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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: May 10, 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-B (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 99.1 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,
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prepayments, yield curve and interest rate risks. Investors should make every
effort to consider the risks of these securities.
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
99.1 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
May 18, 1999 By: /s/ DON P. DUFFY
----------------------------------
Don P. Duffy
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit
Number Description
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<C> <S>
99.1 ABS Term Sheet
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EXHIBIT 99.1
ABS Term Sheet
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Onyx Acceptance Owner Trust 1999-B
RETAIL AUTO ABS
$350,000,000 ASSET-BACKED SECURITIES
ONYX ACCEPTANCE FINANCIAL CORPORATION
SELLER
ONYX ACCEPTANCE CORPORATION
SERVICER
$52,000,000 Class A-1 [ ]% Asset-Backed Notes
$100,000,000 Class A-2 [ ]% Asset-Backed Notes
$105,000,000 Class A-3 [ ]% Asset-Backed Notes
$72,000,000 Class A-4 [ ]% Asset-Backed Notes
$21,000,000 [ ]% 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
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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-B
RETAIL AUTO ABS
$350,000,000 ASSET-BACKED SECURITIES
ONYX ACCEPTANCE FINANCIAL CORPORATION
SELLER
ONYX ACCEPTANCE CORPORATION
SERVICER
$52,000,000 Class A-1 [ ]% Asset-Backed Notes
$100,000,000 Class A-2 [ ]% Asset-Backed Notes
$105,000,000 Class A-3 [ ]% Asset-Backed Notes
$72,000,000 Class A-4 [ ]% Asset-Backed Notes
$21,000,000 [ ]% 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)
783-3727.
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Onyx Acceptance Owner Trust 1999-B
RETAIL AUTO ABS
$350,000,000 ASSET-BACKED SECURITIES
ONYX ACCEPTANCE FINANCIAL CORPORATION
SELLER
ONYX ACCEPTANCE CORPORATION
SERVICER
$52,000,000 Class A-1 [ ]% Asset-Backed Notes
$100,000,000 Class A-2 [ ]% Asset-Backed Notes
$105,000,000 Class A-3 [ ]% Asset-Backed Notes
$72,000,000 Class A-4 [ ]% Asset-Backed Notes
$21,000,000 [ ]% 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-B
Subject to Revision
TERM SHEET DATED MAY 10, 1999
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ISSUER............................. Onyx Acceptance Owner Trust 1999-B, 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 May 18, 1999.
THE NOTES........................... The Trust will issue Auto Loan Backed Notes (the "NOTES") pursuant to
an indenture to be dated as of May 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
$52,000,000, the Class A-2 Auto Loan Backed Notes in the aggregate
principal amount of $100,000,000, the Class A-3 Auto Loan Backed Notes
in the aggregate principal amount of $105,000,000, and the Class A-4
Auto Loan Backed Notes in the aggregate principal amount of
$72,000,000. 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 $21,000,000. 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...................... The Trust's assets will include:
o a pool of fixed rate motor vehicle retail installment sales
contracts and installment loan agreements (the "CONTRACTS"), each
of which was purchased from the Seller
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and each of which is secured by a new or used automobile,
light-duty truck or van;
o certain documents relating to the Contracts;
o certain monies received with respect to the Contracts on or after
the Cut-Off Date for such 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
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);
o the right of the Seller to cause Onyx to repurchase certain
Contracts under specified circumstances; and
o all proceeds of the foregoing.
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 $295,224,883.99 as of May
1, 1999. Such Contracts are referred to herein as the "INITIAL
CONTRACTS" and May 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".
The Trust will acquire certain additional Contracts that have been or
will be originated or purchased after the Initial Cut-Off Date but
prior to May 17, 1999. Such Contracts are referred to herein as the
"SUBSEQUENT CONTRACTS" and May 17, 1999 is referred to as the "FINAL
CUT-OFF DATE". The total principal balance of the Initial Contracts as
of the Initial Cut-Off Date and the Subsequent Contracts as of the
Final Cut-Off Date, which will be approximately $350,000,000, 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 May 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 and the Final Cut-Off Date for the
Subsequent Contracts.
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As of the Initial Cut-Off Date, the Initial Contracts had the
following characteristics:
Weighted average annual percentage rate: 14.691%
Weighted average remaining term: 56.11 months
Contracts that allocate interest and principal
by the rule of 78's or actuarial method: 13.43% (by Initial Cut-Off Pool Balance)
Contracts that allocate interest and principal
by the simple interest method: 86.57% (by Initial Cut-Off Pool Balance)
Contracts secured by new vehicles: 14.41% (by Initial Cut-Off Pool Balance)
Contracts secured by used vehicles: 85.59% (by Initial Cut-Off Pool Balance)
Contracts originated in California:* 30.61% (by Initial Cut-Off Pool Balance)
Contracts originated in Florida:* 9.15% (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 or Florida did not exceed 7.69% of the Initial Cut-Off
Pool Balance.
