Certificates on a Distribution Date.
SERVICING FEE................................ The Servicer will be responsible for managing, administering,
servicing, and collecting on the Contracts. As compensation for its
services, the Servicer will receive a monthly fee equal to the product
of one-twelfth of 1% per annum multiplied by the Pool Balance
(excluding any amounts on deposit in the Prefunding Account) as of the
end of the immediately preceding Collection Period (the "SERVICING
FEE"). As additional compensation, the Servicer will be entitled to any
late fees and other administrative fees and expenses or similar charges
collected with respect to the Contracts. The Servicer or its designee
will also receive as servicing compensation (i) net investment earnings
on funds credited to the Collection Account and the Payahead Account
and (ii) with respect to each rule of 78's Contract that is prepaid in
full prior to its maturity date, the amount, if any, by which the
outstanding principal balance of such rule of 78's Contract exceeds the
Principal Balance of such Contract at the time of such prepayment
(provided, that each amount payable to the Servicer under this clause
(ii) will be deposited in the Spread Account and applied in accordance
with the Insurance Agreement).
</TABLE>
11
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<TABLE>
<S> <C>
FEDERAL INCOME TAX STATUS.................... In the opinion of Andrews & Kurth L.L.P., for federal income tax
purposes, the Notes will be characterized as debt, and the Trust will
not be characterized as an association (or a publicly traded
partnership) taxable as a corporation. Each Noteholder, by the
acceptance of a Note, will agree to treat the Notes as indebtedness and
each Certificateholder, by the acceptance of a Certificate, will agree
to treat the Trust as a partnership in which the Certificateholders are
partners for federal income tax purposes.
ERISA CONSIDERATIONS......................... Subject to the considerations discussed under "ERISA Considerations" in
the Prospectus Supplement and in the Prospectus, the Notes are eligible
for purchase by employee benefit plans that are subject to ERISA.
However, neither an employee benefit plan subject to ERISA or Section
4975 of the Internal Revenue Code of 1986 nor an individual retirement
account is eligible to purchase the Certificates. Any benefit plan
fiduciary considering purchase of the Certificates should, among other
things, consult with its counsel in determining whether all required
conditions have been satisfied.
LEGAL INVESTMENT............................. The Class A-1 Notes will be eligible securities for purchase by money
market funds under Rule 2a-7 under the Investment Company Act of 1940,
as amended.
RATING....................................... At the Closing Date, Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., and Moody's Investors Service, Inc.
will rate the Notes and the Certificates in the highest rating category
for such Securities. The ratings of the Notes and the Certificates will
be based substantially on the issuance of the Policy by MBIA.
REGISTRATION OF THE SECURITIES............... Initially, the Securities will be in the form of one or more
certificates registered in the name of Cede & Co., as the nominee of
The Depository Trust Company. If you acquire an interest in the Notes
or the Certificates through The Depository Trust Company, you will not
be entitled to receive a definitive security, except in the event that
definitive securities are issued in certain limited circumstances.
</TABLE>
12
<PAGE> 16
THE CONTRACTS
Set forth below is certain data concerning the Initial Contracts as of
the Initial Cut-Off Date which had an Initial Cut-Off Pool Balance of
$172,577,090.48. Data concerning all of the Contracts (including the Initial
Contracts, the Subsequent Contracts and the Prefunded Contracts) will be
available to purchasers of the Securities at or before the end of the Funding
Period and will be filed with the SEC on Form 8-K within 15 days after the end
of the Funding Period. Because the financial and other data for the Subsequent
Contracts and the Prefunded Contracts will differ from the data below for the
Initial Contracts, the characteristics of the Contracts are likely to vary from
the characteristics of the Initial Contracts described below.
COMPOSITION OF THE INITIAL CONTRACTS
<TABLE>
<S> <C>
Aggregate principal balance.................................$172,577,090.48
Number of Contracts..................................................14,532
Average principal balance outstanding............................$11,875.66
Average original amount financed.................................$12,013.59
Original amount financed (range)....................$1,155.00 to $81,791.60
Weighted average APR.................................................15.09%
APR (range).................................................6.48% to 25.00%
Weighted average original term...................................56.76 mos.
Original term (range).........................................12 to 72 mos.
Weighted average remaining term..................................56.07 mos.
