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                                                                  EXHIBIT 10.120

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                               SECURITY AGREEMENT

                                     between

                     ONYX ACCEPTANCE RECEIVABLES CORPORATION

                                       and

                            THE CHASE MANHATTAN BANK,

                                as Funding Agent


                           Dated as of August 9, 1999



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                               SECURITY AGREEMENT

                SECURITY AGREEMENT, dated as of August 9, 1999 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), is between ONYX ACCEPTANCE RECEIVABLES CORPORATION, a Delaware
corporation ("Recco"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as funding agent for the benefit of the Secured Parties (in such
capacity, the "Funding Agent").

                              W I T N E S S E T H :

                WHEREAS, the Lenders will from time to time make Loans to Recco
for the purpose of purchasing Contracts; and

                WHEREAS, it is a condition precedent to the Funding Agreement
that Recco execute and deliver this Security Agreement to the Funding Agent for
the benefit of the Secured Parties;

                NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Recco hereby agrees with the
Funding Agent as follows:

                SECTION 1. Defined Terms.

        (1)     As used in this Agreement or any certificate or other document
                made or delivered pursuant hereto, the capitalized terms used
                herein and therein shall, unless otherwise defined herein, have
                the meanings assigned to them in the Definitions List dated as
                of the date hereof that refers to this Agreement, which is
                incorporated herein by reference (the "Definitions List").

        (2)     As used herein and in any certificate or other document made or
                delivered pursuant hereto, accounting terms not defined in the
                Definitions List and accounting terms partly defined in the
                Definitions List to the extent not defined, shall have the
                respective meanings given to them under GAAP.



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        (3)     The words "hereof", "herein" and "hereunder" and words of
                similar import when used in this Agreement shall refer to this
                Agreement as a whole and not to any particular provision of this
                Agreement, and paragraph references are to this Agreement unless
                otherwise specified.

        (4)     Capitalized terms used herein shall be equally applicable to
                both the singular and plural forms of such terms.

        (5)     The following terms that are defined in the UCC are used herein
                as so defined: Chattel Paper, Documents, Equipment, General
                Intangibles, Instruments and Proceeds.

                SECTION 2. Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations, Recco hereby
assigns, pledges, grants, conveys, transfers, delivers and sets over to the
Funding Agent for its benefit and for the ratable benefit of the Secured Parties
a security interest in all Recco's right, title and interest in, to and under
the following, whether now owned or hereafter acquired, in each case (other than
clause (i)) only as related to the Purchased Contracts (collectively, the
"Collateral"). For further clarification, all Collateral as heretofore described
in this Section 2 (other than clause (i)) shall relate to and be in respect of
Purchased Contracts as defined herein, subject to any and all provisos, as
applicable, expressly included in the definition thereof.

        (1)     all chattel paper, including, without limitation, the Purchased
                Contracts and other contracts related to the Purchased Contracts
                (as the same may be amended, modified, supplemented, restated or
                replaced from time to time) and amounts paid or payable with
                respect thereto;

        (2)     all Files (including all Dealer Assignments) and Contract Lists,
                and all right, title and interest of Recco in and to the
                documents, agreements and instruments included in the Files,
                including, without limitation, rights of recourse of Recco
                against Vehicle Dealers;

        (3)     all Insurance Policies and all rights of Recco in all Insurance
                Policies;

        (4)     all security interests, Liens, guaranties, mortgages and other
                encumbrances in favor of or assigned or transferred to Recco in
                and to Purchased Contracts and Vehicles, and all accessions
                thereto and replacements thereof, and in any other property in
                which a security interest is assigned or transferred to Recco;



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        (5)     all of Recco's Equipment and Inventory, General Intangibles,
                Documents, Instruments, Accounts, general ledger sheets, files,
                records, books of account, invoices, bills, certificates or
                documents of ownership, bills of sale, business papers,
                correspondence, tapes, cards, computer tapes and all other data
                and data storage systems (whether in the possession of Recco or
                any other Person) relating to any of the foregoing;

        (6)     all deposit accounts, moneys, deposits, funds, accounts and
                instruments relating to the foregoing;

        (7)     the Collection Account (including, without limitation, all funds
                at any time on deposit therein and all Permitted Investments in
                which such funds may at any time be invested);

        (8)     the Sale Agreement and all other Operative Documents to which
                Recco is a party, including, without limitation, all rights of
                Recco to amounts due or to become due under or in connection
                with such agreements;

        (9)     any Hedge Agreement and any guarantees or other credit
                enhancement associated therewith; and

        (10)    to the extent not otherwise included, all Proceeds and products
                of any and all of the foregoing.

                SECTION 3. Bank Accounts; Possession of Contracts and Files.

        (1)     Subject to the Collection Account Agreement, the Funding Agent
                shall have sole dominion and control over the Bank Accounts, and
                no other Person shall have any right of withdrawal therefrom.

        (2)     The Controlling Party shall have the right to hold the Purchased
                Contracts. The Controlling Party may in its sole discretion,
                designate Recco or any other Person, as custodian and bailee of
                the Funding Agent for the benefit of the Secured Parties, to
                hold the Purchased Contracts. To the extent required to service
                the Purchased Contracts in accordance with the Sale Agreement,
                Recco may release the Purchased Contracts and Files to the
                Servicer, to be held by the Servicer as custodian and bailee of
                the Funding Agent during the Servicer's



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                possession thereof. The Servicer shall promptly return all such
                Purchased Contracts and Files to Recco or any such other Person
                as the Controlling Party shall direct when possession thereof by
                the Servicer is no longer required for servicing such Purchased
                Contracts in accordance with the Sale Agreement. In addition,
                the Servicer shall return the Purchased Contracts to Recco, the
                Funding Agent, the Surety Provider or any such other Person as
                the Funding Agent (at the direction of the Controlling Party)
                shall direct at any time upon receipt of a request from the
                Funding Agent to such effect.

                SECTION 4. Daily Procedures and Distributions of Collections
Prior to the Termination Date. On each Business Day prior to the Termination
Date:

        (1)     Deposits.