No Initial Contract has, and no Subsequent Contract will have, a
scheduled maturity date later than July 2, 2005.
Although the financial and other data for the Subsequent Contracts
will differ from the characteristics of the Initial Contracts set
forth above, the characteristics of the Contracts as a whole will
not vary materially from the characteristics of the Initial
Contracts.
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
June 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 June 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.
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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
----- ---------------------------------
A-1 May 2000
A-2 November 2001
A-3 February 2003
A-4 April 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
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
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including the 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
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
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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 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 the proceeds from the sale of the Securities is greater than the
Original Pool Balance, the Trust will partially redeem the Class A-1
Notes on the first Distribution Date. In such event, the Indenture
Trustee will distribute principal to the Class A-1 Noteholders in an
amount equal to the excess of the proceeds over the Original Pool
Balance.
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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 June 15, 1999. Interest on the
Certificates will be calculated on the basis of a 360-day year of
twelve 30-day months.
The "CERTIFICATE BALANCE" will equal $21,000,000 (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 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 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.
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<TABLE>
<S> <C>
The Trust must pay the outstanding principal amount of the
Certificates, to the extent not previously paid, by the Distribution
Date occurring in December 2005. 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 SPREAD ACCOUNT................. The Indenture Trustee will establish a segregated trust account,
entitled "Spread Account - OT 1999-B, 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 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
</TABLE>
9
<PAGE> 14
<TABLE>
<S> <C>
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 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).
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.
</TABLE>
10
<PAGE> 15
<TABLE>
<S> <C>
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>
11
<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
$295,224,883.99. Data concerning all of the Contracts will be available to
purchasers of the Securities at or before the initial delivery of the Securities
and will be filed with the SEC on Form 8-K within 15 days after the initial
delivery of the Securities. While the financial and other data for the
Subsequent Contracts will differ from the data below for the Initial Contracts,
the characteristics of the Contracts as a whole will not vary materially from
the characteristics of the Initial Contracts described below.
COMPOSITION OF THE INITIAL CONTRACTS
<TABLE>
<S> <C>
Aggregate principal balance.....................................$295,224,883.99
Number of contracts......................................................24,560
Average principal balance outstanding................................$12,020.56
Average original amount financed.....................................$12,175.14
Original amount financed (range)........................$1,050.00 to $65,000.00
Weighted average apr....................................................14.691%
Apr (range)...................................................6.600% to 29.370%
Weighted average original term.......................................57.01 mos.
Original term (range).............................................12 to 72 mos.
Weighted average remaining term......................................56.11 mos.
Remaining term (range).............................................5 to 72 mos.
</TABLE>
DISTRIBUTION BY APRS OF THE INITIAL CONTRACTS
<TABLE>
<CAPTION>
NUMBER
OF % OF % OF INITIAL CUT-
INITIAL INITIAL PRINCIPAL OFF
APR RANGE CONTRACTS CONTRACTS BALANCE POOL BALANCE
--------- --------- --------- ------- ------------
<S> <C> <C> <C> <C>
0.000% to 7.000%.......... 6 0.02 $ 115,990.69 0.04
7.001% TO 8.000%.......... 678 2.76 10,315,548.30 3.49
8.001% TO 9.000%.......... 1,017 4.14 14,944,742.32 5.06
9.001% TO 10.000%......... 1,301 5.30 18,055,573.31 6.12
10.001% TO 11.000%......... 1,208 4.92 16,219,443.82 5.49
11.001% TO 12.000%......... 1,419 5.78 18,413,598.67 6.24
12.001% TO 13.000%......... 1,615 6.58 19,869,161.21 6.73
13.001% TO 14.000%......... 2,093 8.52 26,905,785.49 9.11
14.001% TO 15.000%......... 2,579 10.50 32,563,775.73 11.03
15.001% TO 16.000%......... 2,915 11.87 36,467,127.97 12.35
16.001% TO 17.000%......... 2,484 10.11 29,624,234.54 10.03
17.001% TO 18.000%......... 2,188 8.91 23,703,153.28 8.03
18.001% TO 19.000%......... 1,411 5.75 14,657,563.83 4.96
19.001% TO 20.000%......... 1,139 4.64 11,462,278.90 3.88
20.001% TO 21.000%......... 1,593 6.49 15,692,821.27 5.32
21.001% TO 30.000%......... 914 3.72 6,214,084.66 2.10
------ ------ --------------- ------
TOTALS........... 24,560 100.00* $295,224,883.99 100.00*
</TABLE>
- ----------------
* PERCENTAGES MAY NOT ADD TO 100% BECAUSE OF ROUNDING.
