<PAGE> 1
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: February 16, 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
<PAGE> 2
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-A (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 were prepared solely by Salomon Smith Barney Inc ("Salomon Smith Barney")
and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") in
connection with the offering of the Offered Securities, and the Registrant did
not prepare or participate in the preparation of 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 hypothetical 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
99.1 ABS Term Sheet provided by Salomon Smith
Barney and Merrill Lynch
-3-
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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
February 16, 1999 By: /s/ DON P. DUFFY
------------------------------------
Don P. Duffy
Executive Vice President and Chief
Financial Officer
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EXHIBIT 99.1
ABS Term Sheet provided by Salomon Smith Barney and Merrill Lynch
[Begins on Next Page]
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Onyx Acceptance Owner Trust 1999-A
RETAIL AUTO ABS
$310,000,000 ASSET-BACKED SECURITIES
ONYX ACCEPTANCE FINANCIAL CORPORATION
SELLER
ONYX ACCEPTANCE CORPORATION
SERVICER
$215,000,000 Class A-1 [ ]% Asset-Backed Notes
$76,400,000 Class A-2 [ ]% Asset-Backed Notes
$18,600,000 [ ]% 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.
<PAGE> 3
Onyx Acceptance Owner Trust 1999-A
RETAIL AUTO ABS
$310,000,000 ASSET-BACKED SECURITIES
ONYX ACCEPTANCE FINANCIAL CORPORATION
SELLER
ONYX ACCEPTANCE CORPORATION
SERVICER
$215,000,000 Class A-1 [ ]% Asset-Backed Notes
$76,400,000 Class A-2 [ ]% Asset-Backed Notes
$18,600,000 [ ]% 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-A
Subject to Revision
TERM SHEET DATED FEBRUARY 16, 1999
ISSUER ............................ Onyx Acceptance Owner Trust 1999-A, 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 February 25, 1999.
THE NOTES.......................... The Trust will issue Auto Loan Backed
Notes (the "NOTES") pursuant to an
indenture to be dated as of February 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 $215,000,000 and the
Class A-2 Auto Loan Backed Notes in the
aggregate principal amount of
$76,400,000. 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 $18,600,000. 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:
- 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 and
each of which is secured by a new
or used automobile, light-duty
truck or van;
- certain documents relating to the
Contracts;
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- certain monies received with
respect to the Contracts on or
after the Cut-Off Date for such
Contracts;
- 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;
- all amounts on deposit in certain
specified accounts (excluding any
investment income credited to the
Collection Account, which will be
paid to the Servicer);
- the right of the Seller to cause
Onyx to repurchase certain
Contracts under specified
circumstances; and
- 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
$235,897,269 as of February 1, 1999.
Such Contracts are referred to herein as
the "INITIAL CONTRACTS" and February 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
February ___, 1999. Such Contracts are
referred to herein as the "SUBSEQUENT
CONTRACTS" and February ___, 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
$310,000,000, 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 February
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:
<TABLE>
<S> <C>
Weighted average annual percentage rate: 14.404%
Weighted average remaining term: 55.13 months
Contracts that allocate interest and principal
by the rule of 78's or actuarial method: 17.59% (by Initial Cut-Off Pool Balance)
Contracts that allocate interest and principal
by the simple interest method: 82.41% (by Initial Cut-Off Pool Balance)
Contracts secured by new vehicles: 17.62% (by Initial Cut-Off Pool Balance)
Contracts secured by used vehicles: 82.38% (by Initial Cut-Off Pool Balance)
Contracts originated in California:* 35.54% (by Initial Cut-Off Pool Balance)
Contracts originated in Florida:* 9.44% (by Initial Cut-Off Pool Balance)
</TABLE>
* As of the Initial Cut-Off Date, the
aggregate principal balances of
Initial Contracts originated in any
other single state did not exceed
7.85%.
No Initial Contract has, and no
Subsequent Contract will have, a
scheduled maturity date later than March
31, 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 March 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.
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 March 15,
1999. Interest on the Notes will be
calculated on the basis of a 360-day
year of twelve 30-day months.
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.
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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:
<TABLE>
<CAPTION>
CLASS FINAL SCHEDULED DISTRIBUTION DATE
----- ---------------------------------
<S> <C>
A-1 October 2002
A-2 March 2004
</TABLE>
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 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
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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-2 Notes is reduced
to zero, 100%, (ii) on the Distribution
Date on which the principal amount of
the Class A-2 Notes is reduced to zero,
(a) 100% until the principal amount of
the Class A-2 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-2 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
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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.
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 March 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
$18,600,000 (the "ORIGINAL CERTIFICATE
BALANCE") on the Closing Date and on any
date thereafter
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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-2 Notes is reduced
to zero, 0%, (ii) on the Distribution
Date on which the principal amount of
the Class A-2 Notes is reduced to zero,
(a) 0% until the principal amount of the
Class A-2 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-2 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 July
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"),
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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-A, 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 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
9
<PAGE> 12
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.
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.
10
<PAGE> 13
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
$235,897,269. 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..............................$235,897,269
Number of Contracts............................................20,619
Average principal balance outstanding......................$11,440.77
Average original amount financed...........................$12,424.28
Original amount financed (range)...............$739.75 to $110,000.00
Weighted average APR..........................................14.404%
APR (range)...............................................2.9% to 28%
Weighted average original term.............................57.27 mos.
Original term (range)....................................6 to 72 mos.
Weighted average remaining term............................55.13 mos.