                (1)     the Servicer and Recco shall transfer or cause to be
                        transferred to the Clearing Account (A) all Collections
                        received on the previous Business Day in the Lock-Boxes
                        and (B) all Collections received by the Servicer or
                        Recco in any other manner on the previous Business Day;

                (2)     the Servicer shall transfer or cause to be transferred
                        to the Collection Account all Collections received in
                        the Clearing Account within one Business Day after such
                        Collections are received in the Clearing Account;

                (3)     if a payment of the principal of the Loans is required
                        on such Business Day pursuant to Section 2.4 of the
                        Funding Agreement, Recco shall deposit the amount
                        required into the Collection Account;

                (4)     the Servicer shall transfer from the Collection Account
                        to a sub-account of the Collection Account (the "Accrued
                        Costs and Interest Sub-Account") on such Business Day an
                        amount equal to the sum of the Accrued Facilities Costs
                        Amount and the Accrued Interest Amount for such day; and

                (5)     Recco shall deposit all amounts received in respect of
                        any Hedge Agreement into the Collection Account except,
                        so long as no Event of Default or Unmatured Event of
                        Default shall



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                        have occurred and be continuing, for amounts received
                        prior to the Hedge Effective Date.

Until the transfers set forth in Section 4(a)(i), (ii), (iii) and (v) are made,
Recco and the Servicer shall hold in trust for the benefit of the Funding Agent
for the benefit of the Secured Parties all such amounts and Collections and
shall not commingle such amounts and Collections with other funds of the
Servicer or Recco other than funds of the Servicer or Recco in the Lock-Boxes
and the Clearing Account.

        (2)     Distributions. The Servicer shall make distributions from
                amounts on deposit in the Collection Account for the following
                purposes in the following order of priority, in each case to the
                extent such amounts are due and payable on such Business Day and
                to the Person entitled thereto:

                (1)     an amount necessary to cure any Borrowing Base
                        Deficiency shall be applied to reduce the principal of
                        the Loan Note;

                (2)     if Onyx Acceptance Corporation or an Affiliate is not
                        the Servicer, an amount equal to the Servicing Fee (up
                        to an amount calculated on the basis of a Servicing Fee
                        Percentage equaling 1%);

                (3)     to the counterparty of each Hedge Agreement on or after
                        the Hedge Effective Date, the fixed rate payment payable
                        by Recco under each such Hedge Agreement;

                (4)     on each Determination Date, from the Accrued Costs and
                        Interest Sub-Account, an amount equal to interest on the
                        Loan Note in respect of interest accrued on the Loans
                        during the related Determination Period; provided that
                        the aggregate of the amounts paid pursuant to clauses
                        (iv) and (v) hereof on any Determination Date shall not
                        exceed the Capped Amount;

                (5)     on each Determination Date, from the Accrued Costs and
                        Interest Sub-Account, the Facilities Fees; provided that
                        the aggregate of the amounts paid pursuant to clauses
                        (iv) and (v) hereof on any Determination Date shall not
                        exceed the Capped Amount;



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                (6)     from the Accrued Costs and Interest Sub-Account, an
                        amount equal to the Facilities Costs;

                (7)     an amount equal to the principal of and unpaid interest
                        on the Loans prepaid or required to be prepaid on such
                        Business Day pursuant to Section 2.4(a) or (b) of the
                        Funding Agreement;

                (8)     either (A) an amount equal to the Servicing Fee (if Onyx
                        Acceptance Corporation or an Affiliate thereof is the
                        Servicer) or (B) an amount equal to the portion of the
                        Servicing Fee not paid pursuant to clause (ii) above (if
                        Onyx Acceptance Corporation or an Affiliate thereof is
                        not the Servicer);

                (9)     an amount equal to interest on all unreimbursed drawings
                        under the Policies;

                (10)    an amount equal to all unreimbursed drawings under the
                        Policies and all other amounts owing to the Surety
                        Provider under the Premium Side Letter Agreement and the
                        Insurance Agreement;

                (11)    on each Determination Date, in the following order of
                        priority, from the Accrued Costs and Interest
                        Sub-Account, (A) an amount equal to all interest accrued
                        on Loans during the related Determination Period in
                        excess of the Capped Amount not otherwise paid pursuant
                        to clause (iv) above and (B) an amount equal to all
                        Facilities Fees in excess of the Capped Amount not
                        otherwise paid pursuant to clause (v) above;

                (12)    an amount equal to the sum of the Recco Expenses and all
                        other Obligations;

                (13)    for the purchase of Contracts pursuant to the Sale
                        Agreement;

                (14)    an amount equal to interest and principal due on the
                        Subordinated Note; and

                (15)    an amount equal to all remaining amounts in the
                        Collection Account for other duly authorized corporate
                        purposes of Recco.



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provided, however, that, on any Business Day, no distribution shall be made
pursuant to (xiii) or (xiv) above if the conditions set forth in Section 3.2 of
the Sale Agreement have not been satisfied.

        (3)     Permitted Investments. Amounts on deposit in the Accrued Costs
                and Interest Sub-Account and the Disbursement Sub-Account may be
                invested in Permitted Investments, provided that such
                Investments shall be selected so that the maturity dates thereof
                correspond to the dates on which such amounts are required to be
                distributed in accordance with the provisions of Section 4(b).

                SECTION 5. Daily Procedures and Distributions of Collections on
each Liquidation Day. On each Liquidation Day:

        (1)     Deposits.

                (1)     the Servicer and Recco shall transfer or cause to be
                        transferred to the Clearing Account (A) all Collections
                        received on the previous Business Day in the Lock-Boxes
                        and (B) all Collections received by the Servicer or
                        Recco in any other manner on the previous Business Day;

                (2)     the Servicer shall transfer or cause to be transferred
                        to the Collection Account all Collections received in
                        the Clearing Account within one Business Day after such
                        Collections are received in the Clearing Account;

                (3)     Recco shall deposit all amounts received by Recco in
                        respect of any Hedge Agreement into the Collection
                        Account except, so long as no Event of Default or
                        Unmatured Event of Default shall have occurred and be
                        continuing, for amounts received prior to the Hedge
                        Effective Date. Until such transfers are made, Recco and
                        the Servicer shall hold in trust for the benefit of the
                        Funding Agent for the benefit of the Secured Parties all
                        such amounts and Collections and shall not commingle
                        such amounts and Collections with other funds of the
                        Servicer or Recco other than funds in the Lock-Boxes and
                        the Clearing Account.