12
<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>
ALABAMA.......................... 2 0.01 $ 33,905.88 0.01
ARIZONA.......................... 999 4.07 11,284,829.03 3.82
CALIFORNIA....................... 7,307 29.75 90,367,982.57 30.61
COLORADO......................... 641 2.61 7,025,772.25 2.38
CONNECTICUT...................... 1 0.00 17,925.04 0.01
DELAWARE......................... 5 0.02 64,289.77 0.02
FLORIDA.......................... 2,315 9.43 27,008,315.49 9.15
GEORGIA.......................... 1,716 6.99 21,212,209.75 7.19
IDAHO............................ 214 0.87 2,246,162.30 0.76
ILLINOIS......................... 1,941 7.90 22,692,142.57 7.69
INDIANA.......................... 566 2.30 6,437,369.44 2.18
IOWA............................. 50 0.20 629,556.55 0.21
KENTUCKY......................... 61 0.25 724,962.72 0.25
MARYLAND......................... 241 0.98 3,235,713.16 1.10
MASSACHUSETTS.................... 1 0.00 11,699.11 0.00
MICHIGAN......................... 1,468 5.98 17,422,816.67 5.90
MINNESOTA........................ 1 0.00 6,320.22 0.00
MISSOURI......................... 63 0.26 790,648.43 0.27
MONTANA.......................... 5 0.02 50,438.44 0.02
NEVADA........................... 647 2.63 7,276,791.19 2.46
NEW JERSEY....................... 1,300 5.29 15,371,848.73 5.21
NEW YORK......................... 4 0.02 50,007.95 0.02
NORTH CAROLINA................... 1,036 4.22 13,530,238.00 4.58
OHIO............................. 3 0.01 41,711.79 0.01
OKLAHOMA......................... 138 0.56 1,820,004.51 0.62
OREGON........................... 635 2.59 6,814,000.03 2.31
PENNSYLVANIA..................... 163 0.66 2,037,130.41 0.69
SOUTH CAROLINA................... 456 1.86 5,527,620.52 1.87
TENNESSEE........................ 420 1.71 5,307,329.44 1.80
TEXAS............................ 754 3.07 10,006,503.08 3.39
UTAH............................. 16 0.07 164,615.75 0.06
VIRGINIA......................... 525 2.14 6,774,120.38 2.29
WASHINGTON....................... 865 3.52 9,221,926.38 3.12
WISCONSIN........................ 1 0.00 17,976.44 0.01
------ ------ ---------------- ------
TOTALS................. 24,560 100.00* $ 295,224,883.99 100.00*
</TABLE>
- ----------------
* PERCENTAGES MAY NOT ADD TO 100% BECAUSE OF ROUNDING.
13
<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 MARCH 31, AT MARCH 31,
1998 1999
----------------- ------------------
AMOUNT NO AMOUNT NO
------ -- ------ --
<S> <C> <C> <C> <C>
Servicing portfolio ....... $884,692 86,327 $1,542,612 151,037
Delinquencies
30-59 days(1)(2) ........ $ 9,194 937 $ 19,282 2,049
60-89 days(1)(2) ........ $ 2,863 277 $ 6,747 711
90+ days(1)(2) .......... $ 3,572 320 $ 5,987 543
Total delinquencies as
a percent of servicing
portfolio ............ 1.77% 1.78% 2.08% 2.19%
</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
0.98% AND 0.78% AT MARCH 31, 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>
3 MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------- ------------------------
1996 1997 1998 1998 1999
-------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Number of motor vehicle contracts
outstanding ........................ 38,275 73,502 131,862 86,327 151,037
Period end outstanding ................ $400,665 $757,277 $1,345,961 $884,692 $1,542,612
Average outstanding ................... $311,340 $563,343 $1,023,237 $815,922 $1,435,409
Number of gross charge-offs ........... 987 2,161 3,761 818 1,307
Gross charge-offs ..................... $5,789.2 $13,076.1 $ 20,639.9 $4,457.6 $ 7,039.60
Net charge-offs(1) .................... $5,066.1 $11,433.9 $ 17,618.4 $3,761.8 $ 6,221.0
Net charge-offs as a percent of average
outstanding ......................... 1.63% 2.03% 1.72% 1.84% 1.73%
</TABLE>
- ----------
(1) Net charge-offs are gross charge-offs minus recoveries on motor vehicle
contracts previously charged off.
14