Remaining term (range)...................................5 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% .......... 11 0.05 $ 155,501.06 0.07
7.001% to 8.000% .......... 626 3.04 9,846,374.76 4.17
8.001% to 9.000% .......... 909 4.41 13,159,268.74 5.58
9.001% to 10.000% ......... 1,214 5.89 15,853,507.78 6.72
10.001% to 11.000% ......... 1,217 5.90 14,567,090.31 6.18
11.001% to 12.000% ......... 1,345 6.52 15,975,783.20 6.77
12.001% to 13.000% ......... 1,522 7.38 18,057,470.91 7.65
13.001% to 14.000% ......... 1,851 8.98 22,457,049.77 9.52
14.001% to 15.000% ......... 2,149 10.42 25,724,034.38 10.90
15.001% to 16.000% ......... 2,134 10.35 24,686,078.97 10.46
16.001% to 17.000% ......... 1,991 9.66 22,708,042.30 9.63
17.001% to 18.000% ......... 1,764 8.56 18,142,033.46 7.69
18.001% to 19.000% ......... 1,012 4.91 10,029,270.66 4.25
19.001% to 20.000% ......... 885 4.29 7,923,794.70 3.36
20.001% to 21.000% ......... 1,317 6.39 12,319,133.06 5.22
21.001% to 28.000% ......... 672 3.26 4,292,834.68 1.82
---------- ---------- --------------- ----------
TOTALS ........... 20,619 100.00* $235,897,268.74 100.00*
</TABLE>
- ----------
* Percentages may not add to 100% because of rounding.
11
<PAGE> 14
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 ........ 751 3.64 8,925,953.80 3.78
CALIFORNIA ..... 7,984 38.72 83,832,536.02 35.54
COLORADO ....... 677 3.28 8,093,995.84 3.43
CONNECTICUT .... 3 0.02 48,007.56 0.02
FLORIDA ........ 1,901 9.22 22,259,924.98 9.44
GEORGIA ........ 1,444 7.00 18,507,462.09 7.85
IDAHO .......... 144 0.70 1,358,087.70 0.58
ILLINOIS ....... 1,401 6.80 17,038,760.27 7.22
INDIANA ........ 383 1.86 4,645,558.89 1.97
IOWA ........... 19 0.09 289,817.61 0.12
KANSAS ......... 1 0.00 8,269.30 0.00
KENTUCKY ....... 17 0.08 216,677.21 0.09
MARYLAND ....... 1 0.00 7,821.65 0.00
MASSACHUSETTS .. 1 0.00 14,900.98 0.01
MICHIGAN ....... 1,042 5.05 12,836,853.07 5.44
MISSOURI ....... 20 0.10 225,529.30 0.10
MONTANA ........ 2 0.01 28,259.85 0.01
NEVADA ......... 585 2.84 6,566,852.48 2.78
NEW JERSEY ..... 811 3.93 9,770,344.25 4.14
NEW MEXICO ..... 1 0.00 11,040.15 0.00
NEW YORK ....... 3 0.02 29,615.20 0.01
NORTH CAROLINA . 699 3.39 9,490,652.78 4.02
OHIO ........... 1 0.00 17,247.40 0.01
OKLAHOMA ....... 80 0.39 1,006,422.29 0.43
OREGON ......... 623 3.02 6,485,885.41 2.75
SOUTH CAROLINA . 300 1.46 3,656,282.97 1.55
TENNESSEE ...... 248 1.20 3,205,277.35 1.36
TEXAS .......... 616 2.99 8,241,950.04 3.49
UTAH ........... 16 0.08 191,245.12 0.08
VIRGINIA ....... 63 0.30 833,225.85 0.35
WASHINGTON ..... 781 3.79 8,043,094.77 3.41
WISCONSIN ...... 1 0.00 9,716.56 0.00
---------- ---------- --------------- ----------
TOTALS 20,619 100.00* $235,897,268.74 100.00*
</TABLE>
- ----------
* Percentages may not add to 100% because of rounding.
12
<PAGE> 15
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, 1995. 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, AT DECEMBER 31,
1995 1996 1997 1998
------------------------ ------------------------ ------------------------ -----------------------
AMOUNT NO AMOUNT NO AMOUNT NO AMOUNT NO
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Servicing portfolio . $ 218,207 20,156 $ 400,665 38,275 $ 757,277 73,502 $1,345,961 131,862
Delinquencies
30-59 days(1)(2) .. $ 1,608 153 $ 5,022 478 $ 11,902 1,211 $ 26,410 2,766
60-89 days(1)(2) .. 470 35 1,816 162 3,370 346 6,876 691
90+ days(1)(2) .... 547 42 1,279 111 3,742 316 4,790 455
Total delinquencies
as a percent of
servicing portfolio 1.20% 1.14% 2.03% 1.96% 2.51% 2.55% 2.83% 2.97%
</TABLE>
- ----------
(1) Delinquencies include principal amounts only, net of repossessed
inventory. Repossessed inventory as a percent of the servicing portfolio
was 0.43%, 0.48%, 1.17% and 0.62% at December 31, 1995, 1996, 1997 and
1998, 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,
-------------------------------------------------------------
1995 1996 1997 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Number of motor vehicle contracts outstanding ...... 20,156 38,275 73,502 131,862
Period end outstanding ............................. $ 218,207 $ 400,665 $ 757,277 $1,345,961
Average outstanding ................................ $ 141,029 $ 311,340 $ 563,343 $1,023,237
Number of gross charge-offs ........................ 197 987 2,161 3,761
Gross charge-offs .................................. $ 548.2 $ 5,789.2 $ 13,076.1 $ 20,639.9
Net charge-offs(1) ................................. $ 528.7 $ 5,066.1 $ 11,433.9 $ 17,618.4
Net charge-offs as a percent of average
outstanding ...................................... 0.37% 1.63% 2.03% 1.72%
</TABLE>
- ----------
(1) Net charge-offs are gross charge-offs minus recoveries on motor vehicle
contracts previously charged off.
13