        (2)     Distributions. The Servicer shall make distributions from
                amounts on deposit in the Collection Account for the following
                purposes in the



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                following order of priority, in each case to the extent such
                amounts are due and payable on such day and to the Person
                entitled thereto:

                        first, if Onyx Acceptance Corporation or an Affiliate is
                not the Servicer, an amount equal to the Servicing Fee (up to an
                amount calculated on the basis of a Servicing Fee Percentage
                equaling 1%);

                        second, to the counterparty of each Hedge Agreement, the
                fixed rate payment payable by Recco under each such Hedge
                Agreement;

                        third, on each Determination Date, an amount equal to
                interest on the Loan Note in respect of interest accrued on the
                Loans during the related Determination Period; provided that the
                aggregate of the amounts paid pursuant to clauses third and
                fourth hereof on any Determination Date shall not exceed the
                Capped Amount;

                        fourth, on each Determination Date, an amount equal to
                the Facilities Fees; provided that the aggregate of the amounts
                paid pursuant to clauses third and fourth hereof for any
                Determination Date shall not exceed the Capped Amount;

                        fifth, an amount equal to the Facilities Costs;

                        sixth, an amount equal to the principal of and unpaid
                interest on the Loans required to be prepaid pursuant to Section
                2.4(c) of the Funding Agreement;

                        seventh, an amount equal to interest on all unreimbursed
                drawings under the Policies;

                        eighth, an amount equal to all unreimbursed drawings
                under the Policies and all other amounts owing to the Surety
                Provider under the Premium Side Letter Agreement and the
                Insurance Agreement;

                        ninth, in the following order of priority, (A) an amount
                equal to all interest accrued on Loans during the related
                Determination Period in excess of the Capped Amount not
                otherwise paid pursuant to clause third above and (B) an amount
                equal to all Facilities Fees in excess of the Capped Amount not
                otherwise paid pursuant to clause fourth above;



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                        tenth, an amount equal to the sum of all Recco Expenses
                and all other Obligations;

                        eleventh, an amount equal to the principal of and
                interest due on the Subordinated Note;

                        twelfth, either (A) an amount equal to the Servicing Fee
                (if Onyx Acceptance Corporation or an Affiliate thereof is the
                Servicer) or (B) an amount equal to the portion of the Servicing
                Fee not otherwise paid pursuant to clause first above (if Onyx
                Acceptance Corporation or an Affiliate thereof is not the
                Servicer); and

                        thirteenth, all remaining amounts to Recco, or to such
                Persons and in such amounts as a court of competent jurisdiction
                may direct.

        (3)     Permitted Investments. Amounts on deposit in the Accrued Costs
                and Interest Sub-Account and the Disbursement Sub-Account may be
                invested in Permitted Investments, provided that such Permitted
                Investments shall be selected so that the maturity dates thereof
                correspond to the dates on which such amounts are required to be
                distributed in accordance with the provisions of Section 5(b).

        (4)     Clearing Account. The Clearing Account is a general clearing
                account held by and in the name of Onyx Acceptance Financial
                Corporation into which Collections as well as collections on
                other assets are deposited. The parties hereto agree and
                acknowledge that (i) any Collections transferred to the Clearing
                Account prior to the transfer of such Collections to the
                Collection Account will be subject at all times to the terms of
                the Intercreditor Agreement and (ii) the balance in the Clearing
                Account may not at any time fall below the amount deposited
                representing Collections which have not been transferred to the
                Collection Account.

        (5)     Optional Deposits by Surety Provider. The Surety Provider shall
                at any time, and from time to time, have the option (but shall
                not be required, except in accordance with the terms of the Note
                Policy) to deliver amounts to the Funding Agent for deposit into
                the Collection Account to provide funds in respect of the
                payment of fees or expenses of any provider of services to Recco
                or to any other Person or in respect of any amounts payable
                pursuant to Section 4(b) or 5(b)



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                hereof. Any payment under this Section 5(e) shall constitute an
                amount paid under the Note Policy.

                SECTION 6. Rights of Funding Agent; Limitations on Funding
Agent's Obligations.

        (1)     Funding Agent Not Liable under Contracts. The Funding Agent
                shall not have any obligation or liability under any Contract by
                reason of or arising out of this Agreement or the receipt by the
                Funding Agent of any payment relating to such Contract, nor
                shall the Funding Agent be obligated in any manner to perform
                any such obligations under or pursuant to any Contract, to make
                any payment, to make any inquiry as to the nature or the
                sufficiency of any payment received by it or as to the
                sufficiency of any performance by any party under any Contract,
                to present or file any claim, to take any action to enforce any
                performance or to collect the payment of any amounts which may
                have been assigned to it or to which it may be entitled at any
                time or times.

        (2)     Notice to Obligors. At any time upon the request of the Funding
                Agent (acting at the direction of the Controlling Party), Recco
                shall notify the Obligors that the Contracts have been assigned
                to the Funding Agent and that payments in respect thereof shall
                be made directly to the Funding Agent. The Funding Agent (acting
                at the direction of the Controlling Party) may in its own name
                or in the name of others communicate with the Obligors to verify
                with them to its satisfaction the existence, amount and terms of
                any Purchased Contracts.

        (3)     Analysis of Contracts. The Funding Agent and the Surety Provider
                shall have the right to make test verifications of the Purchased
                Contracts in any manner and through any medium that it considers
                advisable, and Recco shall furnish all such assistance and
                information as the Funding Agent and the Surety Provider may
                require in connection therewith. In addition, at any time and
                from time to time, upon the Funding Agent's or Surety Provider's
                request and at the expense of Recco, Recco shall cause
                independent public accountants or others satisfactory to the
                Funding Agent and the Surety Provider to furnish to the Funding
                Agent and the Surety Provider reports showing reconciliations,
                aging and test verifications of, and trial balances for, the
                Purchased Contracts.