Remaining term (range).........................................6 to 72 mos.
</TABLE>
DISTRIBUTION BY APRS OF THE INITIAL CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF % OF % OF INITIAL
INITIAL INITIAL PRINCIPAL CUT-OFF
APR RANGE CONTRACTS CONTRACTS BALANCE POOL BALANCE
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C>
0.000% to 7.000%............. 1 0.01 $ 6,782.20 0.00
7.001% to 8.000%............. 331 2.28 5,474,912.56 3.17
8.001% to 9.000%............. 498 3.43 7,450,654.92 4.32
9.001% to 10.000%............ 674 4.64 9,215,180.03 5.34
10.001% to 11.000%............ 608 4.18 7,902,185.58 4.58
11.001% to 12.000%............ 706 4.86 9,349,439.47 5.42
12.001% to 13.000%............ 862 5.93 10,723,738.10 6.21
13.001% to 14.000%............ 1,235 8.50 15,249,140.95 8.84
14.001% to 15.000%............ 1,424 9.80 17,635,739.71 10.22
15.001% to 16.000%............ 1,758 12.10 21,452,333.12 12.43
16.001% to 17.000%............ 1,689 11.62 20,070,418.07 11.63
17.001% to 18.000%............ 1,506 10.36 16,476,271.03 9.55
18.001% to 19.000%............ 926 6.37 9,809,834.00 5.68
19.001% to 20.000%............ 755 5.20 7,505,704.19 4.35
20.001% to 21.000%............ 998 6.87 9,985,144.10 5.79
Over 21.000%.................. 561 3.86 4,269,612.45 2.47
------ ------ -------------- ------
Totals.............. 14,532 100.00* 172,577,090.48 100.00*
</TABLE>
- ----------------
* Percentages may not add to 100% because of rounding.
13
<PAGE> 17
GEOGRAPHIC CONCENTRATION OF THE INITIAL CONTRACTS
<TABLE>
<CAPTION>
NUMBER
OF % OF % OF
INITIAL INITIAL PRINCIPAL INITIAL CUT-OFF
CONTRACTS CONTRACTS BALANCE POOL BALANCE
--------- --------- --------- ---------------
<S> <C> <C> <C> <C>
Arizona 635 4.37 7,380,057.53 4.28
California 4,261 29.32 53,563,904.59 31.04
Colorado 340 2.34 3,661,914.19 2.12
Connecticut 4 0.03 21,752.26 0.01
Delaware 93 0.64 1,110,874.12 0.64
District of Columbia 2 0.01 25,308.03 0.01
Florida 1,333 9.17 15,354,278.29 8.90
Georgia 939 6.46 11,481,542.67 6.65
Idaho 175 1.20 1,793,222.42 1.04
Illinois 1,036 7.13 12,109,412.66 7.02
Indiana 321 2.21 3,574,098.40 2.07
Iowa 70 0.48 773,207.84 0.45
Kansas 3 0.02 36,653.92 0.02
Kentucky 160 1.10 1,688,630.98 0.98
Massachusetts 1 0.01 18,306.90 0.01
Michigan 898 6.18 10,473,601.83 6.07
Minnesota 5 0.03 42,207.88 0.02
Mississippi 3 0.02 40,904.93 0.02
Missouri 50 0.34 532,752.99 0.31
Montana 11 0.08 105,314.42 0.06
Nevada 386 2.66 4,305,165.14 2.49
New Jersey 915 6.30 10,940,638.70 6.34
New Mexico 1 0.01 14,929.11 0.01
New York 26 0.18 256,894.10 0.15
North Carolina 477 3.28 5,715,525.23 3.31
Ohio 2 0.01 22,143.14 0.01
Oklahoma 39 0.27 445,398.09 0.26
Oregon 370 2.55 3,993,710.16 2.31
South Carolina 256 1.76 2,813,896.59 1.63
Tennessee 288 1.98 3,287,306.67 1.90
Texas 342 2.35 4,415,010.55 2.56
Utah 12 0.08 119,429.64 0.07
Virginia 550 3.78 7,077,621.71 4.10
Washington 527 3.63 5,370,144.24 3.11
Wisconsin 1 0.01 11,330.56 0.01
------ ------ -------------- ------
Totals 14,532 100.00* 172,577,090.48 100.00*
</TABLE>
- ----------------
* Percentages may not add to 100% because of rounding.