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        (4)     Proceeds. Subject to the provisions of Section 4(a) and 5(a),
                any Proceeds, when collected by Recco, shall be forthwith
                deposited by Recco in the exact form received, duly endorsed by
                Recco to the Funding Agent if required, in the Collection
                Account, subject to withdrawal by the Funding Agent only, and,
                until so turned over, shall be held by Recco in trust for the
                Funding Agent. Such Proceeds shall continue to be collateral
                security for all of the Obligations and shall not constitute
                payment thereof until applied as hereinafter provided. The
                Funding Agent shall apply all or any part of the funds on
                deposit in the Collection Account in accordance with Sections 4
                and 5 hereof. Upon the request of the Funding Agent or the
                Surety Provider, Recco shall deliver or cause to be delivered to
                the Funding Agent all Files relating to the Purchased Contracts,
                including original and other documents evidencing, and relating
                to, the transactions which created the Purchased Contracts,
                including, without limitation, all original orders, invoices,
                receipts and similar documents.

        (5)     Document Delivery. In connection with the security interest
                granted herein, on or prior to each date on which a Loan is
                disbursed from the Disbursement Sub-Account, Recco shall have
                received from the Seller the original Purchased Contract and
                complete Files relating to each Purchased Contract for which
                such Loan was made on such date. Recco shall hold such Purchased
                Contracts and Files for the benefit of the Funding Agent, and,
                upon request of the Funding Agent or the Surety Provider, Recco
                shall deliver such Contracts and Files to the Funding Agent or
                to such Person as the Funding Agent or the Surety Provider may
                designate. In addition, Recco shall mark the following notation
                on the computer tape for such Purchased Contract and File: "The
                Purchased Contracts herein have been pledged to secure the debt
                of Recco to the Secured Parties, and their successors and
                assigns pursuant to that certain Security Agreement dated as of
                August 9, 1999 between Recco and The Chase Manhattan Bank, as
                Funding Agent for the benefit of the Secured Parties".

                SECTION 7. Representations and Warranties. Recco hereby
represents and warrants that:

        (1)     Title; No Other Liens. Except for the Lien granted to the
                Funding Agent pursuant to this Agreement and the other Liens
                permitted pursuant to any of the other Operative Documents,
                Recco owns each



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                item of the Collateral free and clear of any and all Liens or
                claims of others. No security agreement, financing statement or
                other public notice with respect to all or any part of the
                Collateral is on file or of record in any public office, except
                such as may have been filed in favor of the Funding Agent
                pursuant to this Agreement or as may be permitted pursuant to
                the Funding Agreement.

        (2)     Perfected First Priority Liens. The Liens granted pursuant to
                this Agreement constitute perfected first priority Liens on the
                Collateral in favor of the Funding Agent and are enforceable as
                such against all creditors of and purchasers from Recco and, in
                the case of any Collateral constituting fixtures, against any
                owner or purchaser of the real property where any of the
                Equipment is located and any present or future creditor
                obtaining a Lien on such real property.

        (3)     Chief Executive Office. Recco's chief executive office and chief
                place of business is located at 27051 Towne Centre Drive, Suite
                210 Foothill Ranch, California 92610.

        (4)     Locations. All Collateral is located at the addresses listed on
                Schedule 7(d) hereto.

                SECTION 8. Covenants. Recco covenants and agrees with the
Funding Agent for the benefit of the Secured Parties that until the Obligations
are paid in full:

        (1)     Further Documentation; Pledge of Instruments. At any time and
                from time to time, upon the written request of the Funding Agent
                or the Surety Provider, and at the sole expense of Recco, Recco
                will promptly and duly execute and deliver such further
                instruments and documents and take such further action as the
                Funding Agent may request for the purpose of obtaining or
                preserving the full benefits of this Agreement and of the rights
                and powers herein granted, including, without limitation, the
                filing of any financing or continuation statements under the UCC
                with respect to the Liens created hereby, including all steps
                necessary to maintain perfection of the security interest of
                Recco in each Vehicle. Recco also hereby authorizes the Funding
                Agent and the Surety Provider to file any such financing or
                continuation statement without the signature of Recco to the
                extent permitted by applicable law. If any amount payable under
                or in connection with any of the Collateral shall be or become
                evidenced by any



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                additional promissory note, other Instrument or Chattel Paper,
                such note, Instrument or Chattel Paper shall be immediately
                delivered to the Funding Agent or such other person as the
                Funding Agent may designate, duly endorsed in a manner
                satisfactory to the Funding Agent, to be held as Collateral
                pursuant to this Agreement.

        (2)     Indemnification. Recco will pay, and save the Funding Agent and
                the Surety Provider harmless from, any and all liabilities,
                costs and expenses (including, without limitation, legal fees
                and expenses) (i) with respect to, or resulting from, any delay
                in paying, any and all excise, sales or other taxes (excluding
                income and franchise taxes) which may be payable or determined
                to be payable with respect to any of the Collateral, (ii) with
                respect to, or resulting from, any delay in complying with any
                Requirement of Law applicable to any of the Collateral or (iii)
                in connection with any of the transactions contemplated by this
                Agreement. In any suit, proceeding or action brought by the
                Funding Agent or the Surety Provider in respect of any Purchased
                Contract for any sum owing thereunder, or to enforce any
                provisions of any Purchased Contract, Recco will save, indemnify
                and keep the Funding Agent and the Surety Provider harmless from
                and against all expense, loss or damage suffered by reason of
                any defense, setoff, counterclaim, recoupment or reduction or
                liability whatsoever of the account debtor or obligor
                thereunder, arising out of a breach by Recco of any obligation
                thereunder or arising out of any other agreement, indebtedness
                or liability at any time owing to or in favor of such account
                debtor or obligor or its successors from Recco. Notwithstanding
                the foregoing, the parties hereto hereby agree that under no
                circumstances shall Recco be liable for, or required to pay any
                amount pursuant to this paragraph (b), resulting from gross
                negligence or willful misconduct on the part of the Funding
                Agent or the Surety Provider.

        (3)     Maintenance of Records. Recco will keep and maintain, or cause
                to be maintained by the Servicer, at its own cost and expense
                satisfactory and complete records of the Collateral, including,
                without limitation, a record of all payments received and all
                credits granted with respect to the Purchased Contracts. Recco
                will mark its books and records pertaining to the Collateral to
                evidence this Agreement and the security interests granted
                hereby. At any time upon the request of the Funding Agent or
                Surety Provider, Recco shall, during normal business hours, turn
                over any books and records to the Funding Agent or



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                the Surety Provider or to its representatives that the Funding
                Agent or the Surety Provider shall so request.

        (4)     Right of Inspection. The Funding Agent and the Surety Provider
                shall at all times have full and free access during normal
                business hours to all the books, correspondence and records of
                Recco and to all Purchased Contracts and Files held by Recco,
                and the Funding Agent and the Surety Provider or their
                respective representatives may examine the same, take extracts
                therefrom and make photocopies thereof, and Recco agrees to
                render to the Funding Agent and the Surety Provider, at Recco's
                cost and expense, such clerical and other assistance as may be
                reasonably requested with regard thereto.

        (5)     Compliance with Laws, etc. Recco will comply with all
                Requirements of Law applicable to the Collateral or any part
                thereof or to the operation of Recco's business; provided,
                however, that Recco may contest any Requirement of Law in any
                reasonable manner which shall not, in the reasonable opinion of
                the Funding Agent or the Surety Provider, adversely affect the
                rights of the Funding Agent or the Secured Parties or the
                priority of the Lien of the Funding Agent on the Collateral.

        (6)     Compliance with Terms of Contracts, etc. Recco will perform and
                comply with all its obligations under the Purchased Contracts
                and all its other Contractual Obligations relating to the
                Collateral.

        (7)     Payment of Obligations. Recco will pay promptly when due all
                taxes, assessments and governmental charges or levies imposed
                upon the Collateral or in respect of its income or profits
                therefrom, as well as all claims of any kind (including, without
                limitation, claims for labor, materials and supplies) against or
                with respect to the Collateral, except that no such charge need
                be paid if (i) the validity thereof is being contested in good
                faith by appropriate proceedings, (ii) such proceedings do not
                involve any danger of the sale, forfeiture or loss of any of the
                Collateral or any interest therein and (iii) such charge is
                adequately reserved against on Recco's books in accordance with
                GAAP.

        (8)     Limitation on Liens on Collateral. Recco will not create, incur
                or permit to exist, will defend the Collateral against, and will
                take such other action as is necessary to remove, any Lien or
                claim on or to the



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                Collateral, other than the Liens created hereby and other than
                as permitted pursuant to the Funding Agreement, and will defend
                the right, title and interest of the Funding Agent in and to any
                of the Collateral against the claims and demands of all Persons
                whomsoever.

        (9)     Limitations on Dispositions of Collateral. Recco will not sell,
                transfer, lease or otherwise dispose of any of the Collateral,
                or attempt, offer or contract to do so, except as provided for
                in this Agreement.

        (10)    Limitations on Modifications, Waivers, Extensions of Contracts.
                Recco will not, and will not permit any other Person to, (i)
                amend, modify, terminate or waive any provision of any Purchased
                Contract in any manner which could have an adverse effect on the
                value of such Purchased Contract as Collateral except in
                accordance with clause (k) of this Section 8, (ii) fail to
                exercise promptly and diligently each and every right which it
                may have under each Purchased Contract, (iii) fail to deliver to
                the Funding Agent and the Surety Provider, upon the request of
                the Funding Agent and the Surety Provider, a copy of each
                demand, notice or document received by it relating in any way to
                any Purchased Contract, (iv) fail to deliver to the Funding
                Agent and the Surety Provider a copy of each demand, notice or
                document sent to each Obligor at the request of the Funding
                Agent or the Surety Provider; and (v) act otherwise than in
                accordance with the Credit and Collection Policy.

        (11)    Limitations on Discounts, Compromises, Extensions of Contracts.
                Other than pursuant to the Credit and Collection Policy, Recco
                will not, and will not permit any other Person to, grant any
                extension of the time of payment of any of the Purchased
                Contracts, compromise, compound or settle the same for less than
                the full amount thereof, release, wholly or partially, any
                Person liable for the payment thereof, or allow any credit or
                discount whatsoever thereon.

        (12)    Maintenance of Equipment. Recco will maintain each item of
                Equipment in good operating condition, ordinary wear and tear
                and immaterial impairments of value and damage by the elements
                excepted, and will provide all maintenance, service and repairs
                necessary for such purpose.

        (13)    Further Identification of Collateral. Recco will furnish to the
                Funding Agent from time to time statements and schedules further
                identifying



                                       16
<PAGE>   17

                and describing the Collateral and such other reports in
                connection with the Collateral as the Funding Agent may
                reasonably request, all in reasonable detail.

        (14)    Notices. Recco will advise the Funding Agent and the Surety
                Provider promptly, in detail, at its address set forth in the
                Funding Agreement, (i) of any Lien (other than Liens created or
                permitted hereby) on, or claim asserted against, any of the
                Collateral and (ii) of the occurrence of any other event which
                could have in the reasonable exercise of the judgment of the
                Funding Agent or the Surety Provider a material adverse effect
                on the Collateral or on the Liens created hereunder. Recco will
                promptly notify S&P and Moody's of any amendment to any Interest
                Rate Hedge Mechanism.

A copy of any notice delivered to or required to be sent by Recco hereunder
shall be sent by Recco to the holder of the Subordinated Note.

        (15)    Changes in Locations, Name, etc. Recco will not, without
                providing 30 days prior written notice to the Funding Agent and
                the Surety Provider (and, in the case of clause (iv), without
                the prior written consent of the Funding Agent and the Surety
                Provider), and without filing any UCC financing statements
                necessary or desirable (in the opinion of the Funding Agent and
                the Surety Provider) to maintain the perfection and priority of
                the Funding Agent's security interest in the Collateral as
                provided for herein, (i) change the location of its chief
                executive office/chief place of business from that specified in
                Section 7(c) or remove its books and records from such location,
                (ii) permit any Equipment that it may acquire to be kept at a
                location other than that specified in Section 7(d), (iii) change
                its name, identity or corporate structure to such an extent that
                any financing statement filed by the Funding Agent in connection
                with this Agreement would become misleading or (iv) change the
                location where the Purchased Contracts and the Files are
                maintained.