14
<PAGE> 18
DELINQUENCY AND LOAN LOSS INFORMATION
DELINQUENCY AND LOAN LOSS INFORMATION
The following tables set forth information with respect to the
experience of Onyx relating to delinquencies, loan losses and recoveries for the
portfolio of motor vehicle contracts owned and serviced by Onyx on an annual
basis commencing December 31, 1996. The tables include delinquency information
relating to those motor vehicle contracts that were purchased, originated, sold
and serviced by Onyx. All of the motor vehicle contracts were originally
purchased by Onyx from dealers, or originated by Onyx, a subsidiary of Onyx, or
others, in accordance with credit underwriting criteria established by Onyx. In
February 1994, Onyx commenced its operations as a purchaser and servicer of
motor vehicle retail installment sales contracts. Thus, Onyx has historical
performance for only a limited time period with respect to the motor vehicle
contracts it purchases and originates and thus delinquencies and loan losses may
increase from existing levels in the portfolio with the passage of time.
Delinquency and loan loss experience may be influenced by a variety of economic,
social and other factors.
DELINQUENCY EXPERIENCE OF ONYX MOTOR VEHICLE CONTRACT PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31, AT DECEMBER 31, AT DECEMBER 31,
1996 1997 1998
------------------ ------------------ ---------------------
AMOUNT NO AMOUNT NO AMOUNT NO
-------- ------ -------- ------ ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Servicing portfolio ... $400,665 38,275 $757,277 73,502 $1,345,961 131,862
Delinquencies
30-59 days(1)(2) .... $ 5,022 478 $ 11,902 1,211 $ 26,410 2,766
60-89 days(1)(2) .... $ 1,816 162 $ 3,370 346 $ 6,876 691
90+ days(1)(2) ...... $ 1,279 111 $ 3,743 316 $ 4,790 455
Total delinquencies
as a percent of
servicing portfolio . 2.03% 1.96% 2.51% 2.55% 2.83% 2.97%
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30, AT JUNE 30,
1998 1999
-------------------- ---------------------
AMOUNT NO AMOUNT NO
---------- ------ ---------- -------
<S> <C> <C> <C> <C>
Servicing portfolio ... $1,009,246 98,918 $1,729,338 169,309
Delinquencies
30-59 days(1)(2) .... $ 9,041 921 $ 21,800 2,294
60-89 days(1)(2) .... $ 2,473 244 $ 7,891 783
90+ days(1)(2) ...... $ 3,552 332 $ 7,130 673
Total delinquencies
as a percent of
servicing portfolio . 1.49% 1.51% 2.13% 2.21%
</TABLE>
- ----------
(1) Delinquencies include principal amounts only, net of repossessed
inventory. Repossessed inventory as a percent of the servicing
portfolio was 0.48%, 1.17% and 0.62% at December 31, 1996, 1997 and
1998, respectively, and 0.73% and 0.65% at June 30, 1998 and 1999,
respectively.
(2) The period of delinquency is based on the number of days payments are
contractually past due.
LOAN LOSS EXPERIENCE OF ONYX MOTOR VEHICLE CONTRACT PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------- -------------------------
1996 1997 1998 1998 1999
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Number of Motor Vehicle Contracts
outstanding ........................... 38,275 73,502 131,862 98,918 169,309
Period end outstanding ................ $400,665 $757,277 $1,345,961 $1,009,246 $1,729,338
Average outstanding ................... $311,340 $563,343 $1,023,237 $ 875,657 $1,532,269
Number of gross charge-offs ........... 987 2,161 3,761 1,756 2,862
Gross charge-offs ..................... $5,789.2 $13,076.1 $ 20,639.9 $ 9,374.8 $ 15,101.8
Net charge-offs(1) .................... $5,066.1 $11,433.9 $ 17,618.4 $ 7,917.2 $ 13,174.9
Net charge-offs as a percent of
average outstanding ................. 1.63% 2.03% 1.72% 1.81% 1.72%
</TABLE>
- ------------
(1) Net charge-offs are gross charge-offs minus recoveries on Motor Vehicle
Contracts previously charged off.
15