                SECTION 9. Funding Agent's Appointment as Attorney-in-Fact.

        (1)     Powers. Recco hereby irrevocably constitutes and appoints the
                Funding Agent and any officer or agent thereof, with full power
                of substitution, as its true and lawful attorney-in-fact with
                full irrevocable power and authority in the place and stead of
                Recco and in the name of Recco or in its own name, from time to
                time in the Funding



                                       17
<PAGE>   18

                Agent's discretion, for the purpose of carrying out the terms of
                this Agreement, to take any and all lawful and appropriate
                action and to execute any and all documents and instruments
                which may be necessary or desirable to accomplish the purposes
                of this Agreement, and, without limiting the generality of the
                foregoing, Recco hereby gives the Funding Agent the power and
                right, on behalf of Recco, without notice to or assent by Recco,
                to do the following:

                (1)     at the direction of the Controlling Party, upon the
                        occurrence and during the continuance of any Unmatured
                        Event of Default or Event of Default, in the name of
                        Recco or its own name, or otherwise, to take possession
                        of and endorse and collect any checks, drafts, notes,
                        acceptances or other instruments for the payment of
                        moneys due under any Instrument, General Intangible or
                        Contract and to file any claim or to take any other
                        action or proceeding in any court of law or equity or
                        otherwise deemed appropriate by the Funding Agent for
                        the purpose of collecting any and all such moneys due
                        under any Instrument, General Intangible or Contract
                        whenever payable;

                (2)     to pay or discharge taxes and Liens levied or placed on
                        or threatened against the Collateral; and

                (3)     at the direction of the Controlling Party, upon the
                        occurrence and during the continuance of any Unmatured
                        Event of Default or Event of Default, (A) to direct any
                        party liable for any payment under any of the Collateral
                        to make payment of any and all moneys due or to become
                        due thereunder directly to the Funding Agent or as the
                        Controlling Party shall direct; (B) to ask or demand
                        for, collect, receive payment of and receipt for, any
                        and all moneys, claims and other amounts due or to
                        become due at any time in respect of or arising out of
                        any Collateral; (C) to sign and endorse any invoices,
                        freight or express bills, bills of lading, storage or
                        warehouse receipts, drafts against debtors, assignments,
                        verifications, notices and other documents in connection
                        with any of the Collateral; (D) to commence and
                        prosecute any suits, actions or proceedings at law or in
                        equity in any court of competent jurisdiction to collect
                        the Collateral or any proceeds thereof and to enforce
                        any other right in respect of any Collateral; (E) to
                        defend any suit, action or proceeding brought against
                        Recco with respect



                                       18
<PAGE>   19

                        to any Collateral; (F) to settle, compromise or adjust
                        any suit, action or proceeding described in clause (E)
                        above and, in connection therewith, to give such
                        discharges or releases as the Funding Agent may deem
                        appropriate; (G) generally, to sell, transfer, pledge
                        and make any agreement with respect to or otherwise deal
                        with any of the Collateral pursuant to Section 11 hereof
                        as fully and completely as though the Funding Agent were
                        the absolute owner thereof for all purposes, and to do,
                        at the Funding Agent's option and Recco's expense, at
                        any time, or from time to time, all lawful acts and
                        things which the Funding Agent deems necessary to
                        protect, preserve or realize upon the Collateral and the
                        Funding Agent's Liens thereon and to effect the intent
                        of this Agreement, all as fully and effectively as Recco
                        might do; and (H) implement the Alternate Servicing
                        Plan.

Recco hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof.

        (2)     Other Powers. Recco also authorizes the Funding Agent, at any
                time and from time to time, to execute, in connection with the
                sale provided for in Section 11 hereof, any endorsements,
                assignments or other instruments of conveyance or transfer with
                respect to the Collateral.

        (3)     No Duty on Funding Agent's Part. The powers conferred on the
                Funding Agent hereunder are solely to protect the Funding
                Agent's interests in the Collateral and shall not impose any
                duty upon it to exercise any such powers. The Funding Agent
                shall be accountable only for amounts that it actually receives
                as a result of the exercise of such powers, and neither it nor
                any of its officers, directors, employees or agents shall be
                responsible to Recco for any act or failure to act hereunder,
                except for its own gross negligence or willful misconduct.

                SECTION 10. Performance by Funding Agent of Recco's Obligations.
If Recco fails to perform or comply with any of its agreements contained herein
and the Funding Agent, as provided for by the terms of this Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of the Funding Agent incurred in connection with
such performance or compliance, together with interest thereon until



                                       19
<PAGE>   20

paid in full at a rate per annum equal to the Default Rate, shall be payable by
Recco to the Funding Agent on demand and shall constitute Obligations secured
hereby.

                SECTION 11. Remedies. If an Event of Default shall occur and be
continuing, the Funding Agent may with the consent of, and shall at the
direction of, the Controlling Party, exercise in addition to all other rights
and remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, the Funding Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except the notice
specified below of time and place of public or private sale) to or upon Recco or
any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give an option or options to purchase,
or otherwise dispose of and deliver said Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the Funding
Agent or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Funding Agent shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in Recco, which
right or equity is hereby waived or released. Recco further agrees, at the
Funding Agent's request, to assemble the Collateral and the Files and make them
available to the Funding Agent at places which the Funding Agent shall select,
whether at Recco's premises or elsewhere. The Funding Agent shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all costs and expenses of every kind incurred therein
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Funding Agent hereunder,
including, without limitation, attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in such order as the Funding Agent may
elect, and only after such application and after the payment by the Funding
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the UCC, need the Funding Agent account for
the surplus, if any, to Recco. To the extent permitted by applicable law, Recco
waives all claims, damages, and demands against the Funding Agent arising out of
the repossession, retention or sale of the Collateral. If any notice of a
proposed sale or disposition of Collateral shall be required by law, such notice
shall be deemed reasonably and properly given if given (effective upon



                                       20
<PAGE>   21

dispatch) in any manner provided in the Funding Agreement at least 10 days
before such sale or disposition. Recco shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay the Obligations and the fees and disbursements of any attorneys employed
by the Funding Agent to collect such deficiency.

                Upon the occurrence of an Event of Default, and upon the written
instructions of the Controlling Party, Recco shall take such action or shall
cause such action to be taken pursuant to any and all Interest Rate Hedge
Mechanisms and/or enter into any Hedge Agreement at the sole expense of Recco
promptly upon the request of the Controlling Party.

                SECTION 12. Limitation on Funding Agent's Duties in Respect of
Collateral. The Funding Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the UCC or otherwise, shall be to deal with it in the same
manner as the Funding Agent deals with similar property for its own account.
Neither the Funding Agent nor any of its directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or any
part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
Recco or otherwise.

                SECTION 13. Powers Coupled with an Interest. All powers of
attorney, authorizations and agencies herein contained with respect to the
Collateral are irrevocable and are powers coupled with an interest.

                SECTION 14. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

                SECTION 15. Section and Paragraph Headings. The section and
paragraph headings used in this Agreement are for convenience of reference only
and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.

                SECTION 16. No Waiver; Cumulative Remedies. The Funding Agent
shall not by any act (except pursuant to the execution of a written instrument
pursuant to Section 17 hereof), delay, indulgence, omission or otherwise



                                       21
<PAGE>   22

be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Unmatured Event of Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Funding Agent, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Funding Agent of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Funding Agent
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.

                SECTION 17. Waivers and Amendments; Successors and Assigns. None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
Recco, the Funding Agent and the Surety Provider and with prior written notice
thereof to S&P and Moody's. This Agreement shall be binding upon the successors
and assigns of Recco and shall inure to the benefit of the Funding Agent and its
successors and assigns.

                SECTION 18. Integration. This Agreement represents the agreement
of Recco with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Funding Agent relative to
subject matter hereof not expressly set forth or referred to herein or in the
other Operative Documents.

                SECTION 19. Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.

                SECTION 20. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.

                SECTION 21. Termination and Release.

        (1)     This Agreement and the security interests created or granted
                hereby shall remain in full force and effect until the
                indefeasible payment in full in cash of all of the Obligations,
                at which time, following the receipt by the Funding Agent of
                written notice from the Lenders and the Surety Provider that
                such Obligations have been so paid, the



                                       22
<PAGE>   23

                security interest created or granted hereby shall terminate and
                the Funding Agent shall, at the sole expense of Recco, execute
                and deliver such documents and instruments (including without
                limitation UCC termination statements) necessary to evidence the
                termination of such security interest, as Recco may reasonably
                request.

        (2)     (i) Recco Request for Release. Recco intends from time to time
                to sell Purchased Contracts and other related Collateral to (x)
                entities which will then privately or publicly sell securities
                backed by such Purchased Contracts and Collateral, (y) in whole
                loan bulk sales to unaffiliated third parties or (z) in whole
                loan bulk sales to Onyx Acceptance Corporation, in each case,
                for a cash purchase price of not less than the aggregate
                Outstanding Balance of such Purchased Contracts plus accrued and
                unpaid interest thereon; provided that, at least once per annum,
                Recco shall conduct a sale such that, after giving effect to
                such sale, the Outstanding Balances of all Purchased Contracts
                owned by Recco is equal to or less than 25% of the Outstanding
                Balances of all Purchased Contracts immediately prior to such
                sale. Notwithstanding anything to the contrary in Sections 6.4,
                6.5, and 6.16 of the Funding Agreement, Recco shall be permitted
                to sell Purchased Contracts pursuant to the foregoing provisions
                only upon satisfaction of the following conditions precedent:

                        (1)     sales pursuant to clause (x) shall occur no more
                frequently than once each calendar quarter;

                        (2)     sales pursuant to clauses (x) and (y) shall not
                be to any entity which is a direct competitor of the Surety
                Provider, including, without limitation, Ambac Assurance
                Corporation, Financial Security Assurance Corporation, Financial
                Guaranty Insurance Corporation or any affiliate thereof;

                        (3)     each of the Seller and Recco shall be in
                compliance with all of its covenants in the Operative Documents
                and no adverse selection procedures shall have been used by
                Recco or the Servicer in selecting Purchased Contracts for such
                sales; and

                        (4)     The Funding Agent and the Surety Provider shall
                have received copies of all documents executed in connection
                with such sale.



                                       23
<PAGE>   24

                The proceeds of all sales by Recco pursuant to clauses (x), (y)
                and (z) above shall be applied to prepay the Loan Note and the
                Subordinated Note. Upon not less than 5 Business Days' prior
                written notice to the Funding Agent and the Surety Provider,
                Recco may request that specified Purchased Contracts and other
                related Collateral be released in connection with such sales and
                the prepayment of the Loan Note as provided in Section 2.4(b) of
                the Funding Agreement. In connection with such request, Recco
                shall execute and deliver to the Funding Agent and the Surety
                Provider a Lien Release Request Certificate in the form attached
                hereto as Exhibit A. In selecting the Purchased Contracts
                enumerated in its Lien Release Request Certificate delivered to
                the Funding Agent and the Surety Provider pursuant hereto, Recco
                shall employ selection procedures which are not adverse to the
                interests of the Funding Agent, the Lenders or the Surety
                Provider. Recco shall deliver to the Funding Agent and the
                Surety Provider (i) monthly servicer reports for all Contracts
                serviced but not owned by Onyx aggregated by portfolio and owner
                and (ii) copies of all material amendments, waivers or
                modifications to any documents executed in connection with the
                sale of Purchased Contracts by Recco.

                (ii) Funding Agent Release. Upon receipt of an amount in
                immediately available funds equal to the sum of the principal
                amount of such prepayment, all interest accrued and to accrue
                thereon and unpaid and all other costs and Obligations of Recco
                and the Seller associated with such prepayment and unpaid under
                any Operative Document (including, without limitation, amounts
                payable pursuant to Section 2.4(b) of the Funding Agreement), to
                be paid by Recco from the Collection Account pursuant to Section
                4(b) hereof, the Funding Agent shall, with the consent of the
                Surety Provider at the sole expense of Recco, execute and
                deliver a Funding Agent Lien Release Certificate in the form
                attached hereto as Exhibit B which shall evidence the release of
                its security interest in Purchased Contracts having an
                Outstanding Balance equal to the principal amount of the Loan
                Note being prepaid divided by the Net Advance Rate on such day.

                (iii) Documents and Filings. In connection with any such release
                pursuant to this Section 21, Recco and the Funding Agent shall,
                at the sole expense of Recco, execute and deliver any documents
                and instruments necessary to evidence the release of the Funding
                Agent's security interest in such Purchased Contracts and other
                Collateral,



                                       24
<PAGE>   25

                including without limitation, forms UCC-2 prepared for filing in
                all appropriate jurisdictions.

                SECTION 22. Funding Agent Direction; Replacement Policy. (a)
Except as otherwise specifically provided otherwise herein and in the other
Operative Documents, the Funding Agent shall obtain the consent of the
Controlling Party when taking action or refraining from taking action in
connection with any amendment, waiver, consent (or consent to departure from)
this Agreement or any of the other Operative Documents.

                (b) Recco further agrees that, after the occurrence of a
Replacement Event and upon the request of the Funding Agent (acting at the
direction of the Required APA Banks), Recco will obtain a Replacement Policy
acceptable to the Funding Agent and the Required APA Banks within thirty (30)
days of such request, and Recco shall pay or cause to be paid all amounts due
and payable to the current Surety Provider pursuant to the terms of the
Operative Documents. In furtherance of the foregoing, following the occurrence
of a Replacement Event, the Funding Agent hereby acknowledges and agrees that,
notwithstanding anything to the contrary contained herein or in any other
Operative Document, upon the direction of the Required APA Banks, the Funding
Agent shall release the Note Policy to the Surety Provider, provided that (i) a
Replacement Policy acceptable to (and issued by an entity acceptable to) the
Funding Agent, the Required APA Banks, Moody's and S&P has been previously or
simultaneously delivered to the Funding Agent and (ii) all amounts due and
payable to the current Surety Provider pursuant to the terms of this Agreement
and the other Operative Documents have been paid in full.



                                       25
<PAGE>   26

                IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.

                                        ONYX ACCEPTANCE RECEIVABLES
                                        CORPORATION

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

                                        THE CHASE MANHATTAN BANK, as Funding
                                        Agent for the benefit of
                                        the Secured Parties

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

Accepted and agreed as of the date first above written:

MBIA INSURANCE CORPORATION,
  as Surety Provider

By:
   -----------------------------------
   Name:
   Title:

ONYX ACCEPTANCE CORPORATION,
  as Servicer

By:
   -----------------------------------
   Name:
   Title:



<PAGE>   27

                                  SCHEDULE 7(d)

                             Locations of Collateral

The Collateral is located at:

        Onyx Acceptance Receivables Corporation
        27051 Towne Centre Drive, Suite 210
        Foothill Ranch, California  92610

        Schick Data Bank
        26862 Vista Terrace
        Lake Forest, California



<PAGE>   28

                                    EXHIBIT A

                        LIEN RELEASE REQUEST CERTIFICATE

         from Recco to the Funding Agent, the Surety Provider and Seller
                pursuant to Section 21 of the Security Agreement
               and Section 19 of Subordinated Security Agreement

[ date ]

The Chase Manhattan Bank,
   as Funding Agent
450 West 33rd Street, 14th Floor
New York, New York 10001
Attention: Structured Finance Services, PARCO Manager

Onyx Acceptance Corporation
27051 Towne Centre Drive
Foothill Ranch, California 92610
Attention: Don Duffy

MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management, Structured Finance

Re: Onyx Acceptance Receivables Corporation/Commercial Paper Program--
Request for Release of Lien

Ladies and Gentlemen:

                Onyx Acceptance Receivables Corporation ("Recco") refers to (i)
the Security Agreement dated as of August 9, 1999 (as amended, supplemented or
otherwise modified, the "Security Agreement"), and (ii) the Subordinated
Security Agreement dated as of August 9, 1999 (as amended, supplemented or
otherwise modified, the "Subordinated Security Agreement"). Terms not otherwise
defined herein are used herein as defined in the Definitions List dated August
9, 1999, which is incorporated herein by reference.

                 Recco submits this Lien Release Request Certificate pursuant to
Section 21 of the Security Agreement and Section 19 of the Subordinated Security



<PAGE>   29

Agreement and requests that The Chase Manhattan Bank, in its capacity as Funding
Agent for the benefit of the Secured Parties under the Security Agreement, and
Onyx Acceptance Corporation, in its capacity as Seller under the Subordinated
Security Agreement ("Onyx"), each release (and Onyx cause its assignee to
release) all of their liens on and security interests in the assets described on
Schedule 1 attached hereto (and all proceeds thereof, all books, records and
computer records pertaining thereto and all other assets that constitute
Collateral which are specifically related to the assets described in Schedule
1).

                                        ONYX ACCEPTANCE RECEIVABLES
                                        CORPORATION

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:



<PAGE>   30

                                    EXHIBIT B

                     FUNDING AGENT LIEN RELEASE CERTIFICATE
                pursuant to Section 21 of the Security Agreement

[Date]

Onyx Acceptance Receivables Corporation
27051 Towne Centre Drive
Foothill Ranch, California  92610

Re: Partial Collateral Release

Ladies and Gentlemen:

                We hereby refer to the Lien Release Request Certificate
submitted by Onyx Acceptance Receivables Corporation ("Recco") dated
_______________, a copy of which is attached hereto (the "Request Certificate").
Pursuant to the Request Certificate, The Chase Manhattan Bank, acting in its
capacity as the Funding Agent under the Security Agreement, hereby releases its
liens on and security interests in the assets identified in Schedule 1 attached
to the Request Certificate (and all proceeds thereof, all books, records and
computer records pertaining thereto and all other assets that constitute
Collateral which are specifically related to the assets described in that
Schedule 1).

                This Lien Release Certificate may be executed in any number of
counterparts.

                                        THE CHASE MANHATTAN BANK, as
                                        Funding Agent for the benefit of
                                        the Secured Parties

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:



<PAGE>   31

Consented to and agreed
as of the date first above written:

MBIA INSURANCE CORPORATION

By:
   ----------------------------------
   Name:
   Title: