SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities and Exchange Act of 1934
December 18, 1996
Date of Report (Date of earliest event reported)
First Merchants Acceptance Corporation
(Exact name of registrant a specified in its charter)
Delaware 0-24686 36-3759045
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
570 Lake Cook Road, Suite 126, Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
847-948-9300
(Registrant's telephone number)
Item 2. Acquisition or Disposition of Assets
On December 18, 1996, First Merchants Acceptance Corporation (the
"Registrant")effected a securitization of approximately $144.7 million of its
motor vehicle installment contract receivables (the "Receivables") pursuant
to an S-3 Registration Statement. In connection with the securitization,
First Merchants Auto Receivables Corporation II, a bankruptcy-remote special
purpose wholly owned subsidiary of the Registrant (the "Seller"), acquired the
Initial Receivables from Registrant with approximately $108.5 million of the
proceeds received from its sale of notes and certificates issued by First
Merchants Auto Trust 1996-C (the "Trust") pursuant to a Sale and Servicing
Agreement dated as of December 1, 1996 among the Registrant, Seller, the Trust
and Harris Trust and Savings Bank, as Backup Servicer. The remaining
approximately $36.2 million of Subsequent Receivables will be acquired by Seller
from Registrant with funds held by the Indenture Trustee in a Pre-Funding
Account on or before the March 1997 Determination Date. The Trust
was formed pursuant to an Amended and Restated Trust Agreement
dated as of December 1, 1996. The Trust acquired the Initial
Receivables and will acquire the Subsequent Receivables together
with certain related property from Seller and issued to the Seller
$101,000,000 aggregate principal amount of Floating Rate Asset Backed
Notes, Class A-1 (the "Class A-1 Notes"); $37,886,000 aggregate principal amount
of 6.15% Asset Backed Notes, Class A-2 (the "Class A-2 Notes"),(The Class A-1
and Class A-2 Notes together the "Notes"); and $5,787,000 aggregate principal
amount of 6.35% Asset Backed Certificates (the "Certificates"), (The Notes and
Certificate together the "Securities") all pursuant to an Indenture dated as of
December 1, 1996 (the "Indenture") between the Trust and Harris Trust and
Savings Bank, as Indenture Trustee. The assets of the Trust include the
Receivables and the related security interests in the underlying motor vehicles.
The obligations of the Trust to pay principal and interest under the Notes and
Certificate are non-recourse to the Registrant. However, regular payments of
principal and interest on the Notes and Certificates have been guaranteed by
Financial Security Assurance Inc.
Principal and interest on the Securities generally will be paid on the
fifteenth day of each month (or if such fifteenth day is not a business
day, the next succeeding business day), commencing January 15, 1997;
however, no principal payments will be made to holders of the Class A-2
Notes or the Certificates until the Class A-1 Notes have been paid in full,
and no principal payments will be made to holders of the Certificates
until the Class A-2 Notes have been paid in full. The Class A-1 Notes Final
Scheduled Distribution Date will be June 15, 2000, the Class A-2 Notes Final
Scheduled Distribution Date will be July 16, 2001 and the Certificates
Final Scheduled Distribution Date will be January 15, 2003.
The Class A-1 Notes bear interest at a per annum rate equal to LIBOR for the
applicable period plus 0.11% subject to a maximum per annum rate of 11%.
The Class A-2 Notes and Certificates will be subject to redemption in whole,
but not in part, on any Distribution Date on which the Registrant exercises
its option to purchase the Receivables, which it may do when the outstanding
principal balance of the Receivables has been reduced to 10% or less of their
initial aggregate balance at the time of transfer to the Trust. The Securities
are subject to partial mandatory redemption or prepayment to the extent of
funds remaining in the Pre-Funding Account at the end of the Funding Period.
The Registrant used the net proceeds from the sale of the Receivables to the
Seller for general corporate purposes, including, but not limited to, the
purchase of additional motor vehicle retail installment contracts from dealers,
repayment of indebtedness and general working capital purposes.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 1: Copy of Press Release issued by First Merchants Acceptance
Corporation on December 18, 1996.
Exhibit 2: Amended and Restated Trust Agreement, dated as of December 1,
1996, between First Merchants Automobile Receivable
Corporation II, as Depositor and Chase Manhattan Bank
Delaware as Owner Trustee.
Exhibit 3: Sales and Servicing Agreement dated as of December 1, 1996 among
First Merchants Auto Trust 1996-C, as Issuer, First Merchants
Auto Receivable Corporation II, as Seller, and First Merchants
Acceptance Corporation, as Servicer, and Harris Trust and
Savings Bank, as Indenture Trustee, Collateral Agent and Backup
Servicer.
Exhibit 4: Receivables Purchase Agreement, dated as of December 1,
1996 between First Merchants Acceptance Corporation and First
Merchants Auto Receivables Corporation II.
Exhibit 5: Indenture dated as of December 1, 1996 between First Merchants
Acceptance Auto Trust 1996-C and Harris Trust and Savings Bank,
as Indenture Trustee.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST MERCHANTS ACCEPTANCE
CORPORATION
Mitchell C. Kahn
President and Chief Executive Officer
Dated: December 18, 1996
<PAGE>
EXHIBIT INDEX
Sequentially-
Exhibit
No. Description
1. Copy of Press Release issued by First Merchants Acceptance Corporation
on December 18, 1996.
2. Amended and Restated Trust Agreement, dated as of December 1, 1996,
between First Merchants Automobile Receivable Corporation II, as Depositor
and Chase Manhattan Bank Delaware as Owner Trustee.
3. Sales and Servicing Agreement dated as of December 1, 1996 among First
Merchants Auto Trust 1996-C, as Issuer, First Merchants Auto Receivable
Corporation II, as Seller, and First Merchants Acceptance Corporation, as
Servicer, and Harris Trust and Savings Bank, as Indenture Trustee,
Collateral Agent and Backup Servicer.
4. Receivables Purchase Agreement, dated as of December 1, 1996 between First
Merchants Acceptance Corporation and First Merchants Auto Receivables
Corporation II......
5. Indenture dated as of December 1, 1996 between First Merchants
Acceptance Auto Trust 1996-C and Harris Trust and Savings Bank, as
Indenture Trustee.
<PAGE>
Press Release
Contacts: Thomas R. Ehmann
Vice President & Chief Financial Officer
(847)-948-9300
Michele Katz/Geoffrey Busher
(Investor Relations)
Brian Maddox/Alison Hersh
(Media Relations)
Morgen-Walke Associates
(212)-850-5600
FIRST MERCHANTS ANNOUNCES COMPLETION OF APPROXIMATELY $145 MILLION AUTO
FINANCE RECEIVABLES SECURITIZATION
DEERFIELD, ILLINOIS, December 18, -- First Merchants Acceptance Corporation
(Nasdaq:FMAC) today announced the completion of a $144.7 million asset
securitization through the sale of automobile receivables-backed notes and
certificates. Of these securities, $101.0 million Class A-1 Notes have a
floating rate, and $37.9 million Class A-2 Notes have a fixed rate of 6.15%
In addition, $5.8 million of Asset Backed Certificates were issued with a
fixed rate of 6.35%. First Merchants will act as servicer for this portfolio.
The Notes and Certificates were issued by First Merchants Auto Trust
1996-C, a trust formed specifically for purposes of the securitization
structure. The Notes and Certificates have been rated Aaa by Moody's and
AAA by Standard & Poor's, and have the benefit of an irrevocable financial
guaranty insurance policy issued by Financial Security Assurance Inc.
Proceeds of the offering will be used to pay down First Merchant's senior bank
line. Salomon Brothers Inc acted as the lead manager for this offering, with
Bear, Stearns & Co. Inc. as co-manager.
Use of an owner trust structure in this transaction enables First
Merchants to offer multiple, sequential-pay securities and to prefund a
portion of the trust, thereby issuing a larger amount of securities than the
amount of the receivables initially available. The Company anticipates initial
delivery to the trust of approximately $108.5 million in automobile loans
acquired from First Merchant's network of automobile dealers. The remaining
$36.2 million will be available to purchase receivables to be delivered in the
near future.
"This is our sixth successfully completed securitization in just over a
year, totaling more than $600 million," commented Mitchell Kahn, First
Merchants' President and Chief Executive Officer. "Our overall securitization
funding strategy has worked very well for the Company and is enabling the
Company's planned expansion efforts."
This press release shall not constitute an offer to sell or a solicitation
of any offer to buy the securities referenced above nor shall there be any
sales of these securities 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.
First Merchants Acceptance Corporation is a national specialty finance
company, primarily engaged in financing the purchase of used automobiles for
consumers who have limited access to traditional sources of credit. The
Company acquires dealer-originated retail installment contracts from
franchised and independent automobile dealers and financial institutions
in 37 states.
###
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
between
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
as Depositor,
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
Dated as of December 1, 1996
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01.Capitalized Terms 1
SECTION 1.02.Other Definitional Provisions 4
ARTICLE II
Organization
SECTION 2.01.Name 4
SECTION 2.02.Office 4
SECTION 2.03.Purposes and Powers 4
SECTION 2.04.Appointment of Owner Trustee 5
SECTION 2.05.Initial Capital Contribution of Owner Trust Estate 5
SECTION 2.06.Declaration of Trust 5
SECTION 2.07.Liability of the Owners 6
SECTION 2.08.Title to Trust Property 6
SECTION 2.09.Situs of Trust 6
SECTION 2.10.Representations and Warranties of the Depositor 6
SECTION 2.11.Maintenance of the Demand Note 7
SECTION 2.12.Federal Income Tax Allocations 7
SECTION 2.13.Check-The-Box Regulations. 8
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.01.Initial Ownership 8
SECTION 3.02.The Trust Certificates 8
SECTION 3.03.Authentication of Trust Certificates 8
SECTION 3.04.Registration of Transfer and Exchange of Trust Certificates 8
SECTION 3.05.Mutilated, Destroyed, Lost or Stolen Trust Certificates 9
SECTION 3.06.Persons Deemed Owners 9
SECTION 3.07.Access to List of Certificateholders' Names and Addresses 9
SECTION 3.08.Maintenance of Office or Agency 10
SECTION 3.09.Appointment of Paying Agent 10
SECTION 3.10.Ownership by Depositor of Trust Certificates 10
SECTION 3.11.Book-Entry Trust Certificates 10
SECTION 3.12.Notices to Clearing Agency 11
SECTION 3.13.Definitive Trust Certificates 11
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01.Prior Notice with Respect to Certain Matters 12
SECTION 4.02.Action by Owners with Respect to Certain Matters 12
SECTION 4.03.Action by Owners with Respect to Bankruptcy 12
SECTION 4.04.Restrictions on Owners' Power 13
SECTION 4.05.Majority Control 13
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01.Establishment of Trust Account 13
SECTION 5.02.Application of Trust Funds 13
SECTION 5.03.Method of Payment 14
SECTION 5.04.No Segregation of Moneys; No Interest. 14
SECTION 5.05.Accounting and Reports to the Noteholders, Owners, the Internal
Revenue Service and Others 14
SECTION 5.06.Signature on Returns; Tax Matters Partner 14
ARTICLE VI
SECTION 6.01.General Authority 14
SECTION 6.02.General Duties 15
SECTION 6.03.Action upon Instruction 15
SECTION 6.04.No Duties Except as Specified in this Agreement or in
Instructions 15
SECTION 6.05.No Action Except Under Specified Documents or Instructions 16
SECTION 6.06.Restrictions 16
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.01.Acceptance of Trusts and Duties 16
SECTION 7.02.Furnishing of Documents 17
SECTION 7.03.Representations and Warranties 17
SECTION 7.04.Reliance; Advice of Counsel 17
SECTION 7.05.Not Acting in Individual Capacity 18
SECTION 7.06.Owner Trustee Not Liable for Trust Certificates or for
Receivables 18
SECTION 7.07.Owner Trustee May Own Trust Certificates and Notes 18
SECTION 7.08.Pennsylvania Motor Vehicle Sales Finance Act Licenses 18
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01.Owner Trustee's Fees and Expenses 19
SECTION 8.02.Indemnification 19
SECTION 8.03.Payments to the Owner Trustee 19
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01.Termination of Trust Agreement 19
SECTION 9.02.Dissolution upon Bankruptcy of the Depositor 20
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01.Eligibility Requirements for Owner Trustee 21
SECTION 10.02.Resignation or Removal of Owner Trustee 21
SECTION 10.03.Successor Owner Trustee 21
SECTION 10.04.Merger or Consolidation of Owner Trustee 22
SECTION 10.05.Appointment of Co-Trustee or Separate Trustee 22
ARTICLE XI
Miscellaneous
SECTION 11.01.Supplements and Amendments 23
SECTION 11.02.No Legal Title to Owner Trust Estate in Owners 24
SECTION 11.03.Limitations on Rights of Others 24
SECTION 11.04.Notices 24
SECTION 11.05.Severability 24
SECTION 11.06.Separate Counterparts 25
SECTION 11.07.Successors and Assigns 25
SECTION 11.08.Covenants of the Depositor 25
SECTION 11.09.No Petition 25
SECTION 11.10.No Recourse 25
SECTION 11.11.Headings 25
SECTION 11.12.GOVERNING LAW 25
SECTION 11.13.Trust Certificate Transfer Restrictions 25
AMENDED AND RESTATED TRUST AGREEMENT dated as of December 1, 1996,
between
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, a Delaware corporation, as
depositor (the "Depositor"), and CHASE MANHATTAN BANK DELAWARE, a Delaware
banking corporation, as owner trustee (the "Owner Trustee").
WHEREAS, the Depositor and the Owner Trustee entered into a Trust
Agreement dated as of December 5, 1996 (the "Trust Agreement");
WHEREAS, the Trust Agreement is being amended and restated as of
December 1, 1996;
NOW, THEREFORE, the Depositor and the Owner Trustee hereby agree as
follows:
ARTICLE I
Definitions
SECTION 1.01. Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Administration Agreement" shall mean the Administration Agreement dated
as of December 1, 1996, among the Trust, the Indenture Trustee and First
Merchants Acceptance Corporation, as Administrator.
"Agreement" shall mean this Amended and Restated Trust Agreement, as the
same may be amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in Section
11.13.
"Book-Entry Trust Certificate" shall mean a beneficial interest in the
Trust Certificates, the ownership and transfer of which shall be made through
book-entries by a Clearing Agency as described in Section 3.11.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code § 3801 et seq., as the same may be amended
from time to time.
"Certificate Balance" shall mean the Initial Certificate Balance reduced
by all amounts allocable to principal previously distributed to
Certificateholders.
"Certificate Depository Agreement" shall mean the agreement dated
December 18, 1996, among the Trust, the Owner Trustee, the Administrator and
The Depository Trust Company, as the initial Clearing Agency, substantially
in the form attached hereto as Exhibit C, relating to the Trust Certificates,
as the same may be amended and supplemented from time to time.
"Certificate Distribution Account" shall have the meaning assigned to
such term in Section 5.01.
"Certificates Policy" shall have the meaning assigned to such term in
the Sale and Servicing Agreement.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Owner" shall mean, with respect to a Book-Entry Trust
Certificate, a Person who is the beneficial owner of such Book-Entry Trust
Certificate, as reflected on the books of the Clearing Agency or on the books
of a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned in and the registrar appointed pursuant to Section 3.04.
"Certificateholder" or "Holder" shall mean a Person in whose name a
Trust Certificate is registered.
"Class A-1 Notes" shall mean the Floating Rate Asset Backed Notes, Class
A-1 issued pursuant to the Indenture.
"Class A-2 Notes" shall mean the 6.15% Asset Backed Notes, Class A-2
issued pursuant to the Indenture.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at 1201
Market Street, Wilmington, Delaware 19801, or at such other address in the
State of Delaware as the Owner Trustee may designate by notice to the Owners
and the Depositor, or the principal corporate trust office of any successor
Owner Trustee at the address designated by such successor Owner Trustee by
notice to the Owners and the Depositor.
"Definitive Trust Certificates" shall have the meaning set forth in
Section 3.11.
"Demand Note" shall mean the Demand Note dated May 20, 1996 from First
Merchants Acceptance Corporation to the Depositor.
"Depositor" shall mean First Merchants Auto Receivables Corporation II
in its capacity as depositor hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.02.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.
"Indenture" shall mean the Indenture dated as of December 1, 1996
between
the Trust and Harris Trust and Savings Bank, as Indenture Trustee.
"Initial Certificate Balance" shall mean $5,787,000.
"Indemnification Agreement" shall mean the Indemnification Agreement
dated as of December 1, 1996 among the Security Insurer, the Issuer and
Salomon Brothers Inc.
"Insurance Documents" shall mean the Insurance Agreement, the
Indemnification Agreement and the Premium Letter.
"Note Depository Agreement" shall mean the agreement dated December 18,
1996 among the Trust, the Indenture Trustee, the Administrator and The
Depository Trust Company, as the initial Clearing Agency, relating to the
Class A-1 Notes and the Class A-2 Notes, as the same may be amended and
supplemented from time to time.
"Owner" shall mean each Holder of a Trust Certificate.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from
time to time in the Trust Accounts and the Certificate Distribution Account and
all other property of the Trust from time to time, including any rights of the
Owner Trustee and the Trust pursuant to the Sale and Servicing Agreement and
the Administration Agreement.
"Owner Trustee" shall mean Chase Manhattan Bank Delaware, a Delaware
banking corporation, not in its individual capacity but solely as owner
trustee under this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent appointed
pursuant to Section 3.09 and shall initially be The Chase Manhattan Bank.
"Person" shall mean any individual, corporation, estate, partnership,
joint venture, association, joint stock company, limited liability company,
trust (including any beneficiary thereof), unincorporated organization, or
government or any agency or political subdivision thereof.
"Premium Letter" shall mean the letter agreement dated December 18, 1996
among the Security Insurer, First Merchants Acceptance Corporation, the
Depositor and the Issuer.
"Record Date" shall mean, with respect to any Distribution Date, the day
immediately preceding such Distribution Date or, if Definitive Trust
Certificates are issued pursuant to Section 3.13, the last day of the month
preceding such Distribution Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement dated as of December 1, 1996, among the Trust, as issuer, the
Depositor, as seller, First Merchants Acceptance Corporation, as servicer,
and Harris Trust and Savings Bank, as Indenture Trustee, Collateral Agent and
Backup Servicer, as the same may be amended or supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Treasury Regulations" shall mean regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a certificate evidencing the beneficial
interest of an Owner in the Trust, substantially in the form attached hereto
as Exhibit A.
"Underwriter" shall mean each underwriter named in and party to the
Underwriting Agreement dated December 10, 1996 with the Depositor, pursuant
to which the Trust Certificates will be offered publicly.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized
terms used and not otherwise defined herein have the meanings assigned to them
in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To
the extent that the definitions of accounting terms in this Agreement or in any
such certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(d) The words "hereof," "herein," "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; Section and Exhibit
references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to
the singular and plural forms of such terms and to the masculine, feminine and
neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
Organization
SECTION 2.01. Name. The Trust created hereby shall be known as
"First Merchants Auto Trust 1996-C," in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.02. Office. The office of the Trust shall be in care of
the Owner Trustee at the Corporate Trust Office or at such other address in
Delaware as the Owner Trustee may designate by written notice to the Owners
and the Depositor.
SECTION 2.03. Purposes and Powers. (a) The purpose of the Trust
is to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes and the Trust
Certificates;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to purchase the Receivables, to fund the Pre-Funding Account
and the Capitalized Interest Account, to pay the organizational, start-up and
transactional expenses of the Trust and to pay the balance of the proceeds to
the Depositor pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and distribute to
the Owners pursuant to the terms of the Sale and Servicing Agreement any
portion of the Trust Estate released from the Lien of, and remitted to the
Trust pursuant to, the Indenture;
(iv) to hold the Certificates Policy, to make claims thereunder and
to appoint the Indenture Trustee as its agent with respect to payments made
thereunder.
(v) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vii) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation of
the Owner Trust Estate and the making of distributions to the Owners and the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.04. Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.05. Initial Capital Contribution of Owner Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be deposited in the Certificate Distribution Account. The
Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.06. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject
to the conditions set forth herein for the use and benefit of the Owners,
subject to the obligations of the Trust under the Basic Documents. It is the
intention of the parties hereto that the Trust constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust. It is the intention of the
parties hereto that, solely for income and franchise tax purposes, the Trust
shall be treated as a partnership, with the assets of the partnership being
the Receivables, the Eligible Investment Receivables and other assets held by
the Trust, the partners of the partnership being the Certificateholders
(including the Depositor), and the Notes being debt of the partnership. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as
a partnership for such tax purposes. Effective as of the date hereof, the
Owner Trustee shall have all rights, powers and duties set forth herein and in
the Business Trust Statute with respect to accomplishing the purposes of the
Trust.
SECTION 2.07. Liability of the Owners. (a) The Depositor shall be
liable directly to and will indemnify any injured party for all losses,
claims, damages, liabilities and expenses of the Trust (including Expenses,
to the extent not paid out of the Owner Trust Estate) to the extent that the
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Depositor were a general
partner; provided, however, that the Depositor shall not be liable for any
losses incurred by a Certificateholder in the capacity of an investor in the
Trust Certificates, or by a Noteholder in the capacity of an investor in the
Notes. In addition, any third party creditors of the Trust (other than in
connection with the obligations described in the preceding sentence for which
the Depositor shall not be liable) shall be deemed third party beneficiaries
of this paragraph and paragraph (c) below. The obligations of the Depositor
under this paragraph and paragraph (c) below shall be evidenced by the Trust
Certificates described in Section 3.10, which for purposes of the Business
Trust Statute shall be deemed to be a separate class of Trust Certificates
from all other Trust Certificates issued by the Trust; provided that the
rights and obligations evidenced by all Trust Certificates, regardless of
class, shall, except as provided in this Section, be identical.
(b) No Owner, other than to the extent set forth in paragraph (a),
shall have any personal liability for any liability or obligation of the
Trust.
SECTION 2.08. Title to Trust Property. Legal title to all the
Owner Trust Estate shall be vested at all times in the Trust as a separate
legal entity except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee, a co-
trustee and/or a separate trustee, as the case may be.
SECTION 2.09. Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
Delaware or the State of New York. The Trust shall not have any employees in
any state other than Delaware; provided, however, that nothing herein shall
restrict or prohibit the Owner Trustee from having employees within or without
the State of Delaware. Payments will be received by the Trust only in Delaware
or New York, and payments will be made by the Trust only from Delaware or New
York. The only office of the Trust will be at the Corporate Trust Office in
Delaware.
SECTION 2.10. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Owner Trustee that:
(a) The Depositor is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware, with
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its
property
or the conduct of its business shall require such qualifications.
(c) The Depositor has the power and authority to execute and deliver
this Agreement and to carry out its terms; the Depositor has full power and
authority to sell and assign the property to be sold and assigned to and
deposited with the Trust and the Depositor has duly authorized such sale and
assignment and deposit to the Trust by all necessary corporate action; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Depositor by all necessary corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the certificate of
incorporation or bylaws of the Depositor, or any indenture, agreement or
other instrument to which the Depositor is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule or regulation applicable
to the Depositor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(e) There are no proceedings or investigations pending or threatened
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor or its
properties: (A) asserting the invalidity of this Agreement, (B) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of, this Agreement.
SECTION 2.11. Maintenance of the Demand Note. To the fullest
extent permitted by applicable law, the Depositor agrees that it shall not
sell, convey, pledge, transfer or otherwise dispose of the Demand Note.
SECTION 2.12. Federal Income Tax Allocations. Net income of the
Trust for any month as determined for federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation
thereof) shall be allocated:
(a) among the Certificate Owners as of the first day following the
end of such month, in proportion to their ownership of principal amount of
Trust Certificates on such date, net income in an amount up to the sum of (i)
the Certificateholders' Monthly Interest Distributable Amount for such month,
(ii) interest on the excess, if any, of the Certificateholders' Interest
Distributable Amount for the preceding Distribution Date over the amount in
respect of interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, to the extent
permitted by law, at the Pass-Through Rate from such preceding Distribution Date
through the current Distribution Date, (iii) the portion of the market discount
on the Receivables accrued during such month that is allocable to the excess,
if any, of the initial aggregate principal amount of the Trust Certificates
over their initial aggregate issue price, and (iv) any other amounts of income
payable to the Certificateholders for such month; such sum to be reduced by any
amortization by the Trust of premium on Receivables that corresponds to any
excess of the issue price of Certificates over their principal amount; and
(b) to the Depositor, to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the
allocations described in clause (a) above, subsequent net income shall first
be allocated to make up such shortfall before being allocated as provided in
the preceding sentence. Net losses of the Trust, if any, for any month as
determined for federal income tax purposes (and each item of income, gain,
loss and deduction entering into the computation thereof) shall be allocated
to the Depositor to the extent the Depositor is reasonably expected to bear
the economic burden of such net losses, and any remaining net losses shall be
allocated among the Certificate Owners as of the first Record Date following
the end of such month in proportion to their ownership of principal amount of
Trust Certificates on such Record Date. The Depositor is authorized to
modify the allocations in this paragraph if necessary or appropriate, in its
sole discretion, for the allocations to fairly reflect the economic income,
gain or loss to the Depositor or to the Certificate Owners, or as otherwise
required by the Code.
SECTION 2.13. Check-The-Box Regulations. If Treasury Regulations
§ 301.7701-1 through § 301.7701-3 are amended such that the Trust
would not be classified as an association taxable as a corporation if the
requirements of Sections 2.07(a), 2.11 and 9.02 hereof (collectively, the
"Partnership Qualification Provisions") were no longer applicable (such an
amendment, a "Tax Characterization Amendment"), the Partnership Qualification
Provisions shall no longer be applicable or part of this Agreement; provided,
however, that the Partnership Qualification Provisions shall no longer be
applicable or part of this Agreement only if the Owner Trustee first obtains
an Opinion of Counsel stating that (i) a Tax Characterization Amendment has
been adopted and (ii) the deletion of the Partnership Qualification
Provisions will not cause the Trust to be classified as an association taxable
as a corporation.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.01. Initial Ownership. Upon the formation of the Trust
by the contribution by the Depositor pursuant to Section 2.05 and until the
issuance of the Trust Certificates, the Depositor shall be the sole
beneficiary of the Trust.
SECTION 3.02. The Trust Certificates. The Trust Certificates shall
be issued in minimum denominations of $20,000 and in integral multiples of
$1,000 in excess thereof; provided, however, that the Trust Certificates
issued to the Depositor pursuant to Section 3.10 may be issued in such
denomination as required to include any residual amount. The Trust
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Owner Trustee. Trust Certificates
bearing the manual or facsimile signatures of individuals who were, at the
time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefit of
this Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the authentication and delivery of
such Trust Certificates or did not hold such offices at the date of
authentication and delivery of such Trust Certificates.
A transferee of a Trust Certificate shall become a Certificateholder and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Trust
Certificate duly registered in such transferee's name pursuant to Section
3.04.
SECTION 3.03. Authentication of Trust Certificates. On the Closing
Date, the Owner Trustee shall cause the Trust Certificates in an aggregate
principal amount equal to the Initial Certificate Balance to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order
of the Depositor, signed by its chairman of the board, its president, any
vice president, secretary or any assistant treasurer, without further corporate
action by the Depositor, in authorized denominations. No Trust Certificate
shall entitle its Holder to any benefit under this Agreement or be valid for
any purpose unless there shall appear on such Trust Certificate a certificate
of authentication substantially in the form set forth in Exhibit A, executed
by the Owner Trustee or The Chase Manhattan Bank, as the Owner Trustee's
authenticating agent, by manual signature; such authentication shall
constitute conclusive evidence that such Trust Certificate shall have been
duly authenticated and delivered hereunder. All Trust Certificates shall be
dated the date of their authentication.
SECTION 3.04. Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at
the office or agency maintained pursuant to Section 3.08, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of Trust
Certificates and of transfers and exchanges of Trust Certificates as herein
provided. The Chase Manhattan Bank shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate at
the office or agency maintained pursuant to Section 3.08, the Owner Trustee
shall execute, authenticate and deliver (or shall cause The Chase Manhattan
Bank as its authenticating agent to authenticate and deliver), in the name of
the designated transferee or transferees, one or more new Trust Certificates
in authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the
option of a Certificateholder, Trust Certificates may be exchanged for other
Trust Certificates of authorized denominations of a like aggregate amount
upon surrender of the Trust Certificates to be exchanged at the office or
agency maintained pursuant to Section 3.08.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or such Certificateholder's attorney duly
authorized in writing. Each Trust Certificate surrendered for registration
of transfer or exchange shall be cancelled and subsequently disposed of by the
Owner Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Owner
Trustee shall not make, and the Certificate Registrar shall not register
transfers or exchanges of, Trust Certificates for a period of 15 days
preceding the due date for any payment with respect to the Trust Certificates.
SECTION 3.05. Mutilated, Destroyed, Lost or Stolen Trust
Certificates. If (a) any mutilated Trust Certificate shall be surrendered to
the Certificate Registrar, or if the Certificate Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Certificate and (b) there shall be delivered to the Certificate Registrar and
the Owner Trustee such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Certificate has been acquired by a bona fide purchaser, the Owner Trustee on
behalf of the Trust shall execute and the Owner Trustee or The Chase
Manhattan Bank, as the Owner Trustee's authenticating agent, shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Certificate, a new Trust Certificate of like tenor and
denomination. In connection with the issuance of any new Trust Certificate
under this Section, the Owner Trustee or the Certificate Registrar may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Trust
Certificate issued pursuant to this Section shall constitute conclusive evidence
of ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Trust Certificate shall be found at any time.
SECTION 3.06. Persons Deemed Owners. Prior to due presentation of
a Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar or any Paying Agent may treat the Person in whose name
any Trust Certificate is registered in the Certificate Register as the owner
of such Trust Certificate for the purpose of receiving distributions pursuant
to Section 5.02 and for all other purposes whatsoever, and none of the Owner
Trustee, the Certificate Registrar or any Paying Agent shall be bound by any
notice to the contrary.
SECTION 3.07. Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer and the Depositor, within 15 days after receipt by the Owner Trustee
of a written request therefor from the Servicer or the Depositor, a list, in
such form as the Servicer or the Depositor may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record
Date. If (i) three or more Certificateholders or (ii) one or more Holders of
Trust Certificates evidencing not less than 25% of the Certificate Balance
apply in writing to the Owner Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Trust Certificates and such
application is accompanied by a copy of the communication that such
applicants propose to transmit, then the Owner Trustee shall, within five
Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of Certificateholders.
Each Certificateholder, by receiving and holding a Trust Certificate, shall be
deemed to have agreed not to hold any of the Depositor, the Certificate
Registrar or the Owner Trustee accountable by reason of the disclosure of its
name and address, regardless of the source from which such information was
derived.
SECTION 3.08. Maintenance of Office or Agency. The Owner Trustee
shall maintain in the Borough of Manhattan, the City of New York, an office
or offices or agency or agencies where Trust Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Owner Trustee in respect of the Trust Certificates and the Basic
Documents may be served. The Owner Trustee initially designates The Chase
Manhattan Bank, 55 Water Street, New York, New York 10041 as its office for
such purposes. The Owner Trustee shall give prompt written notice to the
Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.09. Appointment of Paying Agent. The Paying Agent shall
make distributions to Certificateholders from the Certificate Distribution
Account pursuant to Section 5.02 and shall report the amounts of such
distributions to the Owner Trustee. Any Paying Agent shall have the
revocable power to withdraw funds from the Certificate Distribution Account for
the purpose of making the distributions referred to above. The Owner Trustee
may revoke such power and remove the Paying Agent if the Owner Trustee
determines in its sole discretion that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect. The
Paying Agent initially shall be The Chase Manhattan Bank, and any co-paying
agent chosen by The Chase Manhattan Bank and acceptable to the Owner Trustee.
The Chase Manhattan Bank shall be permitted to resign as Paying Agent upon 30
days' written notice to the Owner Trustee. In the event that The Chase
Manhattan Bank shall no longer be the Paying Agent, the Owner Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that, as Paying
Agent, such successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be
paid to such Certificateholders. The Paying Agent shall return all unclaimed
funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent
shall also return all funds in its possession to the Owner Trustee. The
provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Owner
Trustee also in its role as Paying Agent, for so long as the Owner Trustee shall
act as Paying Agent and, to the extent applicable, to any other paying agent
appointed hereunder. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
SECTION 3.10. Ownership by Depositor of Trust Certificates. The
Depositor shall on the Closing Date purchase from the Underwriter Trust
Certificates representing at least 1% of the Initial Certificate Balance and
shall thereafter retain beneficial and record ownership of Trust Certificates
representing at least 1% of the Certificate Balance. Any attempted transfer
of any Trust Certificate that would reduce such interest of the Depositor
below 1% of the Certificate Balance shall be void. The Owner Trustee shall
cause any Trust Certificate issued to the Depositor in respect of 1% of the
Certificate Balance to contain a legend stating "THIS TRUST CERTIFICATE IS
NON-TRANSFERABLE".
SECTION 3.11. Book-Entry Trust Certificates. The Trust
Certificates, upon original issuance, will be issued in the form of a
typewritten Trust Certificate or Trust Certificates representing Book-Entry
Trust Certificates, to be delivered to The Depository Trust Company, the
initial Clearing Agency, by, or on behalf of, the Trust; provided, however,
that one Definitive Trust Certificate may be issued to the Depositor pursuant
to Section 3.10. Such Trust Certificate or Trust Certificates shall
initially be registered on the Certificate Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive Trust Certificate representing such Certificate Owner's
interest in such Trust Certificate, except as provided in Section 3.13.
Unless and until definitive, fully registered Trust Certificates (the
"Definitive Trust Certificates") have been issued to Certificate Owners pursuant
to Section 3.13:
(a) The provisions of this Section shall be in full force and effect;
(b) The Certificate Registrar and the Owner Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this Agreement
(including the payment of principal of and interest on the Trust Certificates
and the giving of instructions or directions hereunder) as the sole Holder of
the Trust Certificates and shall have no obligation to the Certificate Owners;
(c) To the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section shall
control;
(d) The rights of Certificate Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Certificate Depository
Agreement, unless and until Definitive Trust Certificates are issued pursuant
to Section 3.13, the initial Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Trust Certificates to such Clearing Agency
Participants; and
(e) Whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Trust Certificates
evidencing a specified percentage of the Certificate Balance, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Certificate Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Trust Certificates and
has delivered such instructions to the Owner Trustee.
SECTION 3.12. Notices to Clearing Agency. Whenever a notice or
other communication to the Certificateholders is required under this
Agreement, unless and until Definitive Trust Certificates shall have been
issued to Certificate Owners pursuant to Section 3.13, the Owner Trustee
shall give all such notices and communications specified herein to be given to
Certificateholders to the Clearing Agency, and shall have no obligations to
the Certificate Owners.
SECTION 3.13. Definitive Trust Certificates. If (i) the
Administrator advises the Owner Trustee in writing that the Clearing Agency
is
no longer willing or able to properly discharge its responsibilities with
respect to the Book-Entry Trust Certificates and the Administrator is unable
to locate a qualified successor, (ii) the Administrator at its option advises
the Owner Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of an Event of
Default or a Servicer Default, Certificate Owners representing beneficial
interests aggregating at least a majority of the Certificate Balance advise
the Clearing Agency in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of the
Certificate Owners, then the Clearing Agency shall notify all Certificate
Owners and the Owner Trustee of the occurrence of any such event and of the
availability of Definitive Trust Certificates to Certificate Owners
requesting the same. Upon surrender to the Owner Trustee of the typewritten
Trust Certificate or Trust Certificates representing the Book-Entry Trust
Certificates by the Clearing Agency, accompanied by registration
instructions, the Trust shall execute and the Owner Trustee shall authenticate
the Definitive Trust Certificates in accordance with the written instructions of
the Clearing Agency. None of the Trust, the Certificate Registrar or the
Owner Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Trust Certificates, the Owner
Trustee shall recognize the Holders of the Definitive Trust Certificates as
Certificateholders. The Definitive Trust Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof.
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01. Prior Notice with Respect to Certain Matters. With
respect to the following matters, the Owner Trustee shall not take action
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders and the Security Insurer (so long
as no Security Insurer Default shall have occurred and be continuing) in
writing of the proposed action and neither the Security Insurer (so long as
no
Security Insurer Default shall have occurred and be continuing) nor the
Owners shall have notified the Owner Trustee in writing prior to the 30th day
after such notice is given that such Owners or the Security Insurer (so long as
no Security Insurer Default shall have occurred and be continuing) have
withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the
Receivables) and the compromise of any action, claim or lawsuit brought by or
against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Receivables);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment would materially adversely affect the interests of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of
a successor Certificate Registrar, or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of
its obligations under the Indenture or this Agreement, as applicable.
SECTION 4.02. Action by Owners with Respect to Certain Matters.
The Owner Trustee shall not have the power, except upon the written direction of
the Owners (with the consent of the Security Insurer (so long as no Security
Insurer Default shall have occurred and be continuing)), to (a) remove the
Administrator under the Administration Agreement pursuant to Section 8
thereof, (b) appoint a successor Administrator pursuant to Section 8 of the
Administration Agreement, (c) remove the Servicer under the Sale and
Servicing Agreement pursuant to Section 8.02 thereof, (d) amend the Sale and
Servicing Agreement pursuant to Section 10.01(b) of such document, or (e)
except as expressly provided in the Basic Documents, sell the Receivables after
the termination of the Indenture. The Owner Trustee shall take the actions
referred to in the preceding sentence only upon written instructions signed
by the Owners.
SECTION 4.03. Action by Owners with Respect to Bankruptcy. The
Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of all
Owners and the Security Insurer (so long as no Security Insurer Default shall
have occurred and be continuing) and the delivery to the Owner Trustee by
each such Owner of a certificate certifying that such Owner reasonably believes
that the Trust is insolvent.
SECTION 4.04. Restrictions on Owners' Power. The Owners shall not
direct the Owner Trustee to take or to refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Basic Documents or would be
contrary to Section 2.03; nor shall the Owner Trustee be obligated to follow
any such direction, if given.
SECTION 4.05. Majority Control. Except as expressly provided
herein, any action that may be taken by the Owners under this Agreement may
be taken by the Holders of Trust Certificates evidencing not less than a
majority of the Certificate Balance. Except as expressly provided herein, any
written notice of the Owners delivered pursuant to this Agreement shall be
effective if signed by Holders of Trust Certificates evidencing not less than a
majority of the Certificate Balance at the time of the delivery of such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01. Establishment of Trust Account. The Owner Trustee,
for the benefit of the Certificateholders, shall establish and maintain in
the name of the Trust an Eligible Deposit Account (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders.
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account
and in all proceeds thereof. Except as otherwise expressly provided herein,
the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee for the benefit of the Certificateholders. If, at
any time, the Certificate Distribution Account ceases to be an Eligible Deposit
Account, the Owner Trustee (or the Depositor on behalf of the Owner Trustee,
if the Certificate Distribution Account is not then held by the Owner Trustee
or an affiliate thereof) shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Certificate Distribution Account as an Eligible
Deposit Account and shall transfer any cash and/or any investments to such new
Certificate Distribution Account.
SECTION 5.02. Application of Trust Funds. (a) On each
Distribution Date, the Owner Trustee will distribute to Certificateholders, on a
pro rata basis, amounts deposited in the Certificate Distribution Account
pursuant to Section 5.06 and 5.12(b) of the Sale and Servicing Agreement with
respect to such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee
by the Servicer pursuant to Section 5.11 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the
amount otherwise distributable to the Owner in accordance with this Section.
The Owner Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Owners sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not
prevent the Owner Trustee from contesting any such tax in appropriate
proceedings and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed
with respect to an Owner shall be treated as cash distributed to such Owner
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S. Owner), the
Owner Trustee may in its sole discretion withhold such amounts in accordance
with this paragraph (c).
SECTION 5.03. Method of Payment. Subject to Section 9.01(c),
distributions required to be made to Certificateholders on any Distribution
Date shall be made to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Distribution Date and such Holder's Trust Certificates in
the aggregate evidence a denomination of not less than $1,000,000, or, if
not, by check mailed to such Certificateholder at the address of such
Certificateholder appearing in the Certificate Register.
SECTION 5.04. No Segregation of Moneys; No Interest. Subject to
Sections 5.01 and 5.02, moneys received by the Owner Trustee hereunder need
not be segregated in any manner except to the extent required by law or the
Sale and Servicing Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
SECTION 5.05. Accounting and Reports to the Noteholders, Owners,
the Internal Revenue Service and Others. The Owner Trustee shall (a) maintain
(or cause to be maintained) the books of the Trust on a calendar year basis and
the accrual method of accounting, (b) deliver to each Owner, as may be
required by the Code and applicable Treasury Regulations, such information as
may be required (including Schedule K-1) to enable each Owner to prepare its
federal and state income tax returns, (c) file such tax returns relating to
the Trust (including a partnership information return, IRS Form 1065) and
make such elections as from time to time may be required or appropriate under
any applicable state or federal statute or any rule or regulation thereunder so
as to maintain the Trust's characterization as a partnership for federal income
tax purposes, (d) cause such tax returns to be signed in the manner required
by law and (e) collect or cause to be collected any withholding tax as
described in and in accordance with Section 5.02(c) with respect to income or
distributions to Owners. The Owner Trustee shall elect under Section 1278 of
the Code to include in income currently any market discount that accrues with
respect to the Receivables. The Owner Trustee shall not make the election
provided under Section 754 of the Code.
SECTION 5.06. Signature on Returns; Tax Matters Partner. (a) The
Owner Trustee shall sign on behalf of the Trust the tax returns of the Trust,
unless applicable law requires an Owner to sign such documents, in which case
such documents shall be signed by the Depositor.
(b) The Depositor shall be designated the "tax matters partner" of
the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.01. General Authority. The Owner Trustee is authorized
and directed to execute and deliver the Basic Documents to which the Trust is
to be a party and each certificate or other document attached as an exhibit
to or contemplated by the Basic Documents to which the Trust is to be a party,
in each case, in such form as the Depositor shall approve, as evidenced
conclusively by the Owner Trustee's execution thereof. In addition to the
foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Basic Documents. The
Owner Trustee is further authorized from time to time to take such action as
the Administrator recommends with respect to the Basic Documents.
SECTION 6.02. General Duties. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and the Basic Documents to which the
Trust is a party and to administer the Trust in the interest of the Owners,
subject to the Basic Documents and in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed
to have discharged its duties and responsibilities hereunder and under the
Basic Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee hereunder or under any Basic Document, and the Owner Trustee
shall not be held liable for the default or failure of the Administrator to
carry out its obligations under the Administration Agreement.
SECTION 6.03. Action upon Instruction. (a) Subject to Article IV
and in accordance with the terms of the Basic Documents, the Owners may by
written instruction direct the Owner Trustee in the management of the Trust.
Such direction may be exercised at any time by written instruction of the
Owners pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Owner Trustee or is
contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Basic Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Owners requesting instruction as to the course of action to be adopted, and
to the extent the Owner Trustee acts in good faith in accordance with any
written instruction of the Owners received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall
not have received appropriate instruction within 10 days of such notice (or
within such shorter period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action not inconsistent with this Agreement
or the Basic Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Basic Document or any
such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Owners requesting instruction and, to the extent that the Owner Trustee acts
or refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Agreement or
the Basic Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or inaction.
SECTION 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Owner Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee is a party, except as expressly
provided by the terms of this Agreement or in any document or written
instruction received by the Owner Trustee pursuant to Section 6.03; and no
implied duties or obligations shall be read into this Agreement or any Basic
Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
Securities and Exchange Commission filing for the Trust or to record this
Agreement or any Basic Document. The Owner Trustee nevertheless agrees that it
will, at its own cost and expense, promptly take all action as may be necessary
to discharge any liens on any part of the Owner Trust Estate that result from
actions by, or claims against, the Owner Trustee that are not related to the
ownership or the administration of the Owner Trust Estate.
SECTION 6.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell,
dispose of or otherwise deal with any part of the Owner Trust Estate except (i)
in accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the Basic
Documents and (iii) in accordance with any document or instruction delivered
to the Owner Trustee pursuant to Section 6.03.
SECTION 6.06. Restrictions. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for federal income
tax purposes. The Owners shall not direct the Owner Trustee to take action
that would violate the provisions of this Section.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.01. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts, but only upon the terms of this Agreement. The
Owner Trustee also agrees to disburse all moneys actually received by it
constituting part of the Owner Trust Estate upon the terms of the Basic
Documents and this Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any Basic Document under any circumstances,
except (i) for its own willful misconduct or negligence or (ii) in the case
of the inaccuracy of any representation or warranty contained in Section 7.03
expressly made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) The Owner Trustee shall not be liable for any error of judgment
made by a Trust Officer of the Owner Trustee;
(b) The Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator or any Owner;
(c) No provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Basic Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) The Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution hereof
by the Depositor or for the form, character, genuineness, sufficiency, value
or validity of any of the Owner Trust Estate, or for or in respect of the
validity or sufficiency of the Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the Owner Trustee shall in no
event assume or incur any liability, duty or obligation to any Noteholder or
to any Owner, other than as expressly provided for herein or expressly agreed
to in the Basic Documents;
(f) The Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Depositor, the Servicer, the Indenture
Trustee or the Backup Servicer under any of the Basic Documents or otherwise,
and the Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Agreement or the Basic Documents that are
required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture or the Depositor, the
Servicer or the Backup Servicer under the Sale and Servicing Agreement; and
(g) The Owner Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document, at the request, order or
direction of any of the Owners, unless such Owners have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses
and liabilities that may be incurred by the Owner Trustee therein or thereby.
The right of the Owner Trustee to perform any discretionary act enumerated in
this Agreement or in any Basic Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act.
SECTION 7.02. Furnishing of Documents. The Owner Trustee shall
furnish to the Owners, promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.
SECTION 7.03. Representations and Warranties. The Owner Trustee
hereby represents and warrants to the Depositor, for the benefit of the
Owners, that:
(a) It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(c) Neither the execution or the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby, nor
compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding
on it, or constitute any default under its charter documents or bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party
or by which any of its properties may be bound.
(d) It is a corporation satisfying the provisions of Section 3807(a)
of the Business Trust Statute; authorized to exercise corporate trust powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and having (or
having a parent that has) time deposits that are rated at least A-1 by
Standard & Poor's and P-1 by Moody's.
SECTION 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee
shall incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion,
bond, or other document or paper believed by it to be genuine and believed by
it to be signed by the proper party or parties. The Owner Trustee may accept
a certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has
been duly adopted by such body and that the same is in full force and
effect. As to any fact or matter the method of determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by
the treasurer or other authorized officers of the relevant party, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Basic Documents, the Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, and the
Owner Trustee shall not be liable for the conduct or misconduct of such
agents or attorneys if such agents or attorneys shall have been selected by the
Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled Persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants or other such Persons and not
contrary to this Agreement or any Basic Document.
SECTION 7.05. Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created, Chase
Manhattan Bank Delaware acts solely as Owner Trustee hereunder and not in its
individual capacity, and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any Basic
Document shall look only to the Owner Trust Estate for payment or satisfaction
thereof.
SECTION 7.06. Owner Trustee Not Liable for Trust Certificates or
for Receivables. The recitals contained herein and in the Trust Certificates
(other than the signature and countersignature of the Owner Trustee on the
Trust Certificates) shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof.
Except as set forth in Section 7.03, the Owner Trustee makes no representations
as to the validity or sufficiency of this Agreement, of any Basic Document or of
the Trust Certificates (other than the signature and countersignature of the
Owner Trustee on the Trust Certificates) or the Notes, or of any Receivable or
related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Receivable or the perfection and priority of any security
interest created by any Receivable in any Financed Vehicle or the maintenance of
any such perfection and priority, or for or with respect to the sufficiency of
the Owner Trust Estate or its ability to generate the payments to be
distributed to Certificateholders under this Agreement or the Noteholders under
the Indenture, including, without limitation: the existence, condition and
ownership of any Financed Vehicle; the existence and enforceability of any
insurance thereon; the existence and contents of any Receivable on any
computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the completeness of
any Receivable; the performance or enforcement of any Receivable; the
compliance by the Depositor, the Servicer or the Backup Servicer with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation, or any
action of the Administrator, the Indenture Trustee, the Servicer or the Backup
Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.07. Owner Trustee May Own Trust Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of Trust Certificates or Notes and may deal with the
Depositor, the Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
SECTION 7.08. Pennsylvania Motor Vehicle Sales Finance Act
Licenses. The Owner Trustee, in its individual capacity, shall use its best
efforts to maintain, and the Owner Trustee, as Owner Trustee, shall cause the
Trust to use its best efforts to maintain, the effectiveness of all licenses
required under the Pennsylvania Motor Vehicle Sales Finance Act in connection
with this Agreement and the Basic Documents and the transactions contemplated
hereby and thereby until such time as the Trust shall terminate in accordance
with the terms hereof.
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01. Owner Trustee's Fees and Expenses. The Administrator
shall pay to the Owner Trustee as compensation for its services hereunder
such fees as have been separately agreed upon before the date hereof between
the Servicer and the Owner Trustee, and the Administrator shall reimburse the
Owner Trustee for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder.
SECTION 8.02. Indemnification. The Administrator shall be liable
as primary obligor for, and shall indemnify the Owner Trustee and its
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of
any kind and nature whatsoever (collectively, "Expenses") which may at any time
be imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Basic Documents, the Owner Trust Estate, the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee hereunder, except only
that the Administrator shall not be liable for or required to indemnify an
Indemnified Party from and against Expenses arising or resulting from any of
the matters described in the third sentence of Section 7.01. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In any event of any
claim, action or proceeding for which indemnity will be sought pursuant to
this Section, the Owner Trustee's choice of legal counsel shall be subject to
the approval of the Administrator, which approval shall not be unreasonably
withheld.
SECTION 8.03. Payments to the Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a
part of the Owner Trust Estate immediately after such payment.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement. (a) This Agreement
(other than Article VIII) and the Trust shall terminate and be of no further
force or effect (i) upon the final distribution by the Owner Trustee of all
moneys or other property or proceeds of the Owner Trust Estate in accordance
with the terms of the Indenture, the Sale and Servicing Agreement and Article
V or (ii) at the time provided in Section 9.02. The bankruptcy, liquidation,
dissolution, death or incapacity of any Owner, other than the Depositor as
described in Section 9.02, shall not (x) operate to terminate this Agreement
or the Trust or (y) entitle such Owner's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate
or (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor nor
any Owner shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which Certificateholders shall surrender their Trust
Certificates to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of
such termination from the Servicer given pursuant to Section 9.01(c) of the
Sale and Servicing Agreement, stating (i) the Distribution Date upon or with
respect to which final payment of the Trust Certificates shall be made upon
presentation and surrender of the Trust Certificates at the office of the
Paying Agent therein designated, (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable, payments being made only upon presentation and surrender of
the Trust Certificates at the office of the Paying Agent therein specified.
The Owner Trustee shall give such notice to the Certificate Registrar (if
other than the Owner Trustee) and the Paying Agent at the time such notice is
given to Certificateholders. Upon presentation and surrender of the Trust
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant
to Section 5.02.
In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner
Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out
of the funds and other assets that shall remain subject to this Agreement.
Any funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Owner Trustee to the Depositor, subject to applicable
escheat laws.
(d) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
SECTION 9.02. Dissolution upon Bankruptcy of the Depositor. In the
event that an Insolvency Event shall occur with respect to the Depositor,
this Agreement shall be terminated in accordance with Section 9.01 90 days
after the date of such Insolvency Event, unless, before the end of such 90-day
period, the Owner Trustee shall have received written instructions from (a)
Holders (other than the Depositor) of Certificates representing more than 50%
of the Certificate Balance (not including the Certificate Balance of the
Trust Certificates held by the Depositor) and (b) each of the (i) Holders (as
defined in the Indenture) of Class A-1 Notes representing more than 50% of
the Outstanding Amount of the Class A-1 Notes, (ii) Holders (as defined in the
Indenture) of Class A-2 Notes representing more than 50% of the Outstanding
Amount of the Class A-2 Notes and (iii) the Security Insurer (so long as no
Security Insurer Default shall have occurred and be continuing), to the
effect that each such party disapproves of the termination of the Trust.
Promptly after the occurrence of any Insolvency Event with respect to the
Depositor, (A) the Depositor shall give the Indenture Trustee and the Owner
Trustee written notice of such Insolvency Event, (B) the Owner Trustee shall,
upon the receipt of such written notice from the Depositor, give prompt written
notice to the Certificateholders and the Indenture Trustee, of the occurrence of
such event and (C) the Indenture Trustee shall, upon receipt of written notice
of such Insolvency Event from the Owner Trustee or the Depositor, give prompt
written notice to the Noteholders of the occurrence of such event; provided,
however, that any failure to give a notice required by this sentence shall
not prevent or delay, in any manner, a termination of the Trust pursuant to the
first sentence of this Section 9.02. Upon a termination pursuant to this
Section, the Owner Trustee shall direct the Indenture Trustee promptly to
sell the assets of the Trust (other than the Trust Accounts and the Certificate
Distribution Account) in a commercially reasonable manner and on commercially
reasonable terms. The proceeds of such a sale of the assets of the Trust
shall be treated as collections under the Sale and Servicing Agreement.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01. Eligibility Requirements for Owner Trustee. The
Owner Trustee shall at all times be a corporation satisfying the provisions
of Section 3807(a) of the Business Trust Statute; authorized to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authorities; and having (or having a parent that has) time deposits that are
rated at least A-1 by Standard & Poor's and P-1 by Moody's. If such
corporation shall publish reports of condition at least annually pursuant to
law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Owner Trustee shall resign
immediately in the manner and with the effect specified in Section 10.02.
SECTION 10.02. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrator. Upon
receiving such notice of resignation, the Administrator shall promptly appoint
a successor Owner Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Owner Trustee and one copy
to the successor Owner Trustee. If no successor Owner Trustee shall have been
so appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Owner Trustee may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the Administrator shall
promptly appoint a successor Owner Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the outgoing Owner Trustee so
removed and one copy to the successor Owner Trustee, and shall pay all fees owed
to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses
owed to the outgoing Owner Trustee. The Administrator shall provide notice
of such resignation or removal of the Owner Trustee to each Rating Agency and
the Security Insurer (so long as no Security Insurer Default shall have
occurred and be continuing).
SECTION 10.03. Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.01 or 10.02 shall execute, acknowledge
and deliver to the Administrator and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become
effective, and such successor Owner Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Administrator and the predecessor Owner Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Owner Trustee all
such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders, the Security
Insurer (so long as no Security Insurer Default shall have occurred and be
continuing) and the Rating Agencies. If the Administrator shall fail to mail
such notice within 10 days after acceptance of such appointment by the
successor Owner Trustee, the successor Owner Trustee shall cause such notice
to be mailed at the expense of the Administrator.
SECTION 10.04. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, that such corporation shall be eligible pursuant
to Section 10.01 and, provided, further, that the Owner Trustee shall mail
notice of such merger or consolidation to each Rating Agency and the Security
Insurer (so long as no Security Insurer Default shall have occurred and be
continuing).
SECTION 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Owner Trust Estate or any Financed Vehicle may at the time be
located, the Administrator and the Owner Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Administrator and Owner Trustee to act as co-trustee,
jointly with the Owner Trustee, or as separate trustee or separate trustees,
of all or any part of the Owner Trust Estate, and to vest in such Person, in
such capacity, such title to the Trust or any part thereof and, subject to
the other provisions of this Section, such powers, duties, obligations, rights
and trusts as the Administrator and the Owner Trustee may consider necessary or
desirable. If the Administrator shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Owner
Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor Owner Trustee pursuant to Section 10.01 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) All rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed by
the Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed, the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Owner Trust
Estate or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at the
direction of the Owner Trustee;
(b) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
(c) The Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Owner Trustee or separately, as may be provided therein, subject to all
the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor co-trustee or separate trustee.
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments. This Agreement may be
amended by the Depositor and the Owner Trustee, with the consent of the
Security Insurer (so long as no Security Insurer Default shall have occurred
and be continuing) and with prior written notice to each Rating Agency,
without the consent of any of the Noteholders or the Certificateholders, to
cure any ambiguity, to correct or supplement any provisions in this Agreement
or for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
This Agreement may also be amended from time to time by the Depositor
and the Owner Trustee, with the consent of the Security Insurer (so long as no
Security Insurer Default shall have occurred and be continuing) and with
prior written notice to each Rating Agency, with the consent of the Holders (as
defined in the Indenture) of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the Holders of
Certificates evidencing not less than a majority of the Certificate Balance, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made for the
benefit of the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificate Balance
required to consent to any such amendment, without the consent of Holders of
all the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders,
Noteholders or the Security Insurer pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner
of obtaining such consents (and any other consents of Certificateholders
provided for in this Agreement or in any other Basic Document) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall
not be obligated to, enter into any such amendment that affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
In connection with the execution of any amendment to this Trust
Agreement or any amendment of any other agreement to which the Issuer is a
party, the Owner Trustee shall be entitled to receive and conclusively rely
upon an Opinion of Counsel to the effect that such amendment is authorized or
permitted by the Basic Documents and that all conditions precedent in the
Basic Documents for the execution and delivery thereof by the Issuer or the
Owner Trustee, as the case may be, have been satisfied.
SECTION 11.02. No Legal Title to Owner Trust Estate in Owners.
Neither the Depositor nor the Owners shall have legal title to any part of
the Owner Trust Estate. The Owners shall be entitled to receive distributions
with respect to their undivided ownership interest therein only in accordance
with Articles V and IX. No transfer, by operation of law or otherwise, of
any right, title or interest of the Owners to and in their ownership interest in
the Owner Trust Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of legal title to any part of the Owner Trust Estate.
SECTION 11.03. Limitations on Rights of Others. Except for Section
2.07, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Depositor, the Owners, the Administrator, the Security
Insurer and, to the extent expressly provided herein, the Indenture Trustee and
the Noteholders, and nothing in this Agreement (other than Section 2.07
hereof), whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.04. Notices. (a) Unless otherwise expressly specified
or permitted by the terms hereof, all notices shall be in writing and shall
be deemed given upon receipt by the intended recipient or three Business Days
after mailing if mailed by certified mail, postage prepaid (except that
notice to the Owner Trustee shall be deemed given only upon actual receipt by
the Owner Trustee), if to the Owner Trustee, addressed to the Corporate Trust
Office; if to the Depositor, addressed to First Merchants Auto Receivables
Corporation II, 570 Lake Cook Road, Suite 126B, Deerfield, Illinois 60015,
Attention: Secretary; or, as to each party, at such other address as shall
be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.05. Severability. Any provision of this Agreement that
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 11.06. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.07. Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
each of the Depositor and its permitted assignees, the Owner Trustee and its
successors and each Owner and its successors and permitted assigns, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by an Owner shall bind the successors and assigns of
such Owner.
SECTION 11.08. Covenants of the Depositor. In the event that (a)
the Certificate Balance shall be reduced by Realized Losses and (b) any
litigation with claims in excess of $1,000,000 to which the Depositor is a
party which shall be reasonably likely to result in a material judgment
against the Depositor that the Depositor will not be able to satisfy shall be
commenced, during the period beginning immediately following the commencement
of such litigation and continuing until such litigation is dismissed or
otherwise terminated (and, if such litigation has resulted in a final
judgment against the Depositor, such judgment has been satisfied), the Depositor
shall not pay any dividend to First Merchants Acceptance Corporation, or make
any distribution on or in respect of its capital stock to First Merchants
Acceptance Corporation, or repay the principal amount of any indebtedness of
the Depositor held by First Merchants Acceptance Corporation, unless (i)
after giving effect to such payment, distribution or repayment, the Depositor's
liquid assets shall not be less than the amount of actual damages claimed in
such litigation or (ii) the Rating Agency Condition shall have been satisfied
with respect to any such payment, distribution or repayment. The Depositor
will not at any time institute against the Trust any bankruptcy proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
SECTION 11.09. No Petition. The Owner Trustee, by entering into
this Agreement, each Certificateholder, by accepting a Trust Certificate, and
the Indenture Trustee and each Noteholder, by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Depositor or the Trust, or join in any institution against the
Depositor or the Trust of, any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, this Agreement or any of the
Basic Documents.
SECTION 11.10. No Recourse. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Trust Certificate represents a
beneficial interest in the Trust only and does not represent an interest in
or an obligation of the Depositor, the Servicer, the Administrator, the Owner
Trustee, the Indenture Trustee, the Backup Servicer or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as
may be expressly set forth or contemplated in this Agreement, the Trust
Certificates or the Basic Documents.
SECTION 11.11. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. Trust Certificate Transfer Restrictions. The Trust
Certificates may not be acquired by or for the account of (i) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1)
of the Code or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding a Trust Certificate, the Holder thereof shall be deemed
to have represented and warranted that it is not a Benefit Plan.<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, as Depositor
by:
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as Owner Trustee
by:
Name:
Title:
EXHIBIT A
FORM OF TRUST CERTIFICATE
THIS TRUST CERTIFICATE IS SUBORDINATE TO THE NOTES, AS SET FORTH IN THE SALE
AND SERVICING AGREEMENT.
UNLESS THIS TRUST CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY TRUST
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE TRUST CERTIFICATES MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF (I) AN
EMPLOYEE BENEFIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE
PROVISIONS OF TITLE I OF ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1)
OF THE CODE OR (III) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY
REASON OF A PLAN'S INVESTMENT IN THE ENTITY (EACH, A "BENEFIT PLAN"). BY
ACCEPTING AND HOLDING A TRUST CERTIFICATE, THE HOLDER THEREOF SHALL BE DEEMED
TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A BENEFIT PLAN.
[THIS TRUST CERTIFICATE IS NONTRANSFERABLE.]<F1>
NUMBER$_________
R-CUSIP NO. 32081Y AK6
FIRST MERCHANTS AUTO TRUST 1996-C
6.35% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which consists of (a) the Receivables and all moneys received
thereon on or after the Cutoff Date; (b) the security interests in the
Financed Vehicles and any accessions thereto granted by Obligors pursuant to
the Receivables and any other interest of the Depositor in such Financed
Vehicles; (c) any Liquidation Proceeds and any other proceeds with respect to
the Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors, including any
vendor's single interest or other collateral protection insurance policy; (d)
any property that shall have secured a Receivable and shall have been
acquired by or on behalf of the Depositor, the Servicer or the Trust; (e) all
documents and other items contained in the Receivables Files; (f) all of the
Depositor's rights (but not its obligations) under the Receivables Purchase
Agreement and the Subsequent Purchase Agreements; (g) all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and the
Certificate Distribution Account, and in all investments and proceeds thereof
(including all income thereon); and (h) the proceeds of any and all of the
foregoing.
THIS TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR AN OBLIGATION OF
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, FIRST MERCHANTS ACCEPTANCE
<F1>To be included only on the Trust Certificates representing the 1% minimum
required to be purchased by the Depositor from the Underwriter and any Trust
Certificates issued in exchange therefor.
CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES.
THIS CERTIFIES THAT ________________ is the registered owner of
____________________________________________ DOLLARS nonassessable, fully
paid, fractional undivided interest in FIRST MERCHANTS AUTO TRUST 1996-C (the
"Trust"), formed by FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, a
Delaware corporation (the "Depositor").
The Trust was created pursuant to a Trust Agreement dated as of
December 18, 1996, as amended and restated by an Amended and Restated Trust
Agreement dated as of December 1, 1996 (as so amended and restated and
further amended or supplemented from time to time, the "Trust Agreement"),
between the Depositor and Chase Manhattan Bank Delaware, as owner trustee
(the "Owner Trustee"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement or the Sale and Servicing Agreement dated as of December 1, 1996
(as amended and supplemented from time to time, the "Sale and Servicing
Agreement"), among the Trust, the Depositor, as seller, First Merchants
Acceptance Corporation, as Servicer, and Harris Trust and Savings Bank, as
Indenture Trustee, Collateral Agent and Backup Servicer, as applicable.
This Trust Certificate is one of the duly authorized Trust
Certificates designated as "6.35% Asset Backed Certificates" (herein called
the "Trust Certificates"). Also issued under an Indenture dated as of
December 1, 1996 (the "Indenture"), between the Trust and Harris Trust and
Savings Bank, as indenture trustee, are the two classes of Notes designated
as "Floating Rate Asset Backed Notes, Class A-1" and 6.15% Asset Backed Notes,
Class A-2" (collectively, the "Notes"). This Trust Certificate is issued
under and is subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the Holder of this Trust Certificate by
virtue of its acceptance hereof assents and by which such Certificateholder
is bound. The property of the Trust consists of the Initial Receivables and
the Subsequent Receivables (together, the "Receivables") and all monies
received thereon on or after November 14, 1996 and each of the Subsequent
Cutoff Dates, respectively, security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, proceeds from claims on
certain insurance policies and certain other rights under the Trust Agreement
and the Sale and Servicing Agreement and all proceeds of the foregoing. The
rights of the Certificateholders are subordinate to the rights of the
Noteholders, as set forth in the Sale and Servicing Agreement.
Under the Trust Agreement, there will be distributed on the 15th
day of each month or, if such 15th day is not a Business Day, the next Business
Day (each, a "Distribution Date"), commencing on January 15, 1997, to the
Person in whose name this Trust Certificate is registered at the close of
business on the day immediately preceding such Distribution Date, or if
Definitive Certificates are issued, the last day of the immediately preceding
month (the "Record Date"), such Certificateholder's fractional undivided
interest in the amount to be distributed to Certificateholders on such
Distribution Date. No distributions of principal will be made on any Trust
Certificate until all of the Notes have been paid in full.
The Holder of this Trust Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Trust Certificate are
subordinate to the rights of the Noteholders as described in the Sale and
Servicing Agreement and the Indenture.
It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of federal income, state and local
income and single business tax and any other income taxes, the Trust will be
treated as a partnership and the Certificateholders (including the Depositor)
will be treated as partners in that partnership. The Depositor and the other
Certificateholders, by acceptance of a Trust Certificate, agree to treat, and
to take no action inconsistent with the treatment of, the Trust Certificates
for such tax purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Trust Certificate,
agrees to treat, and to take no action inconsistent with the treatment of,
the Trust Certificates for such tax purposes as partnership interests in the
Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or, in the case of a Certificate Owner, a beneficial
interest in a Trust Certificate, covenants and agrees that such
Certificateholder or Certificate Owner, as the case may be, will not at any
time institute against the Depositor or the Trust, or join in any institution
against the Depositor or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Trust Certificates, the Notes,
the Trust Agreement or any of the Basic Documents.
Distributions on this Trust Certificate will be made as provided in
the Trust Agreement by the Owner Trustee by wire transfer or check mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Trust Certificate or the making of any
notation hereon, except that with respect to Trust Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee.
Except as otherwise provided in the Trust Agreement and notwithstanding the
above, the final distribution on this Trust Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Trust Certificate at the office or agency
maintained for that purpose by the Owner Trustee in the Borough of Manhattan,
The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the Holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Trust Certificate to be duly
executed.
FIRST MERCHANTS AUTO TRUST 1996-C
by:CHASE MANHATTAN BANK DELAWARE, not in
its individual capacity but solely as Owner Trustee
Dated:
by:
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned
Trust Agreement.
CHASE MANHATTAN BANK DELAWARE, CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee or as Owner Trustee
by:THE CHASE MANHATTAN BANK, as
Authenticating Agent
by:
Authorized Signatory
by:
Authorized Signatory
[REVERSE OF TRUST CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Owner Trustee or any affiliates
of any of them and no recourse may be had against such parties or their
assets, except as expressly set forth or contemplated herein or in the Trust
Agreement or the Basic Documents. In addition, this Trust Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in
right of payment to certain collections and recoveries with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Sale and Servicing Agreement. A copy of each of the Sale
and Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of the Depositor and at such other places, if any,
designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Depositor and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee with the consent
of the Holders of the Trust Certificates and the Notes, each voting as a
class, evidencing not less than a majority of the Certificate Balance and the
outstanding principal balance of the Notes of each class. Any such consent
by the Holder of this Trust Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Trust Certificate and of any Trust
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent is made upon this Trust
Certificate. The Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of
the Trust Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Trust
Certificate for registration of transfer at the offices or agencies of the
Certificate Registrar maintained by the Owner Trustee in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing, and thereupon one or
more new Trust Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated transferee.
The initial Certificate Registrar appointed under the Trust Agreement is The
Chase Manhattan Bank, New York, New York.
Except as provided in the Trust Agreement, the Trust Certificates
are issuable only as registered Trust Certificates without coupons in
denominations of $20,000 and in integral multiples of $1,000 in excess
thereof provided, however, that the Trust Certificates issued to the Depositor
pursuant to Section 3.10 of the Trust Agreement may be issued in such
denomination as required to include any residual amount. As provided in the
Trust Agreement and subject to certain limitations therein set forth, Trust
Certificates are exchangeable for new Trust Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Certificateholder surrendering the same. No service charge will be made for
any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the Person in whose name
this Trust Certificate is registered as the owner hereof for all purposes,
and none of the Owner Trustee, the Certificate Registrar or any such agent
shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of
all property held as part of the Owner Trust Estate. The Servicer of the
Receivables may at its option purchase the Owner Trust Estate at a price
specified in the Sale and Servicing Agreement, and such purchase of the
Receivables and other property of the Trust will effect early retirement of
the Trust Certificates; provided, however, such right of purchase is
exercisable only as of the last day of any Collection Period as of which the
Pool Balance is less than or equal to 10% of the Original Pool Balance. In
addition, in the event that there is any remaining Pre-Funded Amount at the
end of the Funding Period after giving effect to the purchase of all
Subsequent Receivables, including any such purchase on such date, the
Certificates may be subject to partial prepayment on the Mandatory Redemption
Date in the manner and to the extent described in the Sale and Servicing
Agreement.
The Trust Certificates may not be acquired by (a) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (b) a plan described in Section 4975(e)(1) of
the Code or (c) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity or which uses plan assets to
acquire Trust Certificates (each, a "Benefit Plan"). By accepting and
holding this Trust Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of
assignee)
the within Trust Certificate, and all rights thereunder, and hereby
irrevocably constitutes and appoints , attorney,
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
___________________________________________*/
Signature Guaranteed:
____________________________*/
_________________
*/NOTICE: The signature to this assignment must correspond with the name
of
the registered owner as it appears on the face of the within Trust
Certificate
in every particular, without alteration, enlargement or any change whatever.
Such signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Certificate Registrar, which requirements
include membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Certificate Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.<PAGE>EXHIBIT B
Form of Certificate of Trust of First Merchants Auto Trust 1996-C
THIS Certificate of Trust of FIRST MERCHANTS AUTO TRUST 1996-C (the
"Trust"), dated [ ], 1996, is being duly executed and filed by Chase
Manhattan Bank Delaware, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, §
3801 et seq.).
1. Name. The name of the business trust formed hereby is FIRST
MERCHANTS AUTO TRUST 1996-C.
2. Delaware Trustee. The name and business address of the trustee
of the Trust in the State of Delaware is Chase Manhattan Bank Delaware, 1201
Market Street, Wilmington, Delaware 19801, Attention: Corporate Trustee
Administration Department.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as owner trustee under a Trust
Agreement dated as of [ ], 1996
By:
Name:
Title:
<PAGE>
SALE AND SERVICING AGREEMENT
among
FIRST MERCHANTS AUTO TRUST 1996-C,
Issuer,
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
Seller,
and
FIRST MERCHANTS ACCEPTANCE CORPORATION,
Servicer
and
HARRIS TRUST AND SAVINGS BANK,
Indenture Trustee, Collateral Agent and Backup Servicer
Dated as of December 1, 1996
<PAGE>TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions 1
SECTION 1.02. Other Definitional Provisions 20
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables 21
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of First Merchants 24
SECTION 3.02. Representations and Warranties of the Seller 25
SECTION 3.03. Repurchase upon Breach 25
SECTION 3.04. Custody of Receivable Files 26
SECTION 3.05. Duties of Servicer as Custodian 26
SECTION 3.06. Instructions; Authority to Act 27
SECTION 3.07. Custodian's Indemnification 27
SECTION 3.08. Effective Period and Termination 28
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer 28
SECTION 4.02. Collection and Receivable Payments; Modifications of
Receivables 29
SECTION 4.03. Realization upon Receivables 30
SECTION 4.04. Physical Damage Insurance 30
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles 30
SECTION 4.06. Covenants of Servicer 31
SECTION 4.07. Purchase of Receivables upon Breach 32
SECTION 4.08. Servicing Fee 32
SECTION 4.09. Servicer's Certificate 32
SECTION 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event 32
SECTION 4.11. Annual Independent Accountants' Report 33
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables 33
SECTION 4.13. Monthly Tape 33
SECTION 4.14. Retention and Termination of Servicer 34
ARTICLE V
Distributions; Spread Account;
Statements to Certificateholders and Noteholders
SECTION 5.01. Local Post Office Boxes 35
SECTION 5.02. Accounts 35
SECTION 5.03. Application of Collections 37
SECTION 5.04. Purchase Amounts 37
SECTION 5.05. Transfers from the Spread Account 38
SECTION 5.06. Distributions 38
SECTION 5.07. Claims Upon the Policies; Policy Payments Account 39
SECTION 5.08. Notices to the Security Insurer 41
SECTION 5.09. Rights in Respect of Insolvency Proceedings 41
SECTION 5.10. Effect of Payments by the Security Insurer; Subrogation 41
SECTION 5.11. Statements to Securityholders 42
SECTION 5.12. Pre-Funding Account
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller 44
SECTION 6.02. Corporate Existence 46
SECTION 6.03. Liability of Seller; Indemnities 46
SECTION 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Seller 46
SECTION 6.05. Limitation on Liability of Seller and Others 47
SECTION 6.06. Seller May Own Securities 47
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer 47
SECTION 7.02. Indemnities of Servicer 48
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer 49
SECTION 7.04. Limitation on Liability of Servicer, Backup Servicer
and Others 50
SECTION 7.05. Appointment of Subservicer 51
SECTION 7.06. Servicer and Backup Servicer Not to Resign 51
ARTICLE VIII
Default
SECTION 8.01. Servicer Termination Events 52
SECTION 8.02. Consequences of a Servicer Termination Event 53
SECTION 8.03. Appointment of Successor 53
SECTION 8.04. Notification to Noteholders and Certificateholders 54
SECTION 8.05. Waiver of Past Defaults 54
ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables 54
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment 56
SECTION 10.02. Protection of Title to Trust 57
SECTION 10.03. Notices 58
SECTION 10.04. Assignment by the Seller or the Servicer 59
SECTION 10.05. Limitations on Rights of Others 59
SECTION 10.06. Severability 59
SECTION 10.07. Separate Counterparts 59
SECTION 10.08. Headings 59
SECTION 10.09. Governing Law 59
SECTION 10.10. Assignment by Issuer 59
SECTION 10.11. Nonpetition Covenants 60
SECTION 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee 60
SECTION 10.13. Servicer Payment Obligation 60
SCHEDULE A Schedule of Receivables
SCHEDULE B Schedule of Eligible Investment Receivables
SCHEDULE C Location of Receivable Files
EXHIBIT A Representations and Warranties of First Merchants
EXHIBIT B Form of Distribution Date Statement to Securityholders
EXHIBIT C Form of Servicer's Certificate
EXHIBIT D Form of Notes Policy
EXHIBIT E Form of Certificates Policy
EXHIBIT F Form of Subsequent Transfer Agreement<PAGE>SALE AND
SERVICING AGREEMENT dated as of December 1, 1996, among FIRST
MERCHANTS AUTO TRUST 1996-C, a Delaware business trust (the "Issuer"), FIRST
MERCHANTS AUTO RECEIVABLES CORPORATION II, a Delaware corporation (the
"Seller"), FIRST MERCHANTS ACCEPTANCE CORPORATION, a Delaware corporation
(the "Servicer") and HARRIS TRUST AND SAVINGS BANK, an Illinois banking
corporation as indenture trustee (in such capacity, the "Indenture Trustee"), as
collateral agent (in such capacity, the "Collateral Agent") and as backup
servicer (in such capacity, the "Backup Servicer").
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with automobile retail installment sale contracts
generated by First Merchants Acceptance Corporation in the ordinary course of
business and sold by First Merchants Acceptance Corporation to the Seller;
WHEREAS the Seller is willing to sell such receivables to the Issuer; and
WHEREAS First Merchants Acceptance Corporation is willing to service
such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Amount Financed" means with respect to a Receivable, the amount
advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs, exclusive of any amount allocable to the premium
of force-placed physical damage insurance covering the Financed Vehicle.
"Annual Percentage Rate" or "APR" of a Receivable or Eligible Investment
Receivable means the annual rate of finance charges stated in the related
Contract.
"Backup Servicer" means Harris Trust and Savings Bank or its successor
in interest pursuant to Section 7.03 or such other Person as shall have been
appointed as Backup Servicer pursuant to Section 8.03(b).
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Indenture, this Agreement, the Receivables Purchase Agreement, the
Administration Agreement, the Note Depository Agreement, the Certificate
Depository Agreement, the Spread Account Agreement, the Policies, the
Insurance Agreement, the Indemnification Agreement, the Premium Letter, the
Local Collection Account Agreement, any Subsequent Purchase Agreements and
any Subsequent Transfer Agreements and other documents and certificates
delivered in connection therewith.
"Capitalized Interest Account" means the account designated as such,
established and maintained pursuant to Section 5.02(b).
"Capitalized Interest Distribution Amount" shall mean for each
Determination Date and related Distribution Date during the Funding Period,
the amount equal to (A) the product of (i) a fraction the numerator of which
is 28, 31 and 30 for the Determination Dates in January, February and March,
1997, respectively, and the denominator of which is 360, (ii) the weighted
average of the applicable Class A-1 Rate, Class A-2 Rate and Pass-Through
Rate and (iii) the amount by which the sum of the Certificate Balance and Note
Balance as of the first day of the related Collection Period exceeds the Pool
Balance as of the first day of the related Collection Period (or in the case
of the January 1997 Determination Date, as of the Closing Date) less (B), the
amount of Investment Earnings allocable to the Pre-Funding Account and the
Capitalized Interest Account.
"Capitalized Interest Initial Deposit" shall mean $356,028.75.
"Certificate Balance" equals the Initial Certificate Balance reduced by
all amounts allocable to principal previously distributed to
Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such term
in the Trust Agreement.
"Certificate Pool Factor" means, as of the close of business on the last
day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made
on the immediately following Distribution Date) divided by the Initial
Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the
Closing Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"Certificateholders" has the meaning assigned to such term in the Trust
Agreement.
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the amount, if any, by which the sum of the
Certificateholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and any outstanding Certificateholders' Interest Carryover
Shortfall on such preceding Distribution Date exceeds the amount in respect
of interest actually deposited in the Certificate Distribution Account on such
preceding Distribution Date, plus 30 days' interest on the amount of interest
due but not paid to the Certificateholders on such preceding Distribution
Date, to the extent permitted by law, at the Pass-Through Rate.
"Certificateholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date. Interest with
respect to the Certificates shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of this Agreement and the
Basic Documents.
"Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, interest accrued on the Certificates for
the related Interest Accrual Period at the Pass Through Rate on the Certificate
Balance on the immediately preceding Distribution Date (or, in the case of
the first Distribution Date, the Closing Date), after giving effect to all
distributions of principal to the Certificateholders on or prior to such
preceding Distribution Date.
"Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date (i) prior to the Distribution Date on which
the Class A-2 Notes are paid in full, zero and (ii) on or after the
Distribution Date on which the Class A-2 Notes are paid in full, 100% of the
Regular Principal Distribution Amount (less, on the Distribution Date on
which the Class A-2 Notes are paid in full, the portion thereof payable on the
Class A-2 Notes).
"Certificateholders' Principal Carryover Shortfall" means, with respect
to any Distribution Date, the amount, if any, by which the sum of the
Certificateholders' Monthly Principal Distributable Amount for the preceding
Distribution Date and any outstanding Certificateholders' Principal Carryover
Shortfall on such preceding Distribution Date exceeds the amount in respect
of principal actually deposited in the Certificate Distribution Account on such
preceding Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall for such Distribution Date;
provided, however, that the Certificateholders' Principal Distributable Amount
shall not exceed the Certificate Balance. In addition, on the Final Scheduled
Distribution Date, the principal required to be included in the
Certificateholders' Principal Distributable Amount will include the amount that
is necessary (after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero.
"Certificates" means the Trust Certificates (as defined in the Trust
Agreement).
"Certificates Policy" means the financial guaranty insurance policy
issued by the Security Insurer with respect to the Certificates, including
any endorsements thereto, in the form of Exhibit E.
"Class" means any one of the classes of Notes.
"Class A-1 Final Scheduled Distribution Date" means the June 2000
Distribution Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class A-1
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Class A-1 Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest actually
deposited in the Note Distribution Account on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to the Class A-1
Noteholders on such preceding Distribution Date, to the extent permitted by
law, at the Class A-1 Rate for the related Floating Rate Interest Accrual
Period.
"Class A-1 Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-1 Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the Basic Documents, interest with respect to the Class A-1 Notes shall be
computed on the basis of the actual number of days in each applicable
Floating Rate Interest Accrual Period.
"Class A-1 Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued for the related Floating Rate
Interest Accrual Period on the Class A-1 Notes at the Class A-1 Rate on the
Outstanding Amount of the Class A-1 Notes on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date), after giving effect to all distributions of principal to the Class A-1
Noteholders on or prior to such preceding Distribution Date.
"Class A-1 Monthly Principal Distribution Amount" means, with respect to
any Distribution Date until the Class A-1 Notes are paid in full, 100% of the
Regular Principal Distribution Amount.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"Class A-1 Principal Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class A-1
Monthly Principal Distributable Amount for the preceding Distribution Date
and any outstanding Class A-1 Principal Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of principal actually
deposited in the Note Distribution Account on such preceding Distribution
Date.
"Class A-1 Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Monthly Principal Distributable
Amount and the Class A-1 Principal Carryover Shortfall; provided, however,
that the Class A-1 Principal Distributable Amount shall not exceed the
Outstanding Amount of the Class A-1 Notes. In addition, on the Class A-1
Final Scheduled Distribution Date, the principal required to be deposited in
the Note Distribution Account will include the amount necessary (after giving
effect to the other amounts to be deposited in the Note Distribution Account
on such Distribution Date and allocable to principal) to reduce the
Outstanding Amount of the Class A-1 Notes to zero.
"Class A-2 Additional Principal Distribution Amount" means, (i) with
respect to any Distribution Date prior to the Distribution Date on which the
Class A-1 Notes are paid in full and any Distribution Date after the
Distribution Date on which the Class A-2 Notes are paid in full, zero and
(ii) with respect to any Distribution Date on or after the Distribution Date on
which the Class A-1 Notes are paid in full, 50% of the portion, if any, of
the Total Distribution Amount for the related Collection Period that remains
after the payment of amounts in respect of Section 5.06(b)(1) through (8);
provided, however, that the Class A-2 Additional Principal Distribution Amount
shall not exceed the Outstanding Amount of the Class A-2 Notes.
"Class A-2 Final Scheduled Distribution Date" means the July 2001
Distribution Date.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class A-2
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Class A-2 Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest actually
deposited in the Note Distribution Account on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to the Class A-2
Noteholders on such preceding Distribution Date, to the extent permitted by
law, at the Class A-2 Rate for the related Interest Accrual Period.
"Class A-2 Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-2 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-2 Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the Basic Documents, interest with respect to the Class A-2 Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
"Class A-2 Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued for the related Interest Accrual
Period on the Class A-2 Notes at the Class A-2 Rate on the Outstanding Amount
of the Class A-2 Notes on the immediately preceding Distribution Date (or, in
the case of the first Distribution Date, the Closing Date), after giving
effect to all distributions of principal to the Class A-2 Noteholders on or
prior to such preceding Distribution Date.
"Class A-2 Monthly Principal Distributable Amount" means, with respect
to any Distribution Date (i) prior to the Distribution Date on which the Class
A-1 Notes are paid in full, zero and (ii) on or after the Distribution Date
on which the Class A-1 Notes are paid in full 100% of the Regular Principal
Distribution Amount (less, on the Distribution Date on which the Class A-1
Notes are paid in full, the portion thereof payable on the Class A-1 Notes).
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"Class A-2 Principal Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class A-2
Monthly Principal Distributable Amount for the preceding Distribution Date
and any outstanding Class A-2 Principal Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of principal actually
deposited in the Note Distribution Account on such preceding Distribution
Date.
"Class A-2 Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-2 Monthly Principal Distributable
Amount and the Class A-2 Principal Carryover Shortfall; provided, however,
that the Class A-2 Principal Distributable Amount shall not exceed the
Outstanding Amount of the Class A-2 Notes. In addition, on the Class A-2
Final Scheduled Distribution Date, the principal required to be deposited in
the Note Distribution Account will include the amount necessary (after giving
effect to the other amounts to be deposited in the Note Distribution Account
on such Distribution Date and allocable to principal) to reduce the
Outstanding Amount of the Class A-2 Notes to zero.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.02(b).
"Collection Period" means with respect to any Distribution Date other
than the first Distribution Date, the calendar month preceding such
Distribution Date. The Collection Period with respect to the first
Distribution Date will be the period from and including the Cutoff Date to
and including December 31, 1996. Any amount stated as of the last day of a
Collection Period or as of the first day of a Collection Period shall give
effect to the following calculations as determined as of the close of
business on such last day: (1) all applications of collections and (2) all
distributions to be made on the following Distribution Date.
"Contract" means a motor vehicle retail installment sale contract.
"Controlling Party" means (i) as long as either Policy is in effect and
no Security Insurer Default has occurred and is continuing, the Security
Insurer, (ii) if (a) a Security Insurer Default has occurred and is
continuing or both Policies are otherwise no longer in effect and (b) the Notes
have not been paid in full, the Indenture Trustee for the benefit of the
Noteholders and (iii) if (a) a Security Insurer Default has occurred and is
continuing or the Certificates Policy is otherwise no longer in effect and (b)
the Notes have been paid in full, the Owner Trustee for the benefit of the
Certificateholders.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Harris Trust and Savings Bank, 311 West Monroe Street, 12th Floor,
Chicago, Illinois 60606, Attention: Indenture Trust Administration; or at
such other address as the Indenture Trustee may designate from time to time
by notice to the Noteholders and the Seller, or the principal corporate trust
office of any successor Indenture Trustee (of which address such successor
Indenture Trustee will notify the Noteholders and the Seller).
"Cram Down Loss" means any loss resulting from an order issued by a
court of appropriate jurisdiction in an insolvency proceeding that reduces the
amount owed on a Receivable or otherwise modifies or restructures the
Obligor's Scheduled Payments to be made thereon. The amount of any such Cram
Down Loss will equal the excess of (i) the Principal Balance of the
Receivable immediately prior to such order over (ii) the Principal Balance of
such Receivable as so reduced, modified or restructured. A Cram Down Loss will
be deemed to have occurred on the date of issuance of such order.
"Credit Enhancement Fee" means, with respect to any Distribution Date,
the fee paid to the Seller, upon the terms and subject to the conditions set
forth in the Spread Account Agreement, in consideration of the pledge by the
Seller of certain of its assets pursuant to the Spread Account Agreement.
The Credit Enhancement Fee shall be in an amount on each Distribution Date
equal to the funds remaining in the Collection Account on such date after the
distribution by the Indenture Trustee of all amounts required pursuant to
clauses (1) through (9) of Section 5.06(b).
"Cutoff Date" means November 14, 1996.
"Dealer" means the dealer who sold a Financed Vehicle and who originated
the related Receivable and assigned it to First Merchants pursuant to a
Dealer Agreement.
"Dealer Agreement" means an agreement between First Merchants and a
Dealer pursuant to which such Dealer sells Contracts to First Merchants.
"Defaulted Receivable" means a Receivable with respect to which any of
the following shall have occurred: (i) a payment under the related Contract
is 120 or more days (or, if the related Obligor is a debtor under Chapter 13 of
the U.S. Bankruptcy Code, 180 or more days) delinquent, (ii) the related
Financed Vehicle has been repossessed or (iii) the Servicer has determined in
good faith that payments under the related Contract are not likely to be
resumed.
"Deficiency Claim Date" means, with respect to each Distribution Date,
the third Business Day preceding such Distribution Date.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Indenture Trustee or its nominee
or custodian by physical delivery to the Indenture Trustee or its nominee or
custodian endorsed to, or registered in the name of, the Indenture Trustee or
its nominee or custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer
thereof (i) by delivery of such certificated security endorsed to, or
registered in the name of, the Indenture Trustee or its nominee or custodian
or endorsed in blank to a financial intermediary (as defined in Section 8-313
of the UCC) and the making by such financial intermediary of entries on its
books and records identifying such certificated securities as belonging to
the Indenture Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of such certificated
security by the Indenture Trustee or its nominee or custodian, or (ii) by
delivery thereof to a "clearing corporation" (as defined in Section 8-102(3)
of the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the identification by
the clearing corporation of the certificated securities for the sole and
exclusive account of the financial intermediary, the maintenance of such
certificated securities by such clearing corporation or a "custodian bank"
(as defined in Section 8-102(4) of the UCC) or the nominee of either subject to
the clearing corporation's exclusive control, the sending of a confirmation by
the financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such financial
intermediary of entries on its books and records identifying such certificated
securities as belonging to the Indenture Trustee or its nominee or custodian
(all of the foregoing, "Physical Property"), and, in any event, any such
Physical Property in registered form shall be in the name of the Indenture
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Trust Account Property (as defined herein) to the
Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures,
all in accordance with applicable law, including applicable Federal
regulations and Articles 8 and 9 of the UCC: book-entry registration of such
Trust Account Property to an appropriate book-entry account maintained with a
Federal Reserve Bank by a financial intermediary which is also a "depository"
pursuant to applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or custodian
of the purchase by the Indenture Trustee or its nominee or custodian of such
book-entry securities; the making by such financial intermediary of entries
in its books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Indenture Trustee or its nominee or custodian and indicating
that such custodian holds such Trust Account Property solely as agent for the
Indenture Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect complete
transfer of ownership of any such Trust Account Property to the Indenture
Trustee or its nominee or custodian, consistent with changes in applicable
law or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer
thereof in the name of the financial intermediary, the sending of a confirmation
by the financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such uncertificated security, the making by such
financial intermediary of entries on its books and records identifying such
uncertificated certificates as belonging to the Indenture Trustee or its
nominee or custodian.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Determination Date" means, with respect to each Distribution Date, the
earlier of (i) the eighth calendar day of the month in which such
Distribution Date occurs (or if such eighth day is not a Business Day, the next
succeeding Business Day) and (ii) the fifth Business Day preceding such
Distribution Date.
"Distribution Date" means, with respect to each Collection Period, the
fifteenth day of the following month or, if such day is not a Business Day,
the immediately following Business Day, commencing on January 15, 1997.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution shall have a credit
rating from each Rating Agency in one of its generic rating categories that
signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee or The Chase Manhattan Bank so long as
it shall be Paying Agent under the Trust Agreement or (b) a depository
institution organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia (or any domestic branch
of a foreign bank), which (i) has either (A) a long-term unsecured debt
rating of AAA or better by Standard & Poor's and A1 or better by Moody's or (B)
a certificate of deposit rating of A-1+ by Standard & Poor's and P-1 or better
by Moody's, or any other long-term, short-term or certificate of deposit
rating acceptable to the Rating Agencies and (ii) whose deposits are insured
by the FDIC. If so qualified, the Indenture Trustee, the Owner Trustee or
The Chase Manhattan Bank may be considered an Eligible Institution for the
purposes of clause (b) of this definition.
"Eligible Investment Receivable" has the meaning assigned to such term
in the Receivables Purchase Agreement.
"Eligible Investments" means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than
such obligations the rating of which is based on the credit of a Person other
than such depository institution or trust company) thereof shall have a
credit rating from each of the Rating Agencies in the highest investment
category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or any
of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company (acting as
principal) described in clause (b);
(g) repurchase obligations with respect to any security or whole
loan, entered into with (i) a depository institution or trust company (acting
as principal) described in clause (b) above (except that the rating referred
to in the proviso in such clause (b) shall be A-1 or higher in the case of
Standard & Poor's) (such depository institution or trust company being
referred to in this definition as a "financial institution"), (ii) a
broker/dealer (acting as principal) registered as a broker or dealer under
Section 15 of the Exchange Act (a "broker/dealer") the unsecured short-term
debt obligations of which are rated P-1 by Moody's and at least A-1 by
Standard & Poor's at the time of entering into such repurchase obligation (a
"rated broker/dealer"), (iii) an unrated broker/dealer (an "unrated
broker/dealer"), acting as principal, that is a wholly-owned subsidiary of a
non-bank holding company the unsecured short-term debt obligations of which
are rated P-1 by Moody's and at least A-1 by Standard & Poor's at the time of
entering into such repurchase obligation (a "Rated Holding Company") or (iv)
an unrated subsidiary (a "Guaranteed Counterparty"), acting as principal,
that is a wholly-owned subsidiary of a direct or indirect parent Rated Holding
Company, which guarantees such subsidiary's obligations under such repurchase
agreement; provided that the following conditions are satisfied:
(A) the aggregate amount of funds invested in repurchase obligations
of a financial institution, a rated broker/dealer, an unrated broker/dealer
or Guaranteed Counterparty in respect of which the Standard & Poor's unsecured
short-term ratings are A-1 (in the case of an unrated broker/dealer or
Guaranteed Counterparty, such rating being that of the related Rated Holding
Company) shall not exceed 20% of the sum of the then Outstanding Amount of
the Notes and the Certificate Balance (there being no limit on the amount of
funds that may be invested in repurchase obligations in respect of which such
Standard & Poor's rating is A-1+ (in the case of an unrated broker/dealer or
Guaranteed Counterparty, such rating being that of the related Rated Holding
Company));
(B) the repurchase obligation must mature within 30 days of the date
on which the Indenture Trustee or the Issuer, as applicable, enters into such
repurchase obligation;
(C) the repurchase obligation shall not be subordinated to any other
obligation of the related financial institution, rated broker/dealer, unrated
broker/dealer or Guaranteed Counterparty;
(D) the collateral subject to the repurchase obligation is held, in
the appropriate form, by a custodial bank on behalf of the Indenture Trustee
or the Issuer, as applicable;
(E) the repurchase obligation shall require that the collateral
subject thereto shall be marked to market daily;
(F) in the case of a repurchase obligation of a Guaranteed
Counterparty, the following conditions shall also be satisfied:
(i) the Indenture Trustee or the Issuer, as applicable, shall have
received an opinion of counsel (which may be in-house counsel) to the effect
that the guarantee of the related Rated Holding Company is a legal, valid and
binding agreement of the Rated Holding Company, enforceable in accordance
with its terms, subject as to enforceability to bankruptcy, insolvency,
reorganization and moratorium or other similar laws affecting creditors'
rights generally and to general equitable principles;
(ii) the Indenture Trustee or the Issuer, as applicable, shall have
received (x) an incumbency certificate for the signer of such guarantee,
certified by an officer of such Rated Holding Company and (y) a resolution,
certified by an officer of the Rated Holding Company, of the board of
directors (or applicable committee thereof) of the Rated Holding Company
authorizing the execution, delivery and performance of such guarantee by the
Rated Holding Company;
(iii) the only conditions to the obligation of such Rated Holding
Company to pay on behalf of the Guaranteed Counterparty shall be that the
Guaranteed Counterparty shall not have paid under such repurchase obligation
when required (it being understood that no notice to, demand on or other
action in respect of the Guaranteed Counterparty is necessary) and that the
Indenture Trustee or the Issuer shall make a demand on the Rated Holding
Company to make the payment due under such guarantee;
(iv) the guarantee of the Rated Holding Company shall be irrevocable
with respect to such repurchase obligation and shall not be subordinated to
any other obligation of the Rated Holding Company; and
(v) each of Standard & Poor's and Moody's has confirmed in writing
to the Indenture Trustee or Issuer, as applicable, that it has reviewed the
form of the guarantee of the Rated Holding Company and has determined that the
issuance of such guarantee will not result in the downgrade or withdrawal of
the ratings assigned to the Notes or result in an increased capital charge to
the Security Insurer;
(G) the repurchase obligation shall require that the repurchase
obligation be overcollateralized and shall provide that, upon any failure to
maintain such overcollateralization, the repurchase obligation shall become
due and payable, and unless the repurchase obligation is satisfied
immediately, the collateral subject to the repurchase agreement shall be
liquidated and the proceeds applied to satisfy the unsatisfied portion of the
repurchase obligation; and
(H) in the case of the Capitalized Interest Account and the
Pre-Funding Account, the rating from Standard & Poor's and Moody's in respect
of the unsecured short-term debt obligations of the financial institution,
rated broker/dealer, unrated broker/dealer or Guaranteed Counterparty (in the
case of an unrated broker/dealer or Guaranteed Counterparty, such rating
being that of the related Rated Holding Company) shall be A-1+ and P-1,
respectively; and
(h) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies that the
acquisition of such investment as an Eligible Investment will not result in a
withdrawal or downgrading of the ratings on the Notes or the Certificates or
result in an increased capital charge to the Security Insurer.
"Eligible Servicer" means First Merchants Acceptance Corporation, the
Backup Servicer or any other Person which at the time of its appointment as
Servicer (i) is servicing a portfolio of motor vehicle retail installment
sale contracts and/or motor vehicle installment loans, (ii) is legally
qualified and has the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to service a portfolio
of motor vehicle retail installment sale contracts and/or motor vehicle
installment loans similar to the Receivables with reasonable skill and care and
(iv) has a minimum net worth of $100,000,000.
"Endorsement" shall have the meaning specified in the applicable Policy.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Distribution Date" means the January 15, 2003
Distribution Date.
"Final Scheduled Maturity Date" means May 24, 2002.
"Financed Vehicle" means an automobile or light-duty truck, together
with all accessions thereto, securing an Obligor's indebtedness under the
respective Receivable or Eligible Investment Receivable, as the case may be.
"First Merchants" means First Merchants Acceptance Corporation, a
Delaware corporation, and its successors.
"Fiscal Agent" shall have the meaning specified in the applicable Policy.
"FMARC II" means First Merchants Auto Receivables Corporation II, a
Delaware corporation, and its successors.
"Funding Period" means the period beginning on and including the Closing
Date and ending on and including the first to occur of (a) the Determination
Date on which the amount on deposit in the Pre-Funding Account (after giving
effect to any transfers therefrom in connection with the transfer of
Subsequent Receivables to the Issuer on such Determination Date) is less than
or equal to $150,000, (b) the date on which an Event of Default occurs under
either the Indenture or the Sale and Servicing Agreement and (c) the
Determination Date with respect to the March 1997 Distribution Date.
"Guaranteed Certificate Payment" means, with respect to each
Distribution
Date, an amount equal to the Certificateholders' Interest Distributable
Amount plus the Certificateholders' Principal Distributable Amount.
"Guaranteed Note Payment" means, with respect to each Distribution Date,
an amount equal to the Noteholders' Interest Distributable Amount plus the
Noteholders' Principal Distributable Amount.
"Guaranteed Payment" means, with respect to each Distribution Date, a
Guaranteed Note Payment or a Guaranteed Certificate Payment.
"Indenture" means the Indenture dated as of December 1, 1996, between
the Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Certificate Balance" means $5,787,000.
"Initial Pool Balance" means the aggregate principal balance of the
Receivables as of the Cutoff Date.
"Initial Receivable" means any Contract listed on Schedule A (which
Schedule may be in the form of microfiche).
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in
an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of
an order for relief in an involuntary case under any such law, or the consent
by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
for such Person or for any substantial part of its property, or the making by
such Person of any general assignment for the benefit of creditors, or the
failure by such Person generally to pay its debts as such debts become due, or
the taking of action by such Person in furtherance of any of the foregoing.
"Insurance Agreement" means the Insurance and Indemnity Agreement dated
as of December 1, 1996 among the Security Insurer, the Issuer, First
Merchants and the Seller.
"Insurance Agreement Event of Default" means any Event of Default, as
defined in the Insurance Agreement.
"Interest Accrual Period" means, with respect to the Class A-2 Notes and
the Certificates and any Distribution Date, the period from and including the
15th day of the preceding calendar month (or, in the case of the first
Distribution Date, from and including the Closing Date) to and including the
14th day of the calendar month in which such Distribution Date occurs.
"Interest Distribution Amount" means, with respect to any Distribution
Date, the sum of the following amounts, without duplication, with respect to
the Receivables in respect of the Collection Period preceding such
Distribution Date: (a) that portion of all collections on Receivables
allocable to interest, (b) Liquidation Proceeds with respect to the
Receivables to the extent allocable to interest due thereon in accordance
with the Servicer's customary servicing procedures, (c) the Purchase Amount of
each Receivable that became a Purchased Receivable during such Collection
Period to the extent attributable to accrued interest on such Receivable, (d)
Investment Earnings for the related Distribution Date, (e) Recoveries for such
Collection Period to the extent allocable to interest and (f) the Capitalized
Interest Distribution Amount; provided, however, that in calculating the
Interest Distribution Amount the following will be excluded: (i) all payments
and proceeds (including Liquidation Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in the Interest Distribution
Amount in a prior Collection Period and (ii) amounts released from the Pre-
Funding Account other than Investment Earnings.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.02(b).
"Issuer" means First Merchants Auto Trust 1996-C.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of
any act or omission by the related Obligor.
"Liquidated Receivable" means any Receivable or Eligible Investment
Receivable, as applicable, with respect to which any of the following shall
have occurred: (i) the related Financed Vehicle has been repossessed for 90
days or more, (ii) such Receivable is a Defaulted Receivable with respect to
which the Servicer has determined in good faith that all amounts it expects
to recover have been received or (iii) a payment under the related Contract is
150 or more days (or, if the related Obligor is a debtor under Chapter 13 of
the U.S. Bankruptcy Code, 210 or more days) delinquent.
"Liquidation Proceeds" means, with respect to any Liquidated Receivable,
the moneys collected in respect thereof, from whatever source on a Liquidated
Receivable during the Collection Period in which such Receivable or Eligible
Investment Receivable, as applicable, became a Liquidated Receivable, net of
the sum of any amounts expended by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivable.
"Local Collection Account" shall have the meaning provided in Section
5.02.
"Local Collection Account Agreement" means the letter agreement dated as
of December 1, 1996, among Harris Trust and Savings Bank, First Merchants
Auto Receivables Corporation II, the Indenture Trustee, the Seller, the
Servicer and the Security Insurer, as amended, supplemented or otherwise
modified from time to time.
"Local Post Office Box" shall have the meaning specified in Section 5.01.
"Mandatory Redemption Date" means the Distribution Date immediately
following the end of the Funding Period.
"Master Spread Account Agreement" means the Master Spread Account
Agreement dated as of March 1, 1996, as amended, among FMARC II, as
depositor, the Security Insurer and Harris Trust and Savings Bank, as trustee
and collateral agent.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Note" shall have the meaning specified in the Indenture.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.02.
"Note Pool Factor" means, with respect to each Class of Notes as of the
close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the Outstanding Amount of such Class of Notes (after
giving effect to any reductions thereof to be made on the immediately
following Distribution Date) divided by the original Outstanding Amount of
such Class of Notes. The Note Pool Factor will be 1.0000000 as of the
Closing Date; thereafter, the Note Pool Factor will decline to reflect
reductions in the Outstanding Amount of such Class of Notes.
"Noteholders" shall mean the Class A-1 Noteholders and/or the Class A-2
Noteholders.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Interest Distributable Amount for
such Distribution Date and the Class A-2 Interest Distributable Amount for
such Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Principal Distributable Amount
for such Distribution Date and the Class A-2 Principal Distributable Amount for
such Distribution Date.
"Notes Policy" means the financial guaranty insurance policy issued by
the Security Insurer with respect to the Notes, including any endorsements
thereto, in the form of Exhibit D.
"Obligor" on a Receivable or an Eligible Investment Receivable means the
purchaser or co-purchasers of the Financed Vehicle and any other Person who
owes payments under such Receivable or Eligible Investment Receivable,
respectively.
"Obligor's Scheduled Payment" means, with respect to each Receivable and
each Eligible Investment Receivable, the scheduled monthly payment amount set
forth in the related Contract and required to be paid by the Obligor during
each Collection Period. If, after the Closing Date, an Obligor's scheduled
monthly payment obligation under the related Contract is modified (i) as a
result of the order of a court in an insolvency proceeding involving the
Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940
or (iii) as a result of modifications or extensions of the Contract permitted
by Section 4.02, "Obligor's Scheduled Payment" shall refer to the Obligor's
scheduled monthly payment obligation as so modified.
"Officers' Certificate" means a certificate signed by (a) the chairman
of the board, any vice president, the controller or any assistant controller
and (b) the president, a treasurer, assistant treasurer, secretary or assistant
secretary of the Seller or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who
may be an employee of or counsel to the Seller or the Servicer, which counsel
shall be acceptable to the Indenture Trustee, the Owner Trustee or the Rating
Agencies, as applicable.
"Original Pool Balance" means the sum of the Pool Balance as of the
Cutoff Date plus the aggregate Principal Balance of all Subsequent
Receivables
(as of their respective Subsequent Cutoff Dates) sold to the Issuer during
the Funding Period.
"Outstanding Amount" shall have the meaning specified in the Indenture.
"Overfunded Interest Amount" means, with respect to a Subsequent
Transfer Date occurring in December 1996 or January 1997 and the Determination
Date following such Subsequent Transfer Date, that portion of the amount then on
deposit in the Capitalized Interest Account no longer required for future
Capitalized Interest Distribution Amounts, such Overfunded Interest Amount to
be determined by agreement between the Security Insurer and the Seller with
the concurrence of the Rating Agencies and set forth in an Officer's
Certificate of the Servicer delivered to the Indenture Trustee on or before
the applicable Determination Date.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under
the Trust Agreement.
"Pass-Through Rate" means 6.35% per annum.
"Payment Determination Date" means, with respect to any Distribution
Date, the Business Day immediately preceding such Distribution Date.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Policy" means the Certificates Policy or the Notes Policy, as
applicable.
"Policy Payments Account" shall have the meaning specified in Section
5.07(b).
"Pool Balance" means, with respect to each Determination Date, the
aggregate Principal Balance of the Receivables (i.e., not Eligible Investment
Receivables, and excluding all Purchased Receivables and Liquidated
Receivables) as of the close of business on the last day of the related
Collection Period, after giving effect to all payments received from Obligors
for such Collection Period, and after adjustment for Cram Down Losses for
such Collection Period.
"Portfolio Performance Test" has the meaning set forth in the Spread
Account Agreement.
"Precomputed Receivable" means any Receivable or Eligible Investment
Receivable, as applicable, under which the portion of a payment allocable to
earned interest (which may be referred to in the related Contract as an
add-on finance charge) and the portion allocable to the Amount Financed is
determined according to the sum of periodic balances or the sum of monthly
balances or any equivalent method or are monthly actuarial receivables.
"Pre-Funded Amount" means the amount on deposit in the Pre-Funding
Account, which shall initially be $36,168,001.73.
"Pre-Funded Percentage" means, with respect to a Class of Notes or the
Certificates, the quotient (expressed as a percentage) of (i) the principal
balance of such Class of Notes or the Certificates, as the case may be, as of
the preceding Distribution Date and (ii) the sum of the principal balances of
the Notes and the Certificates as of the preceding Distribution Date.
"Pre-Funding Account" means the account designated as such, established
and maintained pursuant to Section 5.02(b).
"Principal Balance" means, with respect to any Receivable or Eligible
Investment Receivable and Determination Date, the Amount Financed minus an
amount equal to the sum, as of the close of business on the last day of the
related Collection Period, of (1) that portion of all amounts received on or
prior to such day with respect to such Receivable or Eligible Investment
Receivable and allocable to principal using the actuarial method (with
respect to Precomputed Receivables) or the Simple Interest Method (with
respect to Simple Interest Receivables), as applicable, and (2) any Cram Down
Losses with respect to such Receivable or Eligible Investment Receivable.
"Purchase Amount" means, with respect to any Receivable or Eligible
Investment Receivable, as applicable, that became a Purchased Receivable, the
unpaid principal balance owed by the Obligor thereon plus interest on such
amount at the applicable APR to the last day of the month of repurchase.
"Purchased Receivable" means a Receivable or Eligible Investment
Receivable, as applicable, purchased as of the close of business on the last
day of a Collection Period by the Servicer pursuant to Section 4.07 or by the
Seller pursuant to Section 3.03.
"Rating Agency" means either Moody's or Standard & Poor's or, when used
in the plural form, Moody's and Standard and Poor's. If none of Moody's,
Standard & Poor's or a successor to either of them remains in existence,
"Rating Agency" shall mean any nationally recognized statistical rating
organization or other comparable Person designated by the Seller, notice of
which designation shall be given to the Owner Trustee, the Indenture Trustee,
the Servicer and the Security Insurer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Seller, the Servicer, the Owner
Trustee and the Indenture Trustee in writing that such action will not result
in a reduction or withdrawal of the then current rating of the Notes or the
Certificates or result in an increased capital charge of the Security Insurer.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
"Receivables" means the Initial Receivables and Subsequent Receivables.
An Eligible Investment Receivable is not a Receivable.
"Receivable Files" means the documents specified in Section 3.04.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement dated as of December 1, 1996, between First Merchants, as seller
and FMARC II, as Purchaser.
"Receivables Schedule" means Schedule A or Schedule B hereto, as
applicable.
"Recoveries" means, with respect to any Receivable that becomes a
Liquidated Receivable, monies collected in respect thereof, from whatever
source, during any Collection Period following the Collection Period in which
such Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts
required by law to be remitted to the Obligor.
"Regular Principal Distribution Amount" means, with respect to any
Distribution Date, the sum of the following amounts, without duplication,
with respect to the Receivables (i.e., not with respect to any Eligible
Investment Receivables) in respect of the related Collection Period: (i) that
portion of all collections on the Receivables allocable to principal, (ii) the
aggregate outstanding principal balance of all Receivables that became
Liquidated Receivables during such Collection Period, (iii) that portion
allocable to principal of the aggregate amount of any Cram Down Losses and (iv)
that portion allocable to principal of the Purchase Amount of all Receivables
that became Purchased Receivables during or in respect of such Collection
Period; provided, however, that in calculating the Regular Principal
Distribution Amount the following will be excluded: (i) all payments and
proceeds (including Liquidation Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in the Regular Principal
Distribution Amount in a prior Collection Period, (ii) Recoveries and (iii)
amounts released from the Pre-Funding Account.
"Responsible Officer" means the chairman of the board, the president,
any executive vice president, any vice president, the treasurer, any assistant
treasurer, the secretary, or any assistant secretary of the Servicer.
"Securities" means the Notes and the Certificates.
"Security Insurer" means Financial Security Assurance Inc., a monoline
insurance company incorporated under the laws of the State of New York, or
its successor.
"Security Insurer Default" means any one of the following events shall
have occurred and be continuing:
(a) the Security Insurer shall have failed to make a required
payment when due under the Notes Policy or the Certificates Policy;
(b) the Security Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization that is final and nonappealable;
or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent, or receiver for the Security Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession
by a custodian, trustee, agent, or receiver of the Security Insurer or of all
or any material portion of its property.
"Securityholders" means the Noteholders and/or the Certificateholders.
"Seller" means FMARC II and its successors in interest to the extent
permitted hereunder.
"Servicer" means First Merchants, as the servicer of the Receivables,
and each successor to First Merchants (in the same capacity) pursuant to
Section 7.03 or 8.03.
"Servicer Termination Event" means an event specified in Section 8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicer Extension Notice" shall have the meaning specified in Section
4.14.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during each Collection Period, determined pursuant to Section 4.08.
"Simple Interest Method" means the method of allocating the monthly
payments received with respect to a Receivable to interest in an amount equal
to the product of (i) the applicable APR, (ii) the period of time (expressed
as a fraction of a year, based on the actual number of days in the calendar
month and 365 days in the calendar year) elapsed since the preceding payment
was made under such Receivable and (iii) the outstanding principal amount of
the Receivable, and allocating the remainder of each such monthly payment to
principal.
"Simple Interest Receivable" means any Receivable or Eligible Investment
Receivable, as applicable, under which the portion of a payment allocable to
interest and the portion allocable to principal is determined in accordance
with the Simple Interest Method.
"Spread Account" means the account designated as such, established and
maintained pursuant to the Spread Account Agreement.
"Spread Account Agreement" means the Master Spread Account Agreement
dated as of March 1, 1996, among FMARC II, as depositor, the Security Insurer
and Harris Trust and Savings Bank, as trustee and collateral agent, as
amended by the Amendment to the Master Spread Account Agreement, dated as of
May 1, 1996 and as supplemented by the Series 1996-C Supplement to the Master
Spread Account Agreement, dated as of December 1, 1996, among FMARC II, the
Security Insurer, the Owner Trustee and Harris Trust and Savings Bank, as the
same may be supplemented or amended from time to time.
"Spread Account Percentage" shall mean with respect to each Subsequent
Transfer Date, the amount equal to 8% of the aggregate principal balance of
Subsequent Receivables being conveyed to the Trust.
"Spread Account Required Amount" has the meaning assigned to such term
in the Spread Account Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc. or its successor.
"State" means any one of the 50 States of the United States of America
or the District of Columbia.
"Subsequent Cutoff Date" means the date as of which particular
Subsequent Receivables are conveyed to the Trust pursuant to Section 2.01 (or
Subsequent Eligible Investment Receivables are conveyed to the Collateral
Agent).
"Subsequent Eligible Investment Receivables" shall have the meaning
assigned to such term in the Receivables Purchase Agreement.
"Subsequent Purchase Agreement" shall have the meaning assigned to such
term in the Receivables Purchase Agreement.
"Subsequent Receivables" means the Contracts transferred to the Issuer
pursuant to Section 2.01, which shall be listed on Schedule A to the related
Subsequent Transfer Agreement.
"Subsequent Transfer Agreement" has the meaning assigned thereto in
Section 2.01(c).
"Subsequent Transfer Date" means each date designated by the Seller
during the Funding Period on which Subsequent Receivables are to be
transferred to the Issuer in accordance with Section 2.01 pursuant to a
Subsequent Transfer Agreement.
"Total Distribution Amount" means, for each Distribution Date, the sum
of the applicable Interest Distribution Amount and the applicable Regular
Principal Distribution Amount (other than the portion thereof attributable to
Realized Losses or Cram Down Losses).
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.02.
"Trust Agreement" means the Amended and Restated Trust Agreement dated
as of December 1, 1996, between the Seller, as Depositor, and the Owner Trustee.
"Trust Officer" means, in the case of the Indenture Trustee or the
Backup Servicer, any Officer within the Corporate Trust Office of the Indenture
Trustee, including any Assistant Vice President, Assistant Treasurer,
Assistant Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject and, with respect to the Owner
Trustee, any officer in the Corporate Trust Administration Department of the
Owner Trustee with direct responsibility for the administration of the Trust
Agreement and the Basic Documents on behalf of the Owner Trustee.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to
them in the Indenture or, if not defined therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To
the extent that the definitions of accounting terms in this Agreement or in any
such certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(d) The words "hereof," "herein," "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; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables. (a) In consideration of the
Issuer's delivery to or upon the order of the Seller of $[ ], the Seller does
hereby sell, transfer, assign, set over and otherwise convey to the Issuer,
without recourse (subject to the obligations of the Seller set forth herein),
all right, title and interest of the Seller in and to:
(i) the Initial Receivables and all moneys received thereon on or
after November 14, 1996 and the Subsequent Receivables listed on Schedule A
to the related Subsequent Transfer Agreements and all moneys received thereon on
or after the related Subsequent Cutoff Dates;
(ii) the security interests in the Financed Vehicles and any
accessions thereto granted by Obligors pursuant to the Receivables and any
other interest of the Seller in such Financed Vehicles;
(iii) any Liquidation Proceeds and any other proceeds with respect
to the Receivables from claims on any physical damage, credit life or
disability insurance policies covering Financed Vehicles or Obligors, including
any vendor's single interest or other collateral protection insurance policy;
(iv) any property that shall have secured a Receivable and shall
have been acquired by or on behalf of the Seller, the Servicer or the Trust;
(v) all documents and other items contained in the Receivables Files;
(vi) all of the Seller's rights (but not its obligations) under the
Receivables Purchase Agreement and each Subsequent Purchase Agreement;
(vii) all right, title and interest in all funds on deposit from
time to time in the Trust Accounts and the Certificate Distribution Account and
in all investments and proceeds thereof (including all income thereon); and
(viii) the proceeds of any and all of the foregoing.
(b) Except as otherwise provided herein, all of the provisions of this
Agreement applicable to a Receivable shall also apply to each Eligible
Investment Receivable, except that (i) collections on the Eligible Investment
Receivables shall be deposited in the Local Collection Accounts and swept to
the Collection Account pursuant to Sections 5.01 and 5.02, and, upon receipt
pursuant to Section 4.09 of the monthly Servicer's Certificate separately
identifying the collections received on the Eligible Investment Receivables,
the Indenture Trustee shall deposit the amount of such collections into the
Spread Account and (ii) pursuant to Section 5.02, the Servicer shall deposit
Purchase Amounts in respect of the Eligible Investment Receivables into the
Spread Account at the time when Purchase Amounts in respect of the
Receivables are required to be deposited into the Collection Account. Eligible
Investment Receivables shall be part of the Spread Account and shall not be
Receivables hereunder or under the Indenture, and collections on and Purchase
Amounts in respect of Eligible Investment Receivables shall be applied as part
of the Spread Account pursuant to the Spread Account Agreement and shall not be
part of the Total Distribution Amount. The Servicer shall receive a Servicing
Fee in respect of the Eligible Investment Receivables calculated in the manner
specified in Section 4.08 and payable out of any collections on the Eligible
Investment Receivables allocable to interest.
(c) The Seller shall transfer to the Issuer the Subsequent Receivables
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions
precedent on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have delivered to the Owner Trustee and the
Indenture Trustee a written transfer agreement in substantially the form of
Exhibit F, which shall have been duly executed by each of the parties thereto
(the "Subsequent Transfer Agreement"), which shall include supplements to
Schedule A listing the Subsequent Receivables;
(ii) the Seller shall have deposited in the Collection Account on or
prior to such Subsequent Transfer Date, with respect to each Subsequent
Receivable, the collections with respect thereto received on or after the
applicable Subsequent Cutoff Date;
(iii) on such Subsequent Transfer Date, (A) the Seller was not
insolvent and will not become insolvent as a result of the transfer of
Subsequent Receivables on such Subsequent Transfer Date, (B) the Seller did
not intend to incur or believe that it would incur debts that would be beyond
the Seller's ability to pay as such debts matured, (C) such transfer was not
made with actual intent to hinder, delay or defraud any Person and (D) the
assets of the Seller did not constitute unreasonably small capital to carry
out its business as conducted;
(iv) the Funding Period shall not have terminated;
(v) the Receivables in the Trust, including the Subsequent
Receivables to be conveyed to the Trust on such Subsequent Transfer Date,
shall meet the following criteria (based on the characteristics of the
Initial Receivables on the Cutoff Date and the Subsequent Receivables on the
related Subsequent Cutoff Dates): (A) the weighted average APR of the Initial
Receivables, together with all Subsequent Receivables as of the applicable
Subsequent Cutoff Dates, is not less than 20% and (B) the original term of
each Subsequent Receivable is not greater than 66 months;
(vi) each of the representations and warranties made by the Seller
pursuant to Section 3.02 with respect to the Subsequent Receivables shall be
true and correct as of such Subsequent Transfer Date, and the Seller shall
have performed all obligations to be performed by it hereunder on or prior to
such Subsequent Transfer Date;
(vii) each Subsequent Receivable will have a scheduled payment due
during the Collection Period for the month immediately following the month in
which the Subsequent Transfer Date occurs;
(viii) the Seller shall, at its own expense, on or prior to such
Subsequent Transfer Date, indicate in its computer files that the Subsequent
Receivables identified in the Subsequent Transfer Agreement have been sold to
the Issuer pursuant to this Agreement and the Subsequent Transfer Agreement;
(ix) the Seller shall have taken any action required to maintain the
first perfected ownership interest of the Issuer in the Owner Trust Estate
and the first perfected security interest of the Indenture Trustee in the
assets of the Trust;
(x) no selection procedures believed by the Seller to be adverse to
the interests of the Certificateholders or the Noteholders shall have been
utilized in selecting the Subsequent Receivables;
(xi) the addition of any such Subsequent Receivables will not result
in a material adverse tax consequence to the Trust, the Noteholders or the
Certificateholders;
(xii) the Security Insurer (so long as no Security Insurer Default
shall have occurred and be continuing) shall have approved the transfer of
such Subsequent Receivable to the Trust; and
(xiii) the Seller shall have delivered to the Indenture Trustee, the
Owner Trustee and the Rating Agencies a statement listing the aggregate
Principal Balance of such Subsequent Receivables so transferred and any other
information reasonably requested by any of the foregoing with respect to such
Subsequent Receivables;
(xiv) the addition of any such Subsequent Receivable will not result
in a material adverse tax consequence to the Trust, the Noteholders or the
Certificateholders; and
(xv) the Seller shall have delivered (A) to the Rating Agencies an
Opinion of Counsel with respect to the transfer of such Subsequent
Receivables substantially in the form of, or confirming, the Opinion of Counsel
delivered to the Rating Agencies on the Closing Date and (B) to the Owner
Trustee and the Indenture Trustee the Opinion of Counsel required by Section
10.02(i)(1); and
(xvi) each Rating Agency shall have confirmed that the rating on the
Notes and the Certificates shall not be withdrawn or reduced as a result of
the transfer of such Subsequent Receivables to the Trust;
(xvii) the Seller shall have delivered to the Indenture Trustee and
the Owner Trustee an Officers' Certificate confirming the satisfaction of
each condition precedent specified in this paragraph (c).
The Seller covenants that in the event any of the foregoing conditions
subsequent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase such
Subsequent Receivable at a price equal to the Purchase Amount thereof, in the
manner specified in Section 5.04.
(d) The Seller covenants to transfer to the Issuer during the
Funding Period pursuant to paragraph (a) above, all Subsequent Receivables made
available by First Merchants to the Seller pursuant to Section 2.03 of the
Receivables Purchase Agreement.
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of First Merchants. (a)
First Merchants has made each of the representations and warranties set forth
in Exhibit A hereto under the Receivables Purchase Agreement and has
consented to the assignment by the Seller to the Issuer of the Seller's rights
with respect thereto. Such representations and warranties speak as of the
execution and delivery of this Agreement and as of the Closing Date in the
case of the Initial Receivables, and as of the applicable Subsequent Transfer
Date, in the case of the Subsequent Receivables, but shall survive the sale,
transfer and assignment of the Receivables to the Issuer. Pursuant to
Section 2.01 of this Agreement, the Seller has sold, assigned, transferred and
conveyed to the Issuer, as part of the assets of the Issuer, its rights under
the Receivables Purchase Agreement, including the representations and
warranties of First Merchants therein as set forth in Exhibit A, upon which
the Issuer relies in accepting the Receivables and delivering the Securities
and the Security Insurer relies in issuing the Policies, together with all
rights of the Seller with respect to any breach thereof, including the right
to require First Merchants to repurchase Receivables in accordance with the
Receivables Purchase Agreement. It is understood and agreed that the
representations and warranties referred to in this Section shall survive the
delivery of the Receivable Files to the Issuer or any custodian.
(b) First Merchants hereby agrees that the Issuer shall have the right
to enforce any and all rights under the Receivables Purchase Agreement
assigned to the Issuer herein, including the right to cause First Merchants
to repurchase any Receivable with respect to which it is in breach of any of
its representations and warranties set forth in Exhibit A, directly against
First Merchants as though the Issuer were a party to the Receivables Purchase
Agreement, and the Issuer shall not be obligated to exercise any such rights
indirectly through the Seller.
SECTION 3.02. Representations and Warranties of the Seller. The Seller
makes the following representations and warranties as to the Receivables on
which the Issuer relies in accepting the Receivables and delivering the
Securities and the Security Insurer relies in issuing the Policies. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of the Initial Receivables,
and as of the applicable Subsequent Transfer Date, in the case of the
Subsequent Receivables, but shall survive the sale, transfer and assignment
of the Receivables by the Seller to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) Title. It is the intention of the Seller that (i) the transfer
and assignment herein contemplated constitute a sale of the Receivables from
the Seller to the Issuer, conveying good title thereto, free and clear of any
Liens or rights of other Persons and (ii) the beneficial interest in and
title to the Receivables not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any bankruptcy
law. No Receivable has been sold, transferred, assigned or pledged by the
Seller to any Person other than the Issuer. Immediately prior to the
transfer and assignment herein contemplated, the Seller had good and marketable
title to each Receivable, free and clear of all Liens and rights of others and,
immediately upon the transfer thereof, the Issuer shall have good and
marketable title to each such Receivable, free and clear of all Liens and
rights of others; and the transfer has been perfected under the UCC.
(b) All Filings Made. All filings (including UCC filings) necessary
in any jurisdiction to give the Issuer a first perfected ownership interest
in the Receivables have been made.
SECTION 3.03. Repurchase upon Breach. The Seller and the Servicer
shall inform the other parties to this Agreement and the Security Insurer
promptly, in writing, upon the discovery of any breach of First Merchants'
representations and warranties made pursuant to Section 3.01 of this
Agreement or Section 3.02 of the Receivables Purchase Agreement or of the
Seller's representations and warranties made pursuant to Section 3.02 above.
Unless any such breach shall have been cured by the last day of the first
Collection Period following the discovery or notice thereof by or to the Seller
or the Servicer, the Seller shall be obligated and, if necessary, the Seller or
the Issuer shall enforce the obligation of First Merchants under the
Receivables Purchase Agreement, to repurchase as of such last day any
Receivable materially and adversely affected by any such breach. In
consideration of the repurchase of any such Receivable, the Seller shall remit
the Purchase Amount to the Collection Account, in the manner specified in
Section 5.04; provided, however, that the obligation of the Seller to repurchase
any Receivable arising solely as a result of a breach of First Merchants'
representations and warranties under Section 3.02 of the Receivables Purchase
Agreement is subject to the receipt by the Seller of the Purchase Amount from
First Merchants. The sole remedy of the Issuer, the Indenture Trustee, the
Noteholders or the Certificateholders with respect to a breach of
representations and warranties pursuant to Sections 3.01 and 3.02 and the
agreement contained in this Section shall be to require the Seller to repurchase
Receivables pursuant to this Section, subject to the conditions contained herein
, or to enforce First Merchants' obligation to the Seller to repurchase such
Receivables pursuant to the Receivables Purchase Agreement.
SECTION 3.04. Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer
(with respect to the Receivables other than the Eligible Investment
Receivables) and the Seller (with respect to the Eligible Investment Receivables
) hereby revocably appoint the Servicer, and the Servicer hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee
(in the case of the Receivables other than the Eligible Investment
Receivables) and for the benefit of the Issuer and the Collateral Agent, as
agent for the secured parties, (in the case of the Eligible Investment
Receivables) as custodian of the following documents or instruments
respectively relating to the Receivables or the Eligible Investment
Receivables, as the case may be, which documents and instruments are hereby
constructively delivered by the Issuer to the Indenture Trustee (in the case
of the Receivables other than the Eligible Investment Receivables) and by the
Seller to the Collateral Agent (in the case of the Eligible Investment
Receivables):
(a) the fully executed original of the Receivable or Eligible
Investment Receivable, as applicable (together with any agreements modifying
such Receivable or Eligible Investment Receivable, including any extension
agreement);
(b) the original credit application, or a copy thereof, fully
executed by each Obligor thereon;
(c) the original certificate of title or such other documents that
the Servicer or the Seller shall keep on file in accordance with its
customary procedures evidencing the security interest of the Seller in the
Financed Vehicle; and
(d) any and all other documents that the Servicer or the Seller
shall keep on file in accordance with its customary procedures relating to a
Receivable or Eligible Investment Receivable, as applicable, an Obligor or a
Financed Vehicle.
SECTION 3.05. Duties of Servicer as Custodian. (a) Safekeeping. The
Servicer shall hold the Receivable Files as custodian for the benefit of the
Issuer, the Indenture Trustee and, to the extent provided herein, the
Security Insurer, and shall maintain such accurate and complete accounts,
records and computer systems pertaining to each Receivable File as shall enable
the Issuer to comply with this Agreement. In performing its duties as custodian
, the Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable automotive receivables that the Servicer services
for itself or others. The Servicer shall conduct, or cause to be conducted,
periodic audits of the Receivable Files held by it under this Agreement and
of the related accounts, records and computer systems, in such a manner as
shall enable the Issuer or the Indenture Trustee to verify the accuracy of the
Servicer's record keeping. The Servicer shall promptly report to the Issuer
and the Indenture Trustee any failure on its part to hold the Receivable
Files and maintain its accounts, records and computer systems as herein
provided and shall promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Issuer or the Indenture Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule C
to this Agreement or at such other office as shall be specified to the Issuer
and the Indenture Trustee by written notice not later than 90 days after any
change in location. The Servicer shall make available to the Issuer and the
Indenture Trustee or their duly authorized representatives, attorneys or
auditors a list of locations of the Receivable Files and the related
accounts, records and computer systems maintained by the Servicer at such times
during normal business hours as the Issuer shall instruct.
(c) Release of Documents. Upon instruction from the Indenture
Trustee, the Servicer shall release any Receivable File to the Indenture
Trustee, the Indenture Trustee's agent or the Indenture Trustee's designee,
as the case may be, at such place or places as the Indenture Trustee may
designate, as soon as practicable, and upon the release and delivery of any
such document in accordance with the instructions of the Indenture Trustee,
the Servicer shall be released from any further liability and responsibility
under this Section 3.05 with respect to such documents, unless and until such
time as such documents shall be returned to the Servicer. In no event shall
the Servicer be responsible for any loss occasioned by the Indenture
Trustee's failure to return any Receivable File or any portion thereof in a
timely manner.
SECTION 3.06. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by a Trust Officer of
the Indenture Trustee in the case of the Receivables and the Collateral Agent
in the case of the Eligible Investment Receivables.
SECTION 3.07. Custodian's Indemnification. The Servicer, as
custodian, shall indemnify the Trust, the Owner Trustee, the Collateral Agent
and the Indenture Trustee and each of their officers, directors, employees and
agents for any and all liabilities, obligations, losses, compensatory damages,
payments, costs, or expenses of any kind whatsoever that may be imposed on,
incurred by or asserted against the Trust, the Owner Trustee, the Collateral
Agent or the Indenture Trustee or any of their officers, directors, employees
or agents as the result of any improper act or omission in any way relating
to the maintenance and custody by the Servicer as custodian of the Receivable
Files; provided, however, that the Servicer shall not be liable to the Owner
Trustee, the Collateral Agent, the Indenture Trustee or any such officer,
director, employee or agent of the Owner Trustee, the Collateral Agent or the
Indenture Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee, the
Collateral Agent or the Indenture Trustee, as the case may be, or any such
officer, director, employee or agent of the Owner Trustee, the Collateral
Agent or the Indenture Trustee, as the case may be.
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the termination of this Agreement and shall
include reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Servicer, without interest.
SECTION 3.08. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and
shall continue in full force and effect unless and until terminated pursuant
to this Section 3.08. If First Merchants or any successor Servicer shall
resign as Servicer in accordance with the provisions of this Agreement or if
all of the rights and obligations of First Merchants or any successor
Servicer shall have been terminated under Section 8.02, the appointment of such
Servicer as custodian may be terminated by the Security Insurer, the Issuer
or by the Noteholders evidencing not less than 25% of the Outstanding Amount of
the Notes, by the Owner Trustee or by Certificateholders evidencing not less
than 25% of the Certificate Balance, in the same manner as the Security
Insurer, the Indenture Trustee or such Securityholders may terminate the
rights and obligations of the Servicer under Section 8.02. The Indenture
Trustee or with the consent of the Indenture Trustee, the Owner Trustee may
terminate the Servicer's appointment as custodian, with cause, at any time
upon written notification to the Servicer and without cause, only by written
notification to the Servicer pursuant to Section 8.02. As soon as
practicable after any termination of such appointment (but in no event more
than 10 Business Days after any such termination of appointment), the Servicer
shall deliver the Receivable Files to the Indenture Trustee or the Indenture
Trustee's agent at such place or places as the Indenture Trustee may
reasonably designate.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer. The Servicer, for the benefit of the
Issuer, the Indenture Trustee and the Security Insurer (or, in the case of
the Eligible Investment Receivables, for the benefit of the Issuer, the
Collateral Agent and the Security Insurer), shall manage, service, administer
and make collections on the Receivables and perform the other actions required
by the Servicer under this Agreement. The Servicer shall service the
Receivables in accordance with its customary and usual procedures and consistent
with the procedures employed by institutions that service motor vehicle retail
installment sale contracts. The Servicer's duties shall include the
collection and posting of all payments, responding to inquiries of Obligors,
investigating delinquencies, sending payment coupons to Obligors, reporting
any required tax information to Obligors, monitoring the collateral,
accounting for collections, furnishing monthly and annual statements to the
Owner Trustee, Indenture Trustee, and the Security Insurer with respect to
distributions, monitoring the compliance by Obligors with the insurance
requirements contained in the related Contracts, and performing the other
duties specified herein. The Servicer also shall administer and enforce all
rights of the holder of the Receivables under the Contracts and the Dealer
Agreements. To the extent consistent with the standards, policies and
procedures otherwise required hereby, the Servicer shall follow its customary
standards, policies and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with the managing,
servicing, administration and collection of the Receivables that it may deem
necessary or desirable. Without limiting the generality of the foregoing,
the Servicer is hereby authorized and empowered to execute and deliver, on
behalf of itself, the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments with respect to the
Receivables and with respect to the Financed Vehicles; provided, however, that,
notwithstanding the foregoing, the Servicer shall not, except pursuant to an
order from a court of competent jurisdiction, release an Obligor from payment of
any unpaid amount due under any Receivable or waive the right to collect the
unpaid balance of any Receivable from an Obligor. The Servicer is hereby
authorized to commence, in its own name or in the name of the Issuer, the
Indenture Trustee, the Owner Trustee, the Collateral Agent, the
Certificateholders or the Noteholders, a legal proceeding to enforce a
Receivable pursuant to Section 4.03 or to commence or participate in any other
legal proceeding (including a bankruptcy proceeding) relating to or involving a
Receivable, an Obligor or a Financed Vehicle. If the Servicer commences or
participates in any such legal proceeding in its own name, the Indenture
Trustee, the Collateral Agent or the
Issuer shall thereupon be deemed to have automatically assigned the
applicable
Receivable to the Servicer solely for purposes of commencing or participating
in such proceeding as a party or claimant, and the Servicer is authorized and
empowered by the Indenture Trustee or the Issuer to execute and deliver in
the Indenture Trustee's or the Issuer's name any notices, demands, claims,
complaints, responses, affidavits, or other documents or instruments in
connection with any such proceeding. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled
to enforce such Receivable, the Owner Trustee shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including bringing
suit in its name or the name of the Issuer, the Indenture Trustee, the
Certificateholders or the Noteholders. The Owner Trustee, the Collateral
Agent and the Indenture Trustee shall upon the written request of the
Servicer furnish the Servicer with any powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 4.02. Collection and Receivable Payments; Modifications of
Receivables. (a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable automotive
receivables that it services for itself or others and otherwise act with
respect to the Receivables in such manner as will, in the reasonable judgment
of the Servicer, maximize the amount to be received by the Trust with respect
thereto. The Servicer is authorized in its discretion to waive any
prepayment charge, late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any Receivable.
(b) The Servicer may at any time agree to a modification or
amendment of a Receivable in order to (i) change the date during each calendar
month when the related Obligor's Scheduled Payment is due or (ii) reamortize
the Obligor's Scheduled Payments on the Receivable following a partial
prepayment of principal.
(c) The Servicer may grant payment extensions or other modifications
of or amendments with respect to a Receivable (in addition to those
modifications permitted by Section 4.02(b)) in accordance with its customary
procedures if the Servicer believes in good faith that such extension,
modification or amendment is necessary to avoid a default on such Receivable,
will maximize the amount to be received by the Trust with respect to such
Receivable and is otherwise in the best interests of the Trust; provided,
however, that:
(i) the aggregate period of all extensions on a Receivable shall not
exceed four months;
(ii) in no event may the final Obligor's Scheduled Payment on a
Receivable be extended beyond the last day of the Collection Period relating
to the Final Scheduled Maturity Date;
(iii) no more than two extensions may be granted with respect to any
Receivable in any one-year period; and
(iv) no more than 13% of the aggregate Pool Balance may be subject
to extension or modification in any one-year period.
SECTION 4.03. Realization upon Receivables. Consistent with the
standards, policies and procedures required by this Agreement, the Servicer
shall use its best efforts to repossess or otherwise convert the ownership of
and liquidate any Financed Vehicle securing a Receivable with respect to
which the Servicer shall have determined that eventual payment in full is
unlikely. The Servicer shall begin such repossession and conversion procedures
as soon as practicable after default on such Receivable, but in no event later
than the date on which all or any portion of an Obligor's Scheduled Payment has
become 91 days delinquent; provided, however, that the Servicer may elect not
to repossess a Financed Vehicle within such time period if in its good faith
judgment it determines that the proceeds ultimately recoverable with respect
to such Receivable would be increased by forbearance. In repossessing or
otherwise converting the ownership of a Financed Vehicle and liquidating a
Receivable, the Servicer is authorized to follow such customary practices and
procedures as it shall deem necessary or advisable, consistent with the
standard of care required by Section 4.01, which practices and procedures may
include reasonable efforts to realize upon any recourse to Dealers, the sale
of the related Financed Vehicle at public or private sale, the submission of
claims under an insurance policy and other actions by the Servicer in order
to realize on a Receivable; provided, however, that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend
funds in connection with any repair or towards the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession shall increase the proceeds of liquidation of the related
Receivable by an amount greater than the expense for such repair or
repossession. The Servicer shall be entitled to recover all reasonable
expenses incurred by it in the course of repossessing and liquidating a
Financed Vehicle into cash proceeds, but only out of the cash proceeds of the
sale of such Financed Vehicle, any deficiency obtained from the Obligor or
any amounts received from recourse to the related Dealer.
SECTION 4.04. Physical Damage Insurance. The Servicer shall, in
accordance with its customary servicing procedures, require that each Obligor
shall have obtained and maintain physical loss damage insurance covering the
Financed Vehicle as of the execution of the Receivable.
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles.
(a) The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary to
re-perfect such security interest on behalf of the Issuer and the Indenture
Trustee in the event of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Receivable to the Issuer is
insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in
favor of the Issuer, the Servicer hereby agrees that the designation of First
Merchants as the secured party on the certificate of title is in its capacity
as agent of the Issuer.
(b) The Seller, the Owner Trustee, the Indenture Trustee, the
Servicer and the Backup Servicer hereby agree that, upon the occurrence of a
Servicer Termination Event, the Controlling Party may take or cause to be
taken such actions as may, in the opinion of counsel to the Controlling
Party, be necessary to perfect or re-perfect the security interests in the
Financed Vehicles in the name of the Issuer, including by amending the title
documents of the Financed Vehicles. The Seller hereby agrees to pay all
expenses related to such perfection or reperfection and to take all action
necessary therefor. In addition, the Controlling Party may at any other time
instruct the Servicer to take or cause to be taken such action as may, in the
opinion of counsel to the Controlling Party, be necessary to perfect or re-
perfect the security interest in the Financed Vehicles in the name of the
Trust; provided, however, that if the Controlling Party requests that the title
documents be amended prior to the occurrence of an Insurance Agreement Event of
Default, the out-of-pocket expenses of the Servicer, the Seller or any other
entity incurred in connection with any such action shall be reimbursed to the
Servicer, the Seller or such other party by the Controlling Party.
SECTION 4.06. Covenants of Servicer. By its execution and delivery of
this Agreement, the Servicer hereby covenants as follows (on which covenants
the Issuer, the Indenture Trustee, the Collateral Agent and the Owner Trustee
rely in accepting the Receivables and delivering the applicable Securities
and on which the Security Insurer relies in issuing the Policies):
(a) Liens in Force. No Financed Vehicle securing a Receivable shall
be released in whole or in part from the security interest granted by the
Receivable, except upon payment in full of the Receivable or as otherwise
contemplated herein;
(b) No Impairment. The Servicer shall do nothing to impair the
rights of the Trust in the Receivables;
(c) No Amendments. The Servicer shall not extend or otherwise amend
the terms of any Receivable, except in accordance with Section 4.02; and
(d) Restrictions on Liens. The Servicer shall not (A) create, incur
or suffer to exist, or agree to create, incur or suffer to exist, or consent
to or permit in the future (upon the occurrence of a contingency or
otherwise) the creation, incurrence or existence of any Lien on or restriction
on transferability of any Receivable except for the Lien in favor of the Trust
and the restrictions on transferability imposed by this Agreement or (B) sign
or file any UCC financing statements in any jurisdiction that names First
Merchants, the Servicer or the Seller as a debtor, and any Person other than
the Seller or the Issuer as a secured party, or sign any security agreement
authorizing any secured party thereunder to file any such financing statement
with respect to the Receivables.
SECTION 4.07. Purchase of Receivables upon Breach. Upon discovery by
any of the Servicer, the Seller, the Owner Trustee, the Indenture Trustee or
the Backup Servicer of a breach of any of the covenants set forth in Sections
4.02(c), 4.05(a) or 4.06, the party discovering such breach shall give prompt
written notice to the other parties; provided, however, that the failure to
give any such notice shall not affect any obligation of the Servicer under
this Section 4.07. On or before the last day of the first Collection Period
following its discovery or receipt of notice of any breach of any covenant
set forth in Sections 4.02(c), 4.05(a) or 4.06 that materially and adversely
affects the interests of the Issuer, the Indenture Trustee, the Owner
Trustee, the Certificateholders, the Noteholders or the Security Insurer in any
Receivable, the Servicer shall, unless such breach shall have been cured in
all material respects by such date, purchase from the Issuer the Receivable
affected by such breach. In consideration of the purchase of any such
Receivable, the Servicer shall remit the related Purchase Amount into the
Collection Account in the manner specified in Section 5.04. Subject to
Section 7.02, it is understood and agreed that the obligation of the Servicer
to purchase any Receivable with respect to which such a breach has occurred
and is continuing shall, if such obligation is fulfilled, constitute the sole
remedy against the Servicer for such breach available to the Issuer, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders.
SECTION 4.08. Servicing Fee. The Servicing Fee payable to the Servicer
on each Distribution Date shall equal the product of (i) one-twelfth, (ii)
2.50% and (iii) the Pool Balance as of the first day of the related
Collection Period. The Servicing Fee shall be calculated on the basis of a
360-day year comprised of twelve 30-day months. The Servicer also shall be
entitled to all late fees, prepayment charges (including, in the case of a
Receivable that provides for payments according to the "Rule of 78s" and that
is prepaid in full, the difference between the Principal Balance of such
Receivable (plus accrued interest to the date of prepayment) and the Principal
Balance of such Receivable computed according to the "Rule of 78s"), and other
administrative fees or similar charges allowed by applicable law with respect to
the Receivables, collected (from whatever source) on the Receivables.
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed
on the Servicer and expenses incurred in connection with distributions and
reports made by the Servicer to the Owner Trustee and Indenture Trustee).
The Servicer shall be liable for the fees and expenses of the Backup Servicer.
SECTION 4.09. Servicer's Certificate. Not later than 10:00 a.m. (New
York City time) on each Determination Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent, the Indenture Trustee, the Collateral
Agent, the Backup Servicer, the Security Insurer and the Seller, with a copy to
the Rating Agencies, a Servicer's Certificate containing all information
necessary to make the distributions to be made on the related Distribution Date
pursuant to Section 5.06 for the related Collection Period. Receivables to be
purchased by the Servicer or to be repurchased by the Seller and each
Receivable that became a Liquidated Receivable shall be identified by the
Servicer by account number with respect to such Receivable (as specified in
the applicable Receivables Schedule).
SECTION 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event. (a) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, the Backup Servicer, the Security Insurer and each Rating
Agency, within 120 days after the end of the Servicer's fiscal year (with the
first such certificate being delivered no later than April 30, 1997), an
Officer's Certificate signed by a Responsible Officer of the Servicer,
stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or such shorter period as shall have elapsed from
the Closing Date to the end of the first such fiscal year) and of the
performance of its obligations under this Agreement has been made under such
officer's supervision and (ii) to such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such period or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature and status thereof.
(b) The Servicer or the Seller shall deliver to the Owner Trustee,
the Indenture Trustee, the Backup Servicer, the Security Insurer and each
Rating Agency, promptly after having obtained knowledge thereof, but in no
event later than two Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time or
both would become a Servicer Termination Event under Section 8.01.
SECTION 4.11. Annual Independent Accountants' Report. The Servicer
shall cause a firm of independent certified public accountants, which may
also render other services to the Servicer or its Affiliates, to deliver to the
Owner Trustee, the Indenture Trustee, the Backup Servicer, the Security
Insurer and each Rating Agency, within 120 days after the end of each fiscal
year (with the first such report being delivered no later than April 30,
1997), a report addressed to the Board of Directors of the Servicer, the
Owner Trustee, the Indenture Trustee, the Backup Servicer and the Security
Insurer, to the effect that such firm has audited the books and records of the
Servicer and issued its report thereon and that (1) such audit was made in
accordance with generally accepted auditing standards and accordingly included
such tests of the accounting records and such other auditing procedures as such
firm considered necessary in the circumstances; (2) the firm is independent of
the Seller and the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants; and (3) a
review in accordance with agreed upon procedures was made of three randomly
selected Servicer's Certificates, including the delinquency, default and loss
statistics required to be specified therein and, except as disclosed in the
accountants' report, no exceptions or errors in the Servicer's Certificates
were found.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Owner
Trustee, the Indenture Trustee, the Backup Servicer, the Security Insurer (so
long as no Security Insurer Default shall have occurred and be continuing),
the Certificateholders and Noteholders reasonable access to the documentation
regarding the Receivables. Access shall be afforded without charge, but only
upon reasonable request and during the normal business hours at the offices
of the Servicer. Nothing in this Section shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of
this Section.
SECTION 4.13. Monthly Tape. On or before the eighth Business Day, but
in no event later than the tenth calendar day, of each month, the Servicer
shall deliver or cause to be delivered to the Indenture Trustee, Owner
Trustee and the Backup Servicer a computer tape and a diskette (or any other
form of electronic transmission acceptable to the Owner Trustee, the Indenture
Trustee and the Backup Servicer) in a format acceptable to the Indenture
Trustee, Owner Trustee and the Backup Servicer containing the information with
respect to the Receivables as of the last day of the preceding Collection
Period and necessary for preparation of the Servicer's Certificate for the
immediately succeeding Determination Date and to determine the application of
payments received on the Receivables as provided herein. The Backup Servicer
shall use such tape or diskette (or other electronic transmission acceptable to
the Indenture Trustee, Owner Trustee and the Backup Servicer) to verify the
mathematical accuracy of the Servicer's Certificate delivered by the
Servicer, and the Backup Servicer shall certify to the Indenture Trustee and the
Owner Trustee that it has verified the mathematical accuracy of the Servicer's
Certificate in accordance with this Section 4.13 and shall notify the
Servicer, the Indenture Trustee and the Owner Trustee of any discrepancies,
in each case, on or before the third Business Day following the related
Determination Date. In the event that the Backup Servicer reports any
discrepancies, the Servicer and the Backup Servicer shall attempt to
reconcile such discrepancies prior to the related Distribution Date, but in the
absence of a reconciliation, the Servicer's Certificate shall control for the
purpose of calculations and distributions with respect to the related
Distribution Date. In the event that the Backup Servicer and the Servicer are
unable to reconcile discrepancies with respect to a Servicer's Certificate by
the related Distribution Date, the Servicer shall cause a firm of nationally
recognized independent certified public accountants, at the Servicer's
expense, to audit the Servicer's Certificate and, prior to the third Business
Day, but in no event later than the fifth calendar day, of the following
month, to reconcile the discrepancies. The effect, if any, of such
reconciliation shall be reflected in the Servicer's Certificate for the next
succeeding Determination Date. In addition, upon the occurrence of a
Servicer Termination Event, the Servicer shall, if so requested by the
Indenture Trustee or the Owner Trustee, deliver to the Backup Servicer within 15
days after demand therefor its records relating to the Receivables and a
computer tape containing as of the close of business on the date of demand all
of the data maintained by the Servicer in computer format in connection with
servicing the Receivables. Other than the duties specifically set forth in
this Agreement, the Backup Servicer shall have no obligations hereunder,
including, without limitation, to supervise, verify or monitor the
performance of the Servicer. The Backup Servicer shall have no liability for
any actions taken or omitted by the Servicer.
SECTION 4.14. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as Servicer under this Agreement for an
initial term commencing on the Closing Date and ending on March 18, 1997,
which term shall be extendible by the Security Insurer (or (a) the Indenture
Trustee for as long as the Notes are outstanding, if there is an existing
Security Insurer Default or if both Policies are no longer in effect or (b)
the Owner Trustee for as long as the Certificates are outstanding, if (i)
there is an existing Security Insurer Default or if both Policies are no
longer in effect and (ii) the Notes are no longer outstanding) for successive
quarterly terms ending on each successive December 18, March 18, June 18 and
September 18 (or pursuant to revocable written standing instructions
delivered from time to time to the Servicer, the Indenture Trustee and the
Owner Trustee, for any specified number of terms). Each such notice (including
each notice pursuant to standing instructions, which shall be deemed delivered
at the end of successive quarterly terms for so long as such instructions are in
effect) (a "Servicer Extension Notice") shall be delivered by the Security
Insurer, the Indenture Trustee or the Owner Trustee, as applicable, to the
other parties to this Agreement. The Servicer hereby agrees that, as of the
date hereof and upon its receipt of any such Servicer Extension Notice, the
Servicer shall be bound for the duration of the initial term or the term
covered by such Servicer Extension Notice to act as the Servicer, subject to
and in accordance with the other provisions of this Agreement. Until such
time as a Security Insurer Default shall have occurred and be continuing, the
Servicer agrees that if as of the last day of the calendar month preceding
the last day of any such servicing term the Servicer shall not have received a
Servicer Extension Notice from the Security Insurer, the Servicer shall,
within five days thereafter, give written notice of such non-receipt to the
Indenture Trustee, the Owner Trustee, the Security Insurer and the Backup
Servicer.
ARTICLE V
Distributions; Spread Account;
Statements to Certificateholders and Noteholders
SECTION 5.01. Local Post Office Boxes. On or prior to the Closing Date,
the Servicer shall send revised payment statements (which statements will
indicate (by notation specific to this transaction) that such payments relate
to Receivables owned by the Issuer) to each Obligor pursuant to which
payments made by such Obligor after the Closing Date will be addressed to a
regional post office box (each a "Local Post Office Box") separate from any
post office box to which receivables owned by First Merchants are or will be
sent. All payments and other proceeds of any type and from any source on or
with respect to the Receivables that are delivered to one of the Local Post
Office Boxes shall be the property of the Issuer, subject to the lien of the
Indenture and the rights of the Indenture Trustee thereunder.
SECTION 5.02. Accounts. (a) The Servicer has established various
accounts in the name of the Indenture Trustee (the "Local Collection
Accounts"), at the locations identified on Schedule IV. Each Local
Collection Account shall be maintained as an Eligible Deposit Account and shall
bear a designation clearly indicating that the amounts deposited thereto and
held therein are for the benefit of the Issuer, as provided in the Local
Collection Account Agreement. All payments on the Receivables mailed by
Obligors or any other Person to the Local Post Office Boxes or otherwise
delivered to the Servicer shall be deposited on a daily basis into the
applicable Local Collection Account, from which they will be swept within two
Business Days to the Collection Account. Amounts on deposit in any Local
Collection Account shall not be invested.
(b) (i) On or prior to the Closing Date, the
Servicer shall establish, or cause to be established, an account in the name of
the Indenture Trustee (the "Collection Account"), which shall be maintained as
an Eligible Deposit Account and shall bear a designation clearly indicating
that the amounts deposited thereto are held for the benefit of the Noteholders
and Certificateholders. The Servicer shall cause the Indenture Trustee to
sweep any amounts deposited to any Local Collection Account, on or with respect
to the Receivables into the Collection Account as promptly as possible, but in
no event later than the second Business Day following receipt thereof in the
Local Collection Accounts.
(ii) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account (the "Note Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Noteholders.
(iii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the Indenture
Trustee an Eligible Deposit Account (the "Pre-Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Noteholders and the Certificateholders.
(iv) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the Indenture
Trustee an Eligible Deposit Account (the "Capitalized Interest Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Noteholders and the Certificateholders.
(v) Funds on deposit in the Collection Account, the Capitalized
Interest Account, the Pre-Funding Account and the Note Distribution Account
(collectively, the "Trust Accounts") shall be invested by the Indenture
Trustee in Eligible Investments selected in writing by the Servicer or, if an
Insurance Agreement Event of Default shall have occurred and be continuing,
the Security Insurer. All such Eligible Investments shall be held by the
Indenture Trustee for the benefit of the Noteholders and the
Certificateholders or the Noteholders, as applicable; provided that, on each
Payment Determination Date all interest and other investment income (net of
losses and investment expenses) on funds on deposit in the Trust Accounts
shall be deposited into the Collection Account and shall be deemed to
constitute a portion of the Interest Distribution Amount for the related
Distribution Date. Other than as permitted by the Rating Agencies, funds on
deposit in the Trust Accounts shall be invested in Eligible Investments that
will mature not later than the Business Day immediately preceding the next
Distribution Date. Funds deposited in a Trust Account on a day which
immediately precedes a Distribution Date upon the maturity of any Eligible
Investments are not required to be invested overnight.
(vi) The Indenture Trustee shall not be held liable in any way by
reason of any insufficiency in the Collection Account resulting from any loss
on an Eligible Investment included therein, except for losses attributable to
the Indenture Trustee's failure to make payments on such Eligible Investments
issued by the Indenture Trustee, in its commercial capacity as principal
obligor and not as Indenture Trustee, in accordance with their terms.
(c) (i) The Indenture Trustee and, to the extent provided herein, the
Security Insurer shall possess all right, title and interest in all funds
received in the Local Post Office Boxes and all funds on deposit from time to
time in the Local Collection Accounts, the Trust Accounts and in all proceeds
thereof (including all income thereon), subject to the Local Collection
Account Agreement. The Local Post Office Boxes, the Local Collection
Accounts and the Trust Accounts shall be under the sole dominion and control of
the Indenture Trustee for the benefit of the Noteholders or the Noteholders and
the Certificateholders, as the case may be subject to the Local Collection
Account Agreement. If, at any time, any Local Collection Account or Trust
Account ceases to be an Eligible Deposit Account, the Indenture Trustee (or
the Servicer on its behalf) shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Local Collection Account or Trust Account, as
applicable, as an Eligible Deposit Account and shall transfer any cash and/or
any investments from the account that is no longer an Eligible Deposit
Account to the new Local Collection Account or Trust Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit accounts
shall be held solely in the Eligible Deposit Accounts, subject to the last
sentence of Section 5.02(c)(i); and each such Eligible Deposit Account shall be
subject to the exclusive custody and control of the Indenture Trustee, and the
Indenture Trustee shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with paragraph (a)
of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a financial intermediary (as
such term is defined in Section 8-313(4) of the UCC) acting solely for the
Indenture Trustee;
(C) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry regulations
shall be delivered in accordance with paragraph (b) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee, pending maturity
or disposition, through continued book-entry registration of such Trust
Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated security"
under Article VIII of the UCC and that is not governed by clause (C) above
shall be delivered to the Indenture Trustee in accordance with paragraph (c)
of the definition of "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition, through continued registration of
the Indenture Trustee's (or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture Trustee, to
instruct the Indenture Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting the Servicer or the Owner Trustee
to carry out its respective duties hereunder or permitting the Indenture
Trustee to carry out its duties under the Indenture.
SECTION 5.03. Application of Collections. All amounts received with
respect to the Receivables during each Collection Period shall be applied by
the Servicer as follows:
With respect to each Simple Interest Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be applied to
interest and principal in accordance with the Simple Interest Method. With
respect to each Precomputed Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, first, to the
Obligor's Scheduled Payment, with any excess amounts being applied to future
Obligor's Scheduled Payments.
SECTION 5.04. Purchase Amounts. Except as otherwise provided in Section
2.01(b), the Servicer and the Seller shall deposit or cause to be deposited
in the Collection Account, on or prior to each Determination Date, the
aggregate Purchase Amount with respect to Purchased Receivables and the Servicer
shall deposit therein all amounts to be paid under Section 4.07.
SECTION 5.05. Transfers from the Spread Account. The Indenture Trustee
shall determine, no later than 11:00 a.m., New York City time, on each
Deficiency Claim Date whether a shortfall exists with respect to the
distributions that the Indenture Trustee is required to make on the upcoming
Distribution Date pursuant to clauses (1) through (7) of Section 5.06(b). In
the event that the Indenture Trustee determines that such a shortfall exists,
the Indenture Trustee shall furnish to the Collateral Agent and the Security
Insurer, no later than 12:00 noon, New York City time, on such Deficiency
Claim Date, a written notice specifying the amount of the shortfall and
directing the Collateral Agent to remit an amount equal to such shortfall (to
the extent of funds available to be so distributed pursuant to the Spread
Account Agreement) to the Indenture Trustee for deposit in the Collection
Account. Upon receipt of any such funds, the Indenture Trustee shall
immediately deposit such amounts into the Collection Account for distribution
on the Distribution Date pursuant to Section 5.06.
SECTION 5.06. Distributions. (a) On each Payment
Determination Date, the Servicer shall calculate all amounts required to be
deposited in the Note Distribution Account and the Certificate Distribution
Account.
(b) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee in writing (based on the information contained in the
Servicer's Certificate delivered on the related Payment Determination Date
pursuant to Section 4.09) to make the following deposits and distributions
for receipt by the Servicer or deposit in the applicable account by 11:00 a.m.
(New York City time), to the extent of the Total Distribution Amount plus all
amounts transferred to the Collection Account from the Spread Account, plus
any amounts deposited thereto from the Policy Payments Accounts pursuant to
Section 5.07(b), to make required payments and distributions on such date
pursuant to clauses (1) through (9) below, in the following order and
priority:
(1) To the Servicer, from the Interest Distribution Amount, the
Servicing Fee (and all unpaid Servicing Fees from prior Collection Periods).
Shortfalls in amounts due to the Servicer as Servicing Fees on any
Distribution Date may be paid using amounts transferred from the Spread
Account only to the extent provided in Section 3.03(b) of the Master Spread
Account Agreement;
(2) To the Owner Trustee and the Indenture Trustee, from the
Interest
Distribution Amount remaining after the application of (1) above, any accrued
and unpaid fees and expenses (including legal fees and expenses) due, but
only to the extent not previously paid by the Servicer. Shortfalls in any such
amounts due to the Owner Trustee or the Indenture Trustee on any Distribution
Date may be paid using amounts transferred from the Spread Account only to
the extent provided in Section 3.03(b) of the Master Spread Account Agreement.
(3) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clauses (1) and (2) above, the
Noteholders' Interest Distributable Amount;
(4) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (1) through
(3), the Noteholders' Principal Distributable Amount;
(5) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (1) through
(4), the Certificateholders' Interest Distributable Amount;
(6) only after the Class A-2 Notes have been paid in full, to the
Certificate Distribution Account, from the Total Distribution Amount
remaining after the application of clauses (1) through (5), the
Certificateholders' Principal Distributable Amount;
(7) to the Security Insurer, from the Total Distribution Amount
remaining after the application of clauses (1) through (6), any amounts due
to the Security Insurer under the Insurance Agreement;
(8) to the Spread Account, from the Total Distribution Amount
remaining after the application of clauses (1) through (7), an amount up to
the amount of any deficiency in the Spread Account Required Amount;
(9) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clauses (1) through (8), the Class
A-2 Additional Principal Distribution Amount; and
(10) to the Collateral Agent, the portion, if any, of the Total
Distribution Amount remaining after the application of clauses (1) through
(9) above to pay the Credit Enhancement Fee to the Seller pursuant to the terms
and subject to the conditions set forth in the Spread Account Agreement.
Notwithstanding that the Notes have been paid in full, the Indenture Trustee
shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
SECTION 5.07. Claims Upon the Policies; Policy Payments Accounts. (a)
If on the third Business Day prior to a Distribution Date, the Total
Distribution Amount on deposit or to be deposited in the Collection Account
for the related Collection Period (after giving effect to all transfers
thereto of any amounts from the Spread Account and to the payment of all
amounts required to be paid pursuant to clauses (1) and (2) of Section
5.06(a)) is insufficient to pay the Guaranteed Payments on the related
Distribution Date, then the Indenture Trustee shall give notice to the
Security Insurer and the Owner Trustee by telephone or telecopy of the amount
of such deficiency, separately identifying the amount of such deficiency
applicable to the Notes and the Certificates, as the case may be. Such
notice shall be confirmed in writing by the Indenture Trustee in the case of
the Notes Policy and the Owner Trustee in the case of the Certificates Policy in
the form set forth as Exhibit A to the Endorsement of the applicable Policy,
to the Security Insurer and the Fiscal Agent, if any, at or before 12:00
noon, New York City time, on the second Business Day prior to such Distribution
Date. Following receipt by the Security Insurer of such notice in such form,
the Security Insurer or the Fiscal Agent will pay any amount payable under
the Notes Policy or the Certificates Policy, or both, on the later to occur of
(i) 12:00 noon, New York City time, on the second Business Day following such
receipt and (ii) 12:00 noon, New York City time, on the Distribution Date to
which such deficiency relates, as provided in the Endorsement to the
Policies. The Indenture Trustee shall not be liable for any failure by the
Owner Trustee to make claims in a timely manner under the Certificates Policy
so long as the Indenture Trustee shall have provided timely notice to the
Owner Trustee pursuant to this Section 5.07.
(b) The Indenture Trustee shall establish two separate special
purpose trust accounts, one for the benefit of the Noteholders (referred to
herein as the "Notes Policy Payments Account") and the other (to be
established by the Indenture Trustee as agent for the Owner Trustee) for the
benefit of Certificateholders (referred to herein as the "Certificates Policy
Payments Account" and, together with the Notes Policy Payments Account, the
"Policy Payments Accounts"). The Indenture Trustee shall have exclusive control
over the Notes Policy Payments Account and sole right of withdrawal. The
Indenture Trustee shall act as agent of the Owner Trustee with respect to the
Certificates Policy Payments Account and shall, unless and until otherwise
instructed by the Owner Trustee, have exclusive control over the Certificates
Policy Payments Account and sole right of withdrawal. The Owner Trustee
hereby appoints the Indenture Trustee as its agent for the purposes provided
for in this Section 5.07. The Indenture Trustee shall deposit any amount
paid under the Notes Policy or the Certificates Policy in the applicable Policy
Payments Account and distribute such amount only to pay to Securityholders
the Guaranteed Payments for which a claim has been made, and such amount may
not be applied to satisfy any costs, expenses or liabilities of the Servicer,
the Indenture Trustee or the Owner Trustee. Amounts paid under the Notes
Policy shall be transferred to the Collection Account in accordance with the
next succeeding paragraph and disbursed by the Indenture Trustee to Noteholders
in accordance with Section 5.06. Amounts paid under the Certificates Policy
shall not be deposited in the Collection Account but shall be paid directly
to the Certificate Distribution Account in accordance with Section 5.06 and the
next succeeding paragraph. It shall not be necessary for such payments to be
made by checks or wire transfers separate from the checks or wire transfers
used to pay the Guaranteed Payments with other funds available to make such
payment. However, the amount of any payment of principal of or interest on
the Securities to be paid from funds transferred from the Policy Payments
Accounts shall be noted as provided in paragraph (c) below in the Note
Register and the Certificate Register, as applicable, and in the statement to
be furnished to the Securityholders pursuant to Section 5.11. Funds held in
the Policy Payments Accounts shall not be invested by the Indenture Trustee.
On any Distribution Date with respect to which a claim has been made
under the Notes Policy, the amount of any funds received by the Indenture
Trustee as a result of any claim under such Policy, to the extent required to
make the related Guaranteed Payment on such Distribution Date, shall be
withdrawn from the Notes Policy Payments Account and deposited in the
Collection Account and applied by the Indenture Trustee, together with the
other funds to be distributed from the Collection Account pursuant to Section
5.06, directly to the payment in full of the applicable Guaranteed Payment
due with respect to the Notes. On any Distribution Date with respect to which
a claim has been made under the Certificates Policy, the amount of any funds
received by the Indenture Trustee as a result of any claim under such Policy,
to the extent required to make the related Guaranteed Payment on such
Distribution Date, shall be withdrawn from the Certificates Policy Payments
Account and deposited in the Certificate Distribution Account and applied,
together with the other funds to be distributed from the Collection Account
pursuant to Section 5.06, directly to the payment in full of the applicable
Guaranteed Payment due with respect to the Certificates. Any funds remaining
in the Policy Payments Accounts on the first Business Day following a
Distribution Date shall be remitted to the Security Insurer, pursuant to the
instructions of the Security Insurer, by the end of such Business Day.
(c) The Indenture Trustee shall keep a complete and accurate record
of the amount of interest and principal paid in respect of any Securities
from moneys received under the Policies. The Security Insurer shall have the
right to inspect such records at reasonable times during normal business hours
upon one Business Day's prior notice to the Indenture Trustee at the expense of
the Security Insurer.
SECTION 5.08. Notices to the Security Insurer. All notices, statements,
reports, notes, or opinions required by this Agreement to be sent to any
other party hereto or to the Securityholders at any time when the Security
Insurer is the Controlling Party shall also be sent to the Security Insurer.
SECTION 5.09. Rights in Respect of Insolvency Proceedings. (a) In the
event that the Indenture Trustee or the Owner Trustee, as applicable, has
received a certified copy of a final, nonappealable order of the appropriate
court that any Guaranteed Payment has been voided in whole or in part as a
preference payment under applicable bankruptcy or insolvency law, the
Indenture Trustee or the Owner Trustee, as applicable, shall (i) deliver to
the Security Insurer a certified copy of such court order, an irrevocable
assignment to the Security Insurer of the Securityholders' rights with
respect to any such recovered payment and an instrument appointing the Security
Insurer as agent of the Securityholders with respect to any such recovered
payments and (ii) notify the Securityholders by mail that, in the event that
any Guaranteed Payment distributed to a Securityholder is so recovered, such
Securityholder will be entitled to payment of such recovered amounts pursuant
to the applicable Policy.
(b) The Indenture Trustee or the Owner Trustee, as applicable, shall
promptly notify the Security Insurer of either of the following as to which
an applicable Trust Officer has actual knowledge: (i) the commencement of any
proceeding by or against the Seller or the Issuer commenced under the United
States Bankruptcy Code or any other applicable United States federal or state
bankruptcy, insolvency, receivership, rehabilitation, or similar law (an
"Insolvency Proceeding") or (ii) the making of any claim in connection with
any Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of or interest on the Notes
or the Certificates. Each Securityholder, by its purchase of a Security, and
the Indenture Trustee and the Owner Trustee hereby agree that, so long as a
Security Insurer Default shall not have occurred and be continuing, the
Security Insurer may at any time during the continuation of an Insolvency
Proceeding direct all matters relating to such Insolvency Proceeding,
including (i) all matters relating to any Preference Claim, (ii) the
direction of any appeal of any order relating to any Preference Claim at the
expense of the Security Insurer and (iii) the posting of any surety, supersedeas
or performance bond pending any such appeal. In addition, and without
limitation of the foregoing, as set forth in Section 5.10, the Security Insurer
shall be subrogated to, and each Securityholder and the Indenture Trustee and
the Owner Trustee hereby delegate and assign, to the fullest extent permitted by
law, the rights of the Indenture Trustee and Owner Trustee and such
Securityholder in the conduct of any Insolvency Proceeding, including all rights
of any party to an adversary proceeding action with respect to any court order
issued in connection with any such Insolvency Proceeding.
(c) Each of the Indenture Trustee and Owner Trustee shall furnish to
the Security Insurer its records evidencing the distributions of principal of
and interest on the Securities that have been made by such trustee and
subsequently recovered from Securityholders and the dates on which such
payments were made.
SECTION 5.10. Effect of Payments by the Security Insurer;
Subrogation.
(a) Anything herein to the contrary notwithstanding, any distribution of
principal of or interest on the Securities that is made with moneys received
pursuant to the terms of the Policies shall not be considered payment of the
Securities by the Issuer and shall not discharge the Trust assets in respect
of such distribution. The Indenture Trustee and the Owner Trustee
acknowledge that, without the need for any further action on the part of the
Security Insurer, the Indenture Trustee, the Owner Trustee, the Certificate
Registrar or the Note Registrar, (i) to the extent the Security Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Securities to the Securityholders thereof, the Security Insurer will be fully
subrogated to the rights of such Securityholders to receive such principal
and interest from distributions of the assets of the Trust and will be deemed to
the extent of the payments so made to be a Securityholder and (ii) the
Security Insurer shall be paid principal and interest in its capacity as a
Securityholder until all such payments by the Security Insurer have been
fully reimbursed, but only from the sources and in the manner provided herein
for the distribution of such principal and interest and in each case only after
the Securityholders have received all Guaranteed Payments due to them under
this Agreement.
(b) Without limiting the rights or interests of the Securityholders
as otherwise set forth herein and subject to Article X, so long as no
Security Insurer Default exists, the Indenture Trustee and Owner Trustee shall
cooperate in all respects with any reasonable request by the Security Insurer
for action to preserve or enforce the Security Insurer's rights or interests
under this Agreement, including, upon the occurrence and continuance of a
Servicer Termination Event, a request to take any one or more of the
following actions:
(i) institute proceedings for the collection of all amounts then
payable on the Securities or under this Agreement, enforce any judgment
obtained and collect moneys adjudged due; and
(ii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Security Insurer hereunder.
SECTION 5.11. Statements to Securityholders. On each Distribution
Date, the Servicer shall provide to the Indenture Trustee (with a copy to the
Rating Agencies and each Paying Agent) for the Indenture Trustee to forward to
each Noteholder of record as of the most recent Record Date and to the Owner
Trustee (with a copy to each Paying Agent) for the Owner Trustee to forward
to each Certificateholder of record as of the most recent Record Date a
statement substantially in the form of Exhibit B, respectively, setting forth at
least the following information as to the Securities to the extent applicable:
(i) the amount of such distribution allocable to principal allocable
to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest allocable
to each Class of Notes and to the Certificates;
(iii) the Outstanding Amount of each Class of Notes, the Note Pool
Factor for each such Class, the Certificate Balance and the Certificate Pool
Factor as of the close of business on the last day of the preceding
Collection Period, after giving effect to payments allocated to principal
reported under clause (i) above;
(iv) the amount of the Servicing Fee paid to the Servicer and the
amount of any fees payable to the Owner Trustee or the Indenture Trustee with
respect to the related Collection Period;
(v) the aggregate amounts of Realized Losses, if any, and Cram Down
Losses, if any, separately identified, with respect to the related Collection
Period;
(vi) the amount, if any, of the distribution payable pursuant to
claims under the Policies;
(vii) the balance of the Spread Account on such Payment
Determination
Date after giving effect to deposits and withdrawals to be made on the next
following Distribution Date, if any;
(viii) the Pool Balance as of the close of business on the last day
of the related Collection Period, after giving effect to payments allocated
to principal reported under clause (i) above.
(ix) the amount of any Class A-2 Additional Principal Distribution
Amount distributable to Class A-2 Noteholders on such date;
(x) the amount of any deposit to the Spread Account and the amount
and application of any funds withdrawn from the Spread Account;
(xi) the aggregate principal balance of all Receivables that became
Liquidated Receivables or Purchased Receivables during the related Collection
Period;
(xii) the aggregate principal balance of Receivables that are 30 to
59 days, 60 to 89 days or 90 days or more delinquent;
(xiii) the Class A-1 Interest Carryover Shortfall, the Class A-1
Principal Carryover Shortfall, the Class A-2 Interest Carryover Shortfall,
the Class A-2 Principal Carryover Shortfall, the Certificateholders' Interest
Carryover Shortfall and the Certificateholders' Principal Carryover
Shortfall, if any, in each case after giving effect to payments on such
Distribution Date, and any change in such amounts from the preceding statement;
(xiv) the aggregate Purchase Amounts for Receivables, if any, that
were purchased during or with respect to such Collection Period;
(xv) for each such date during the Funding Period, the
remaining amount in the Pre-Funding Account and the amount remaining in the
Capitalized Interest Account; and
(xvi) the remaining Pre-Funded Amount following the end of the
Funding Period that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on one or both
Classes of Notes and/or the Certificates.
Each amount set forth on the Distribution Date statement under clauses
(i), (ii) or (iv) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Certificate or Note, as applicable.
SECTION 5.12. Pre-Funding Account. (a) On the Closing Date, the Owner
Trustee will deposit in the Pre-Funding Account the Pre-Funded Amount from
the net proceeds of the sale of the Notes and the Certificates. On each
Subsequent Transfer Date, upon satisfaction of the conditions set forth in
Section 2.01(c) with respect to such transfer, the Servicer shall instruct
the Indenture Trustee in writing to withdraw from the Pre-Funding Account an
amount equal to (i) the Principal Balance of the Subsequent Receivables
transferred to the Issuer on such Subsequent Transfer Date less the Spread
Account Percentage for such Subsequent Transfer Date, and to distribute such
amount to or upon the order of the Seller and (ii) the Spread Account
Percentage for such Subsequent Transfer Date and, on behalf of the Seller, to
deposit such amount in the Spread Account.
(b) If the Pre-Funded Amount has not been reduced to zero on the
last day of the Funding Period after giving effect to any reductions in the
Pre-Funded Amount on such date pursuant to paragraph (a) above, the Servicer
shall instruct the Indenture Trustee in writing to withdraw from the
Pre-Funding Account on the Mandatory Redemption Date (i) if the Pre-Funded
Amount is equal to or less than $150,000, the Pre-Funded Amount and deposit
such amount in the Note Distribution Account to be applied to reduce the
Outstanding Amount of the Class A-1 Notes and (ii) if the Pre-Funded Amount
is greater than $150,000, (A) amounts equal to the Pre-Funded Percentage for
each Class of Notes of the Pre-Funded Amount and deposit such amounts in the
Note Distribution Account to be applied in reduction of the Outstanding
Amount of each Class of Notes and (B) an amount equal to the Pre-Funded
Percentage for the Certificates of the Pre-Funded Amount and deposit such
amount in the Certificate Distribution Account to be applied in reduction of
the Certificate Balance.
SECTION 5.13. Capitalized Interest Account. (a) On the Closing Date,
the Owner Trustee will deposit in the Capitalized Interest Account the
Capitalized Interest Initial Deposit from the net proceeds of the sale of the
Notes and the Certificates.
(b) On each Determination Date during the Funding Period, the
Indenture Trustee will withdraw from the Capitalized Interest Account an
amount equal to the Capitalized Interest Distribution Amount and deposit such
amount into the Collection Account.
(c) On the Distribution Date after each Subsequent Transfer Date
occurring in December 1996 or January 1997, the Indenture Trustee shall
distribute the Overfunded Interest Amount (calculated as of the Determination
Date after each such Subsequent Transfer Date) from the Capitalized Interest
Account to the Seller.
(d) On the Mandatory Redemption Date, any amounts remaining in the
Capitalized Interest Account shall be paid to the Seller.
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller. The Seller makes the
following representations on which the Issuer relies in accepting the
Receivables and delivering the Securities and the Security Insurer relies in
issuing the Policies. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date in the case of the
Initial Receivables and as of the applicable Subsequent Transfer Date in the
case of the Subsequent Receivables, and shall survive the sale, transfer and
assignment of the Receivables by the Seller to the Issuer and the pledge thereof
to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Seller is duly organized
and validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted.
(b) Due Qualification. The Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions where the failure to do so would
materially and adversely affect the Seller's ability to transfer the
Receivables to the Trust pursuant to this Agreement or the validity or
enforceability of the Receivables.
(c) Power and Authority. The Seller has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents
to which it is a party and to carry out their respective terms; the Seller
has full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Issuer, and the Seller shall have duly
authorized such sale and assignment to the Issuer by all necessary corporate
action; and the execution, delivery and performance of this Agreement and the
other Basic Documents to which the Seller is a party have been and, in the
case of Subsequent Purchase Agreements and Subsequent Transfer Agreements,
will be duly authorized by the Seller by all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic
Documents to which the Seller is a party, when duly executed and delivered by
the other parties hereto and thereto, shall constitute legal, valid and binding
obligations of the Seller, enforceable against the Seller in accordance with
their respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, and similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and to general
principles of equity (whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the other Basic Documents and the fulfillment of the
terms of this Agreement and the other Basic Documents shall not conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time, or both) a default under, the
certificate of incorporation or bylaws of the Seller, or any indenture,
agreement, mortgage, deed of trust, or other instrument to which the Seller
is a party or by which it is bound; or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust, or other instrument, other
than this Agreement and the other Basic Documents; or violate any law, order,
rule or regulation applicable to the Seller of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties: (1) asserting the invalidity of this Agreement or any other Basic
Document; (2) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement or any other Basic Document; (3) seeking any determination or ruling
that might materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement or
any other Basic Document; or (4) seeking to adversely affect the federal income
tax attributes of the Trust, the Notes or the Certificates.
(g) No Consents. The Seller is not required to obtain the consent
of any other party or any consent, license, approval, registration,
authorization, or declaration of or with any governmental authority, bureau
or agency in connection with the execution, delivery, performance, validity, or
enforceability of this Agreement or any other Basic Document to which it is a
party that has not already been obtained.
SECTION 6.02. Corporate Existence. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
SECTION 6.03. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement (which shall not
include distributions on account of the Notes or Certificates).
SECTION 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. The Seller shall not merge or consolidate with any
other Person or permit any other Person to become the successor to the
Seller's business without the prior written consent of the Security Insurer.
Any such successor Person shall execute an agreement of assumption of every
obligation of the Seller under this Agreement and the other Basic Documents
and, whether or not such assumption agreement is executed, shall be the
successor to the Seller under this Agreement without the execution or filing
of any document or any further act on the part of any of the parties to this
Agreement. The Seller shall provide prompt notice of any merger,
consolidation or succession pursuant to this Section 6.04 to the Owner
Trustee, the Indenture Trustee, the Security Insurer, the Securityholders and
the Rating Agencies. Notwithstanding the foregoing, the Seller shall not
merge or consolidate with any other Person or permit any other Person to
become a successor to the Seller's business unless (x) immediately after
giving effect to such transaction, no representation or warranty made
pursuant to Section 3.02 or 6.01 shall have been breached (for purposes hereof,
such representations and warranties shall speak as of the date of the
consummation of such transaction), (y) the Seller shall have delivered to the
Owner Trustee, the Indenture Trustee and the Security Insurer an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this
Section 6.04 and that all conditions precedent provided for in this Agreement
relating to such transaction have been complied with and (z) the Seller shall
have delivered to the Owner Trustee, the Indenture Trustee and the Security
Insurer an Opinion of Counsel stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Trust in the Receivables and reciting the details of the
filings or (B) no such action is necessary to preserve and protect such
interest.
SECTION 6.05. Limitation on Liability of Seller and Others. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 6.06. Seller May Own Securities. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or
pledgee of Securities with the same rights as it would have if it were not
the Seller or an Affiliate thereof, except as expressly provided herein or in
any Basic Document.
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables and the Security Insurer relies in issuing the
Policies. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of the Initial Receivables
and as of the applicable Subsequent Transfer Date in the case of the
Subsequent Receivables and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Servicer is duly organized
and validly existing as a corporation in good standing under the laws of the
state of its incorporation, with the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the corporate power, authority and legal right to acquire, own, sell and
service the Receivables and to hold the Receivable Files as custodian.
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of
the Receivables as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. The Servicer has the power and authority
to execute and deliver this Agreement and the other Basic Documents to which it
is a party and to carry out their respective terms; and the execution,
delivery and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Servicer by all
necessary corporate action;
(d) Binding Obligation. This Agreement and the Basic Documents to
which it is a party constitute legal, valid and binding obligations of the
Servicer, enforceable against the Servicer in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law;
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the Basic Documents to which it is a party and the
fulfillment of their respective terms shall not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the articles of
incorporation or bylaws of the Servicer, or any indenture, agreement,
mortgage, deed of trust, or other instrument to which the Servicer is a party
or by which it is bound; or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust, or other instrument other than this
Agreement and the Basic Documents, or violate any law, order, rule or
regulation applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties;
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or any of the
Basic Documents; (ii) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this Agreement or any
of the Basic Documents; (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement or
any of the Basic Documents; or (iv) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the Securities.
(g) No Insolvent Obligors. As of the related Cutoff Date, no
Obligor on a Receivable is shown on the Receivable Files as the subject of a
bankruptcy proceeding.
SECTION 7.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer and the representations made by the Servicer under
this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Collateral Agent, the
Backup Servicer, the Security Insurer, the Securityholders and the Seller and
any of the officers, directors, employees and agents of the Issuer, the Owner
Trustee, the Indenture Trustee, the Collateral Agent, the Backup Servicer and
the Security Insurer from and against any and all costs, expenses, losses,
damages, claims and liabilities arising out of or resulting from the use,
ownership or operation by the Servicer or any Affiliate thereof of a Financed
Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Collateral Agent, the
Seller, the Backup Servicer, the Security Insurer, their respective officers,
directors, agents and employees, and the Securityholders from and against any
taxes that may at any time be asserted against any of such parties with
respect to the transactions contemplated in this Agreement, including any
sales, gross receipts, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes, including
franchise taxes asserted with respect to, and as of the date of, the transfer
of the Receivables to the Trust or the issuance and original sale of the
Securities), and costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Collateral Agent, the
Seller, the Backup Servicer, the Security Insurer, the Securityholders and
any of the officers, directors, employees and agents of the Issuer, the Owner
Trustee, the Collateral Agent, and the Indenture Trustee from and against any
and all costs, expenses, losses, claims, damages and liabilities to the
extent that such cost, expense, loss, claim, damage or liability arose out of,
or was imposed upon any such Person through, the negligence, misfeasance or bad
faith of the Servicer in the performance of its duties under this Agreement or
by reason of reckless disregard of its obligations and duties under this
Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of First Merchants (or any successor thereto pursuant
to Section 7.03) as Servicer pursuant to Section 8.02, or a resignation by
such Servicer pursuant to this Agreement, such Servicer shall be deemed to be
the Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.03.
Indemnification under this Section shall survive the resignation or
removal of any indemnified party or the termination of this Agreement and
shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant
to this Section and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Servicer, without interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. (a) The Servicer shall not merge or consolidate
with any other Person, convey, transfer or lease substantially all its assets
as an entirety to another Person, or permit any other Person to become the
successor to the Servicer's business unless, after the merger, consolidation,
conveyance, transfer, lease, or succession, the successor or surviving entity
shall be capable of fulfilling the duties of the Servicer contained in this
Agreement and shall be reasonably acceptable to the Controlling Party. Any
Person (i) into which the Servicer may be merged or consolidated, (ii)
resulting from any merger or consolidation to which the Servicer shall be a
party, (iii) that acquires by conveyance, transfer or lease substantially all
of the assets of the Servicer or (iv) succeeding to the business of the
Servicer, which Person shall execute an agreement of assumption to perform
every obligation of the Servicer under this Agreement, shall be the successor to
the Servicer under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties to this Agreement. The
Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section 7.03(a) to the Owner Trustee and the Indenture
Trustee, the Certificateholders, the Security Insurer and each Rating
Agency. Notwithstanding the foregoing, the Servicer shall not merge or
consolidate with any other Person or permit any other Person to become a
successor to the Servicer's business unless (i) immediately after giving effect
to such transaction, no representation or warranty made pursuant to Section
7.01 shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such transaction)
and no event that, after notice or lapse of time or both, would become a
Servicer Termination Event shall have occurred and be continuing, (ii) the
Servicer shall have delivered to the Owner Trustee, the Indenture Trustee and
the Security Insurer an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 7.03(a) and that all conditions precedent
provided for in this Agreement relating to such transaction have been
complied with, (iii) immediately after giving effect to such transaction, the
successor to the Servicer shall become the Administrator under the
Administration Agreement in accordance with Section 8 of such Agreement and (iv)
the Servicer shall have delivered to the Owner Trustee, the Indenture Trustee
and the Security Insurer an Opinion of Counsel stating that either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the interest
of the Owner Trustee and the Indenture Trustee, respectively, in the
Receivables and reciting the details of such filings or (B) no such action
shall be necessary to preserve and protect such interest.
(b) Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Backup Servicer shall be a party, (iii) which acquires by conveyance,
transfer or lease substantially all of the assets of the Backup Servicer or
(iv) succeeding to the business of the Backup Servicer, which Person shall
execute an agreement of assumption to perform every obligation of the Backup
Servicer under this Agreement, shall be the successor to the Backup Servicer
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement.
SECTION 7.04. Limitation on Liability of Servicer, Backup Servicer
and Others. (a) None of the Servicer, the Backup Servicer or any of their
respective directors, officers, employees or agents shall be under any
liability to the Issuer, the Noteholders or the Certificateholders, except as
provided in this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement; provided, however, that this
provision shall not protect the Servicer, the Backup Servicer or any such
person against any liability that would otherwise be imposed by reason of a
breach of this Agreement or willful misfeasance, bad faith or negligence in
the performance of duties. The Servicer, the Backup Servicer and any
director, officer, employee or agent of the Servicer or Backup Servicer may
conclusively rely in good faith on the written advice of counsel or on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
(b) The Backup Servicer shall not be liable for any obligation of
the Servicer contained in this Agreement or for any errors of the Servicer
contained in any computer tape, certificate or other data or document
delivered to the Backup Servicer hereunder or on which the Backup Servicer
must rely in order to perform its obligations hereunder, and the Owner
Trustee, the Indenture Trustee, the Seller, the Security Insurer, the
Securityholders shall look only to the Servicer to perform such obligations.
The Backup Servicer, the Owner Trustee and the Indenture Trustee shall have
no responsibility and shall not be in default hereunder or incur any liability
for any failure, error, malfunction or any delay in carrying out any of its
duties under this Agreement if such failure or delay results from the Backup
Servicer acting in accordance with information prepared or supplied by a
Person other than the Backup Servicer or the failure of any such other Person
to prepare or provide such information. The Backup Servicer shall have no
responsibility, shall not be in default and shall incur no liability for (i)
any act or failure to act of any third party, including the Servicer or the
Controlling Party, (ii) any inaccuracy or omission in a notice or
communication received by the Backup Servicer from any third party, (iii) the
invalidity or unenforceability of any Receivable under applicable law, (iv)
the breach or inaccuracy of any representation or warranty made with respect
to any Receivable, or (v) the acts or omissions of any successor Backup
Servicer.
(c) The parties expressly acknowledge and consent to Harris Trust
and Savings Bank simultaneously acting in the capacity of Backup Servicer or
successor Servicer and Indenture Trustee and as collateral agent under the
Spread Account Agreement and the Local Collection Account Agreement. Harris
Trust and Savings Bank may, in such capacities, discharge its separate
functions fully, without hinderance or regard to conflict of interest
principles, duty of loyalty principles or other breach of fiduciary duties to
the extent that any such conflict or breach arises from the performance by
Harris Trust and Savings Bank of express duties set forth in this Agreement
in any of such capacities.
SECTION 7.05. Appointment of Subservicer. The Servicer may at any
time, with the Security Insurer's consent, appoint a subservicer to perform
all or any portion of its obligations as Servicer hereunder; provided,
however, that 10 days' prior notice of such appointment shall have been given
to the Rating Agencies and each Rating Agency shall have notified the
Servicer, the Backup Servicer, the Owner Trustee and the Indenture Trustee in
writing that such appointment will not result in a reduction or withdrawal of
the then current ratings of the Securities or result in an increased capital
charge to the Security Insurer; and, provided, further, that the Servicer
shall remain obligated and be liable to the Owner Trustee, the Indenture
Trustee, the Security Insurer and the Securityholders for the servicing and
administering of the Receivables in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and
administering the Receivables. The fees and expenses of any subservicer shall
be as agreed between the Servicer and such subservicer from time to time, and
none of the Owner Trustee, the Indenture Trustee, the Issuer, the Backup
Servicer, the Security Insurer or the Securityholders shall have any
responsibility therefor.
SECTION 7.06. Servicer and Backup Servicer Not to Resign. (a)
Subject to the provisions of Section 7.03(a), the Servicer shall not resign
from the obligations and duties imposed on it by this Agreement as Servicer
except upon a determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law.
(b) Subject to the provisions of Section 7.03(b), the Backup Servicer
may resign from the obligations and duties imposed on it by this Agreement as
Backup Servicer (i) upon a determination that the performance of its duties
under this Agreement shall no longer be permissible under applicable law,
(ii) if the Backup Servicer resigns or is removed as Indenture Trustee
(in which case the Backup Servicer may resign as Backup Servicer subject to the
same conditions applicable to the Indenture Trustee pursuant to Section 6.08 of
the Indenture), or (iii) with the prior written consent of the Rating Agency
and the Controlling Party; provided, that, the Rating Agency Condition shall
have been satisfied.
(c) Notice of any determination that the performance by either the
Servicer or the Backup Servicer of its duties hereunder is no longer
permitted under applicable law shall be communicated to the Owner Trustee, the
Indenture Trustee and the Security Insurer at the earliest practicable time
(and, if such communication is not in writing, shall be confirmed in writing at
the earliest practicable time) and any such determination shall be evidenced by
an Opinion of Counsel to such effect delivered by the Servicer or Backup
Servicer, as applicable, to the Owner Trustee, the Indenture Trustee and the
Security Insurer concurrently with or promptly after such notice. No
resignation of the Servicer shall become effective until the Backup Servicer
or a successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 8.03. No resignation
of the Backup Servicer shall become effective until an entity acceptable to
the Controlling Party shall have assumed the responsibilities and obligations
of the Backup Servicer.
ARTICLE VIII
Default
SECTION 8.01. Servicer Termination Events. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) any failure by the Servicer to deposit into any Local Collection
Account or the Collection Account any proceeds or payment required to be so
delivered under the terms of this Agreement that continues unremedied for a
period of two Business Days (one Business Day with respect to payments of
Purchase Amounts) after written notice is received by the Servicer or after
discovery of such failure by a Responsible Officer of the Servicer;
(b) failure by the Servicer to deliver to the Owner Trustee, the
Indenture Trustee, the Seller and (so long as the Security Insurer is the
Controlling Party) the Security Insurer the Servicer's Certificate by the
applicable Determination Date, or to observe any covenant or agreement set
forth in Section 4.06;
(c) failure on the part of the Servicer duly to observe or perform
any other covenants or agreements of the Servicer set forth in this
Agreement, which failure (i) materially and adversely affects the rights of the
Securityholders (determined without regard to the availability of funds under
the Policies) or of the Security Insurer (unless the Security Insurer is no
longer the Controlling Party) and (ii) continues unremedied for a period of
30 days after knowledge thereof by the Servicer or after the date on which
written notice of such failure requiring the same to be remedied shall have
been given to the Servicer by any of the Owner Trustee, the Indenture Trustee
or the Security Insurer (or, if a Security Insurer Default shall have
occurred and be continuing, Noteholders evidencing not less than 25% of the
Outstanding Amounts of the Notes);
(d) the occurrence of an Insolvency Event with respect to the
Servicer or, so long as First Merchants is the Servicer, the Seller;
(e) so long as the Security Insurer is the Controlling Party, any
failure by the Security Insurer to have delivered a Servicer Extension Notice
pursuant to Section 4.14;
(f) so long as the Security Insurer is the Controlling Party, an
Insurance Agreement Event of Default shall have occurred and be continuing; or
(g) the Servicer is terminated as servicer with respect to any other
trust that has issued one or more classes of asset backed securities with
respect to which the Security Insurer has issued a financial insurance
guaranty policy.
SECTION 8.02. Consequences of a Servicer Termination Event. If a
Servicer Termination Event shall occur and be continuing, the Security
Insurer or, if the Security Insurer is no longer the Controlling Party, the
Indenture Trustee, the Owner Trustee or Noteholders evidencing 25% of the
Outstanding Amount of the Notes, by notice given in writing to the Servicer (and
to the Indenture Trustee, the Owner Trustee and the Seller if given by the
Security Insurer or such Noteholders), may terminate all of the rights and
obligations of the Servicer under this Agreement. On or after the receipt by
the Servicer of such written notice or upon termination of the Servicer pursuant
to Section 4.14, all authority, power, obligations and responsibilities of the
Servicer under this Agreement automatically shall pass to, be vested in and
become obligations and responsibilities of the Backup Servicer (or such other
successor Servicer appointed by the Controlling Party); provided, however,
that the successor Servicer shall have no liability with respect to any
obligation that was required to be performed by the terminated Servicer prior
to the date that the successor Servicer becomes the Servicer or any claim of
a third party based on any alleged action or inaction of the terminated
Servicer. The successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement of the Receivables and related documents to show the
Indenture Trustee (or Owner Trustee if the Notes have been paid in full) as
lienholder or secured party on the related certificates of title of the
Financed Vehicles or otherwise. The terminated Servicer agrees to cooperate
with the successor Servicer in effecting the termination of the
responsibilities and rights of the terminated Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of
all money and property held by the Servicer with respect to the Receivables
and the delivery to the successor Servicer of all Receivable Files and other
records relating to the Receivables and a computer tape in readable form as
of the most recent Business Day containing all information necessary to enable
the successor Servicer to service the Receivables.
SECTION 8.03. Appointment of Successor. (a) On and after the time the
Servicer receives a notice of termination pursuant to Section 8.02, upon
non-extension of the servicing term as referred to in Section 4.14, or upon
the resignation of the Servicer pursuant to Section 7.06, the Backup Servicer
(unless the Security Insurer shall have exercised its option pursuant to
Section 8.03(b) to appoint an alternate successor Servicer) shall be the
successor in all respects to the Servicer in its capacity as Servicer under
this Agreement (including its appointment as Administrator under the
Administration Agreement as set forth in Section 8.03(c)) and shall be
subject to all the rights, responsibilities, restrictions, duties, liabilities,
and termination provisions relating to the Servicer under this Agreement,
except as otherwise stated herein. The Seller, the Owner Trustee, the
Indenture Trustee and such successor Servicer shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
If a successor Servicer is acting as Servicer hereunder, it shall be subject to
term-to-term servicing as referred to in Section 4.14 and to termination
under Section 8.02 upon the occurrence of any Servicer Termination Event
applicable to it as Servicer.
(b) The Controlling Party may exercise at any time its right to
appoint as Backup Servicer or as successor to the Servicer a Person other
than the Person serving as Backup Servicer at the time, and shall have no
liability to the Owner Trustee, the Indenture Trustee, the Servicer, the Seller,
the Person then serving as Backup Servicer, any Noteholders, any
Certificateholders or any other Person if it does so. Notwithstanding the
above, if the Backup Servicer shall be legally unable or unwilling to act as
Servicer, and the Security Insurer is no longer the Controlling Party, the
Backup Servicer, the Indenture Trustee, the Owner Trustee or Noteholders
evidencing 25% of the Outstanding Amount of the Notes may petition a court of
competent jurisdiction to appoint any Eligible Servicer as the successor to
the Servicer. Pending appointment pursuant to the preceding sentence, the
Backup Servicer shall act as successor Servicer unless it is legally unable
to do so, in which event the outgoing Servicer shall continue to act as
Servicer until a successor has been appointed and accepted such appointment.
Subject to Section 7.06, no provision of this Agreement shall be construed as
relieving the Backup Servicer of its obligation to succeed as successor
Servicer upon the termination of the Servicer pursuant to Section 8.02, the
resignation of the Servicer pursuant to Section 7.06 or the non-extension of
the servicing term of the Servicer pursuant to Section 4.14. If upon the
termination of the Servicer pursuant to Section 8.02 or the resignation of
the Servicer pursuant to Section 7.06, the Controlling Party appoints a
successor Servicer other than the Backup Servicer, the Backup Servicer shall
not be relieved of its duties as Backup Servicer hereunder.
(c) Upon appointment, the successor Servicer (including the Backup
Servicer acting as successor Servicer) shall (i) be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement and (ii) become the Administrator under the
Administration Agreement in accordance with Section 8 of such Agreement.
SECTION 8.04. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Servicer pursuant
to this Article VIII, the Owner Trustee shall give prompt written notice
thereof to Certificateholders, and the Indenture Trustee shall give prompt
written notice thereof to Noteholders and the Rating Agencies.
SECTION 8.05. Waiver of Past Defaults. The Security Insurer or (if the
Security Insurer is no longer the Controlling Party) the Noteholders
evidencing not less than a majority of the Outstanding Amount of the Notes or
the Certificateholders evidencing not less than a majority of the outstanding
Certificate Balance (in the case of any default which does not adversely
affect the Indenture Trustee or the Noteholders) may, on behalf of all
Securityholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from any of the Trust
Accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Termination Event
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto.
ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables. (a) On each
Determination Date as of which the Pool Balance is equal to or less than 10%
of the Original Pool Balance, the Servicer shall have the option to purchase
the Receivables (with the consent of the Security Insurer, if a claim has
previously been made under either of the Policies or if such purchase would
result in a claim on one or both of the Policies or if such purchase would
result in any amount owing and remaining unpaid under this Agreement or the
Insurance Agreement to the Security Insurer or any other Person). To
exercise such option, the Servicer shall deposit to the Collection Account
pursuant to Section 5.04 an amount equal to the aggregate Purchase Amount for
the Receivables (including Defaulted Receivables) and shall succeed to all
interests in and to the Receivables.
(b) Upon any sale of the assets of the Trust pursuant to Section
9.02 of the Trust Agreement, the Servicer shall instruct the Indenture Trustee
in writing to deposit the proceeds from such sale after all payments and
reserves therefrom have been made (the "Insolvency Proceeds") in the Collection
Account. On the Distribution Date on which the Insolvency Proceeds are
deposited in the Collection Account (or, if such proceeds are not so
deposited on a Distribution Date, on the Distribution Date immediately following
such deposit), the Servicer shall instruct the Indenture Trustee to make the
following deposits (after the application on such Distribution Date of the
Total Distribution Amount pursuant to Section 5.06) from the Insolvency
Proceeds and any funds remaining on deposit in the Spread Account, including
the proceeds of any sale of investments therein as follows:
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited into the
Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the Outstanding Amount of the
Notes (less the deposits made to the Note Distribution Account on such
Distribution Date and on prior Distribution Dates);
(iii) to the Certificate Distribution Account, any portion of the
Certificateholders' Interest Distributable Amount not otherwise deposited
into the Certificate Distribution Account on such Distribution Date;
(iv) to the Certificate Distribution Account, the Certificate
Balance (less the deposits made to the Certificate Distribution Account on such
Distribution Date); and
(v) to pay any amount owed to the Security Insurer under the
Insurance Agreement.
Any investments on deposit in the Note Distribution Account which will not
mature on or before such Distribution Date shall be sold by the Indenture
Trustee at such time as will result in the Indenture Trustee receiving the
proceeds from such sale not later than the Payment Determination Date
preceding such Distribution Date. Any Insolvency Proceeds remaining after
the deposits described above shall be paid to the Seller.
(c) As described in Article IX of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee,
the Indenture Trustee and the Security Insurer as soon as practicable after
the Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes and all
amounts owed to the Security Insurer, the Certificateholders will succeed to
the rights of the Noteholders hereunder and the Owner Trustee will succeed to
the rights of, and assume the obligations of, the Indenture Trustee pursuant to
this Agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment. (a) This Agreement may be amended by the
Seller, the Servicer, the Backup Servicer, the Owner Trustee, the Indenture
Trustee and the Issuer, with the prior written consent of the Security
Insurer (so long as the Security Insurer is the Controlling Party), but without
the consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Owner Trustee and the Indenture Trustee, adversely affect in
any material respect the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Issuer, with the prior written consent of the
Indenture Trustee, the Security Insurer (so long as the Security Insurer is
the Controlling Party), the Noteholders holding not less than a majority of
the Outstanding Amount of the Notes and the Holders (as defined in the Trust
Agreement) of outstanding Certificates evidencing not less than a majority of
the outstanding Certificate Balance, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Securityholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made
for the benefit of the Securityholders or (b) reduce the aforesaid percentage of
the Outstanding Amount of the Notes and the Certificate Balance, the
Securityholders of which are required to consent to any such amendment,
without the consent of the Noteholders holding all the outstanding Notes and
Certificateholders holding all the outstanding Certificates.
Promptly after the execution of any amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee and each of the
Rating Agencies.
It shall not be necessary for the consent of Securityholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon
an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 10.02(i)(1). The Owner Trustee and the Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects
the Owner Trustee's or the Indenture Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise.
SECTION 10.02. Protection of Title to Trust. (a) The Servicer shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and of the Indenture Trustee in the Receivables and in the proceeds
thereof. The Servicer shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following
such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of §
9-402(7) of the UCC, unless it shall have given the Owner Trustee and the
Indenture Trustee at least five days' prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Seller and the Servicer shall have an obligation to
give the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment or new financing statement. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection
Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer
to a Receivable shall indicate clearly the interest of the Issuer and the
Indenture Trustee in such Receivable and that such Receivable is owned by the
Issuer and has been pledged to the Indenture Trustee. Indication of the
Issuer's and the Indenture Trustee's interest in a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only when,
the related Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and the Security
Insurer (so long as no Security Insurer Default shall have occurred and be
continuing) and their agents at any time during normal business hours to
inspect, audit and make copies of and abstracts from the Servicer's records
regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee,
the Security Insurer (so long as no Security Insurer Default shall have
occurred and be continuing) or to the Indenture Trustee, within five Business
Days, a list of all Receivables (by contract number and name of Obligor) then
held as part of the Trust, together with a reconciliation of such list to the
Schedule of Receivables and to each of the Servicer's Certificates furnished
before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee, the Security
Insurer (so long as no Security Insurer Default shall have occurred and be
continuing) and the Indenture Trustee:
(1) promptly after the execution and delivery of this Agreement and
each amendment hereto and in connection with the transfer of Subsequent
Receivables from the Seller to the Trust, an Opinion of Counsel stating that,
in the opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Owner Trustee and the Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) no such action shall be necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months after
the Cutoff Date, an Opinion of Counsel, dated as of a date during such 90-day
period, stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee and the Indenture Trustee in the Receivables, and reciting the details
of such filings or referring to prior Opinions of Counsel in which such details
are given, or (B) no such action shall be necessary to preserve and protect
such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 10.03. Notices. All demands, notices, communications and
instructions upon or to the Seller, the Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of the Seller, to First Merchants Auto Receivables Corporation II, 570
Lake Cook Road, Suite 126B, Deerfield, Illinois 60015, Attention: Thomas R.
Ehmann; (b) in the case of the Servicer, to First Merchants Acceptance
Corporation, 570 Lake Cook Road, Suite 126, Deerfield, Illinois 60015,
Attention: Thomas R. Ehmann; (c) in the case of the Backup Servicer or the
Indenture Trustee, to Harris Trust and Savings Bank, 311 West Monroe Street,
12th Floor, Chicago, Illinois 60606, Attention: Indenture Trust
Administration; (d) in the case of the Issuer or the Owner Trustee, at the
Corporate Trust Office (as defined in the Trust Agreement), (e) in the case
of the Security Insurer, to Financial Security Assurance Inc., 350 Park Avenue,
New York, New York 10022, Attention: Surveillance Department; (f) in the case
of Moody's, to Moody's Investors Service, Inc., ABS Monitoring Department, 99
Church Street, New York, New York 10007 and (g) in the case of Standard &
Poor's, to Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., 25 Broadway (15th Floor), New York, New York 10004,
Attention of Asset Backed Surveillance Department; or, as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties. In addition, copies of such notices shall be sent to the
Security Insurer pursuant to Section 5.08.
SECTION 10.04. Assignment by the Seller or the Servicer.
Notwithstanding anything to the contrary contained herein, except as provided
in the remainder of this Section, as provided in Sections 6.04 and 7.03
herein and as provided in the provisions of this Agreement concerning the
resignation of the Servicer, this Agreement may not be assigned by the Seller or
the Servicer.
SECTION 10.05. Limitations on Rights of Others. The Security Insurer
is an intended third party beneficiary of this Agreement entitled to enforce
the provisions hereof as if a party hereto. The provisions of this Agreement
are solely for the benefit of the Seller, the Servicer, the Issuer, the Owner
Trustee, the Security Insurer, the Certificateholders, the Indenture Trustee
and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 10.06. Severability. Any provision of this Agreement that 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 10.07. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.10. Assignment by Issuer. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Indenture Trustee pursuant to the Indenture for
the benefit of the Noteholders of all right, title and interest of the Issuer
in, to and under the Receivables and/or the assignment of any or all of the
Issuer's rights and obligations hereunder to the Indenture Trustee.
SECTION 10.11. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, the Servicer and the Seller shall not, prior
to the date which is one year and one day after the termination of this
Agreement with respect to the Issuer or the Seller, acquiesce, petition or
otherwise invoke or cause the Issuer or the Seller to invoke the process of any
court or government authority for the purpose of commencing or sustaining a
case against the Issuer or the Seller under any federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or
the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer or the Seller.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce, petition
or otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Seller under any federal or state bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Seller or any
substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Seller.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Chase Manhattan Bank Delaware not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall Chase Manhattan Bank Delaware in its individual
capacity or, except as expressly provided in the Trust Agreement, as beneficial
owner of the Issuer have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of its duties or
obligations hereunder or in the performance of any duties or obligations of
the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Harris Trust and Savings Bank, not in its
individual capacity but solely as Indenture Trustee and in no event shall
Harris Trust and Savings Bank have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
SECTION 10.13. Servicer Payment Obligation. The Servicer shall be
responsible for payment of the Administrator's fees under the Administration
Agreement and shall reimburse the Administrator for all expenses and
liabilities of the Administrator incurred thereunder. In addition, the
Servicer shall be responsible for the payment of all fees and expenses of the
Trust, the Owner Trustee and the Indenture Trustee paid by any of them in
connection with any of their obligations under the Basic Documents to obtain
or maintain any required license under the Pennsylvania Motor Vehicle Sales
Finance Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers as of the day and year first
above written.
FIRST MERCHANTS AUTO TRUST 1996-C
By:CHASE MANHATTAN BANK DELAWARE, not in its individual capacity but solely
as
Owner Trustee on behalf of the Trust
By:
Name:
Title:
FIRST MERCHANTS AUTO RECEIVABLES
CORPORATION II, Seller
By:
Name:
Title:
FIRST MERCHANTS ACCEPTANCE
CORPORATION, Servicer
By:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK,
Indenture Trustee, Collateral Agent
and Backup Servicer
By:
Name:
Title:<PAGE>SCHEDULE A
Schedule of Receivables
[To be Delivered to the Trust at Closing and Supplemented
on each Subsequent Transfer Date for Subsequent Receivables]<PAGE>SCHEDULE B
Schedule of Eligible Investment Receivables
[To be Delivered to the Trust at Closing and Supplemented
on each Subsequent Transfer Date for Subsequent Receivables]<PAGE>SCHEDULE C
Location of Receivable Files
EXHIBIT A
Representations and Warranties of First Merchants Acceptance Corporation
Under Section 3.02 of the Receivables Purchase Agreement
EXHIBIT B
First Merchants Acceptance Corporation
First Merchants Auto Trust 1996-C Distribution Date Statement to
Securityholders
Principal Distribution Amount
Class A-1 Notes:($ per $1,000 original principal balance)
Class A-2 Notes:($ per $1,000 original principal balance)
Interest Distribution Amount
Class A-1 Notes:($ per $1,000 original principal balance)
Class A-2 Notes:($ per $1,000 original principal balance)
Principal Distribution Amount
Principal Per $1,000 Certificate
Interest Distribution Amount
Interest Per $1,000 Certificate
Class A-1 Interest Carryover Shortfall
Class A-1 Principal Carryover Shortfall
Class A-2 Interest Carryover Shortfall
Class A-2 Principal Carryover Shortfall
Certificateholders' Interest Carryover Shortfall
Certificateholders' Principal Carryover Shortfall
Class A-2 Additional Principal Distribution Amount
Note Balance:
Class A-1 Notes:
Class A-2 Notes:
Note Pool Factor:
Class A-1 Notes:
Class A-2 Notes:
Certificate Balance
Certificate Pool Factor
Servicing Fee
Servicing Fee Per $1,000
Owner Trustee Fee
Indenture Trustee Fee
Pool Balance
Realized Losses
Cram Down Losses
Liquidated Receivables or Purchased Receivables
Purchase Amounts
Distribution Under Notes Policy
Distribution Under Certificates Policy
Spread Account Balance
Amount Deposited to Spread Account
Principal Balance of Receivables that were delinquent:
30 to 59 days
60 to 89 days
90 days or more
Amount Withdrawn from Spread Account
Pre-Funding Account Balance
Mandatory Redemption Amount
Class A-1 Notes
Class A-2 Notes
Mandatory Prepayment Amount (Certificates)
EXHIBIT C
Form of Servicer's Certificate
First Merchants Acceptance Corporation
Monthly Servicing Report
[Date]
First Merchants Owner Trust 1996-C
$ Floating Rate Asset Backed Notes, Class A-1
$ % Asset Backed Notes, Class A-2
$ % Asset Backed Certificates
Distribution Date:
I.Original Deal Parameter Inputs
(A) Initial Pool Balance
(B) Initial Class A-1 Balance
(C) Initial Class A-2 Balance
(D) Initial Certificate Balance
(E) Class A-1 Rate
(F) Class A-2 Rate
(G) Pass-Through Rate
(E) Servicing Fee Rate
(F) Trustee Fee
(G) Security Insurer's Premium
(H) Original Weighted Average Coupon (WAC)
(I) Original Weighted Average Remaining Term (WAM)
(J) Number of Contracts
(K) Spread Account
i. Spread Account Initial Deposit
ii. Spread Account Required Amount
II.Inputs from Previous Monthly Servicer Reports
(Not Applicable for First Monthly Report)
(A) Current Pool Balance
(B) Current Class A-1 Note Balance
(C) Current Class A-2 Note Balance
(D) Current Certificate Balance
(D) Class A-1 Note Pool Factor
(E) Class A-2 Note Pool Factor
(F) Certificate Pool Factor
(G) Spread Account Balance
(H) Weighted Average Coupon of Remaining Portfolio (WAC)
(I) Weighted Average Remaining Term of Remaining Portfolio (WAM)
(J) Number of Contracts
III.Inputs from the System
(A) Simple Interest Loans
i. Principal Payments Received
ii. Interest Payments Received
iii. Repurchased Receivables
iv. Late Fees
(B) Spread Account Release to Collection Account
(C) Spread Account Release to Depositor
(D) Liquidated Contracts
i. Gross Principal Balance of Liquidated Receivables
ii. Net Liquidation Proceeds & Recoveries Received during the
Collection Period
(F) Weighted Average Coupon of Remaining Portfolio (WAC)
(G) Weighted Average Remaining Maturity of Remaining Portfolio (WAM)
(H) Remaining Number of Contracts
(I) Receivable Balance of Vehicles in Repossession During the
Collection Period
(J) Number of Vehicles in Repossession During the Collection Period
(K) Aggregate Net Losses for Collection Period
(L) Delinquent Contracts
i. 31-60 Days Delinquent
ii. 61 Days or More Delinquent
IV.Inputs Derived from Other Sources
(A) Collection Account Investment Income
(B) Spread Account Investment Income
A. Collections
(1) Total Principal Payments Received
(a) Principal Payments on Receivables (includes Partial and
Full
Prepayments)
(b) Repurchased Receivables
(c) Cram Down Loss
(2) Interest Payments Received
B. Draw on Credit Enhancements
(1) Withdrawal from Spread Account
(2) Draw on the Insurance Policies
(3) Total Draw on Credit Enhancements
C.Total Distribution Amount
(1) Total Distribution Amount
(2) Interest Distribution Amount
(3) Regular Principal Distribution Amount
D.Liquidated Receivables, Net (includes repos repurchased in October)
(1) Gross Principal Balance of Liquidated Receivables
(2) Net Liquidation Proceeds & Recoveries Received during the
Collection Period
(3) Liquidated Receivables, Net
E.Monthly Distributions
(1) Noteholders' Principal Distributable Amount
(2) Certificateholders' Principal Distributable Amount
(3) Principal Distribution Amount
(a) Principal Payments on Receivables
(b) Repurchased Receivables
(c) Cram Down Loss
(4) Noteholders' Interest Distributable Amount
(a) amount allocated to Class A-1 Notes
(b) amount allocated to Class A-2 Notes
(5)Certificateholders' Interest Distributable Amount
(6) Required Distributions
(a) Servicing Fee (Includes late fees collected)
(b) Fees Paid to the Indenture Trustee and Owner Trustee
(c) Monthly Security Insurer's Premium
(d) Deposits into Spread Account
F. Pool Balances and Portfolio Information
(1) Total Pool Balance
(2) Total Pool Factor
(3) Note Balance
(4) Certificate Balance
(5) Remaining
Overcollateralization
Amount
(6) Weighted Average
Coupon
(7) Weighted Average
Remaining Maturity
(8) Remaining Number
of Contracts
G.Spread Account
(1) Required Spread Account Balance
(2) Beginning Balance
(3) Amount Available for Deposit to the Spread Account
(4) Withdrawal from Spread Account
(5) Amount Released to Seller
(6) Ending Balance
H. Net Loss and Delinquency Activities
(1) Net Losses for the Collection Period (including Cram Down)
(2) Liquidated Receivables for the Collection Period
(3) Cumulative Net Losses
(4) Delinquent and Repossessed Receivables
(a) 60 Days Delinquent (Receivables Balance)
(b) 60 Days Delinquent (Number of Receivables)
(c) 61 Days or More (Receivables Balance)
(d) 91 Days or More (Number of Receivables)
(e)Receivables Balance of Vehicles in Repossession During the
Monthly Period
(f) Number of Vehicles in Repossession During the Collection
Period
[I.Portfolio Performance Test
(1) Delinquency Ratio
(a) Second Preceding Collection Period
(b) Preceding Collection Period
(c) Current Collection Period
(d) Three Month Average
(2) Default Ratio
(a) Second Preceding Collection Period
(b) Preceding Collection Period
(c) Current Collection Period
(d) Three Month Average
(3) Net Loss Ratio
(a) Second Preceding Collection Period
(b) Preceding Collection Period
(c) Current Collection Period
(d) Three Month Average
(4) Delinquency Trigger Indicator
(5) Default Trigger Indicator
(6) Loss Trigger Indicator]
J. (1) Amount of principal being paid to the Noteholders:
(2) Per $1,000 original principal amount:
K. (1) Amount of principal being paid to the Certificateholders:
(2) Per $1,000 original principal amount:
L. (1) Amount of interest being paid to the Noteholders:
(a) amount allocated to the Class A-1 Notes:
(b) amount allocated to the Class A-2 Notes:
(2) Per $1,000 original principal amount:
M. (1) Amount of interest being paid to Certificateholders:
(2) Per $1,000 original principal amount:
N. Pool Balance at the end of the related Collection Period:
O. Outstanding Amount of Notes:
(1) Outstanding Amount of the Class A-1 Notes:
(2) Outstanding Amount of the Class A-2 Notes:
Note Pool Factor:
(1) Class A-1 Note Pool Factor:
(2) Class A-2 Note Pool Factor:
P. Outstanding Certificate Balance:
Certificate Pool Factor:
Q. (1) Amount of Servicing Fee:
(2) Per $1,000 original principal amount:
R. Aggregate Purchase Amounts for Collection Period:
S. Aggregate Amount of Realized Losses for the Collection Period:
T. Amount in Spread Account:
U. Pre-Funding Account
(1) Pre-Funding Account Balance
(2) Mandatory Redemption Amount
Class A-1 Notes
Class A-2 Notes
(3) Mandatory Prepayment Amount (Certificates)
V. Capitalized Interest Account Balance
EXHIBIT D
Form of Notes Policy<PAGE>EXHIBIT E
Form of Certificates Policy
EXHIBIT F
Form of Subsequent Transfer Agreement
SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT (the "Agreement") dated as of [ ],
by and among First Merchants Auto Receivables Corporation II, a Delaware
corporation ("FMARC II"), First Merchants Auto Trust 1996-C, a Delaware
business trust (the "Trust"), First Merchants Acceptance Corporation, a
Delaware corporation ("First Merchants"), and Harris Trust and Savings Bank,
an Illinois banking corporation, as collateral agent under the Spread Account
Agreement (the "Collateral Agent") and indenture trustee under the Indenture
(the "Indenture Trustee").
Reference is hereby made to the Sale and Servicing Agreement (the "Sale
and Servicing Agreement") dated as of December 1, 1996, among FMARC II,
Harris Trust and Savings Bank, the Trust, and First Merchants, the Receivables
Purchase Agreement (the "Purchase Agreement") dated as of December 1, 1996,
between First Merchants and FMARC II, and the Master Spread Account Agreement
dated as of March 1, 1996, among FMARC II, Financial Security Assurance Inc.
and the Collateral Agent, as amended by the Amendment to the Master Spread
Account Agreement, dated as of May 1, 1996 among the same parties, and as
supplemented by the Series 1996-C Supplement to the Master Spread Account
Agreement, dated as of December 1, 1996, among FMARC II, Financial Security
Assurance Inc., Chase Manhattan Bank Delaware and the Collateral Agent (the
"Spread Account Agreement").
WHEREAS, FMARC II wishes to sell the Subsequent Receivables set forth in
Schedule A hereto to the Trust, and the Trust wishes to purchase such
Subsequent Receivables and to pledge such Subsequent Receivables to the
Indenture Trustee, all in accordance with the provisions of the Sale and
Servicing Agreement and the Indenture; and
WHEREAS, FMARC II wishes to convey the Subsequent Eligible Investment
Receivables set forth in Schedule B hereto to the Collateral Agent as
provided herein and in accordance with the provisions of the Spread Account
Agreement;
NOW, THEREFORE, First Merchants, FMARC II, the Trust, the Indenture
Trustee and the Collateral Agent hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein and not
otherwise defined herein shall the meanings ascribed to them in the Sale and
Servicing Agreement.
Section 2. Subsequent Receivables and Eligible Investment Receivables.
Schedule A attached hereto sets forth the Subsequent Receivables being
transferred hereby by FMARC II to the Trust having an aggregate principal
balance of $[ ] as of [ ] and Schedule B attached hereto sets forth
the Subsequent Eligible Investment Receivables being transferred hereby by
FMARC II to the Collateral Agent having an aggregate principal balance of
$[ ] as of [ ].
Section 3. Transfer of Subsequent Receivables to the Trust. Pursuant to
and upon the representations, warranties and agreements on the part of First
Merchants and FMARC II in the Sale and Servicing Agreement and in
consideration of the purchase price of $[92%], FMARC II does hereby sell,
assign, transfer and otherwise convey unto the Trust, without recourse
(except as expressly provided in the Sale and Servicing Agreement), all right,
title and interest of FMARC II in and to (1) the Subsequent Receivables and all
monies due thereon on or after the Subsequent Cutoff Date; (2) the security
interests in the Financed Vehicles and any accessions thereto granted by
Obligors pursuant to the Subsequent Receivables and any other interest of
FMARC II in such Financed Vehicles; (3) any Liquidation Proceeds and any
other proceeds with respect to the Subsequent Receivables from claims on any
physical damage, credit life or disability insurance policies covering
Financed Vehicles or Obligors, including any vendor's single interest or
other collateral protection insurance policy; (4) any property that shall have
secured a Subsequent Receivable and shall have been acquired by or on behalf
of FMARC II; (5) all documents and other items contained in the Receivables
Files; (6) all of FMARC II's rights (but not its obligations) under the
Purchase Agreement; and (7) the proceeds of any and all of the foregoing.
The foregoing sale does not constitute and is not intended to result in any
assumption by the Trust of any obligation of either FMARC II or First
Merchants to the Obligors, insurers or any other person in connection with
the Subsequent Receivables, Receivable Files, any insurance policies or any
agreement or instrument relating to any of them.
Section 4. Withdrawal from the Pre-Funding Account. Pursuant to Section
5.12 of the Sale and Servicing Agreement, the Indenture Trustee withdraws
$[ ] from the Pre-Funding Account (i) to pay the Spread Account Percentage to
the Collateral Agent for deposit into the Spread Account and (ii) to pay the
balance of $[ ] to FMARC II. The Collateral Agent hereby acknowledges
receipt of such deposit to the Spread Account.
Section 5. Transfer of Subsequent Eligible Investment Receivables to
the Collateral Agent. Pursuant to and upon the representations, warranties and
agreements on the part of First Merchants in Section 6, FMARC II does hereby
transfer and convey unto the Collateral Agent in exchange for $[ ] from the
Collateral Agent, without recourse (except as expressly provided in the
Purchase Agreement), all right, title and interest of FMARC II in and to (1)
the Subsequent Eligible Investment Receivables and all monies due thereon on
or after the Subsequent Cutoff Date; (2) the security interests in the
Financed Vehicles and any accessions thereto granted by Obligors pursuant to
the Subsequent Eligible Investment Receivables and any other interest of
FMARC II in such Financed Vehicles; (3) any Liquidation Proceeds and any other
proceeds with respect to the Subsequent Eligible Investment Receivables from
claims on any physical damage, credit life or disability insurance policies
covering Financed Vehicles or Obligors, including any vendor's single
interest or other collateral protection insurance policy; (4) any property that
shall have secured a Subsequent Eligible Investment Receivable and shall have
been acquired by or on behalf of FMARC II; (5) all documents and other items
contained in the Receivables Files; (6) all of FMARC II's rights (but not its
obligations) under the Receivables Purchase Agreement; and (7) the proceeds
of any and all of the foregoing. Pursuant to the Spread Account Agreement,
upon the transfer and conveyance to it of such Subsequent Eligible Investment
Receivables by FMARC II, the Collateral Agent shall release to FMARC II $[ ]
of the $[ ] paid to it by the Indenture Trustee pursuant to Section 4
hereof.
The foregoing sale does not constitute and is not intended to result in any
assumption by the Collateral Agent of any obligation of FMARC II or First
Merchants to the Obligors, insurers or any other person in connection with
the Subsequent Eligible Investment Receivables, Receivable Files, any insurance
policies or any agreement or instrument relating to any of them.
Section 6. Representations of First Merchants. (a) First Merchants
hereby consents to the assignment by FMARC II to the Trust of FMARC II's
rights with respect to the representations and warranties made by First
Merchants in the Purchase Agreement with regard to the Subsequent
Receivables. Such representations and warranties speak as of the execution
and delivery of this Agreement, but shall survive the conveyance of the
Subsequent Receivables to the Indenture Trustee or any custodian. Pursuant
to this Agreement, FMARC II has sold, assigned, transferred and conveyed to the
Trust its rights under the Purchase Agreement, including its rights with
respect to the representations and warranties of First Merchants, upon which
the Trust relies in accepting the Subsequent Receivables.
(b) First Merchants hereby consents to the assignment by FMARC II to the
Collateral Agent of FMARC II's rights with respect to the representations and
warranties made by First Merchants in the Purchase Agreement with regard to
the Subsequent Eligible Investment Receivables. Such representations and
warranties speak as of the execution and delivery of this Agreement, but
shall survive the conveyance of the Subsequent Eligible Investment Receivables
to the Collateral Agent or to any custodian. Pursuant to this Agreement, FMARC
II has transferred and conveyed to the Trust its rights under the Purchase
Agreement, including its rights with respect to the representations and
warranties of First Merchants, upon which the Trust relies in accepting the
Subsequent Eligible Investment Receivables.
(c) First Merchants hereby agrees that the Trust and the Collateral
Agent shall have the right to enforce any and all rights under the Purchase
Agreement assigned herein to such party, including the right to cause First
Merchants to repurchase any Subsequent Receivable or Subsequent Eligible
Investment Receivable, respectively, with respect to which it is in breach of
any of its representations and warranties, directly against First Merchants
as though the Trust and Collateral Agent were each a party to the Purchase
Agreement, and neither the Trust nor the Collateral Agent shall be obligated
to exercise any such rights indirectly through FMARC II.
Section 7. Representations of FMARC II. FMARC II represents and
warrants to the Trust that the representations and warranties of FMARC II in
the Sale and Servicing Agreement with respect to the Subsequent Receivables
are true and correct as of the date of this agreement and hereby certifies
that:
(a) The weighted average APR of the Initial Receivables together with all
Subsequent Receivables and including the Subsequent Receivables to be
conveyed on the date of this Agreement (based on the characteristics of the
Initial Receivables on the Cutoff Date and the Subsequent Receivables on the
related Subsequent Cutoff Dates), is not less than 20%;
(b) the original term of each Subsequent Receivable is not greater than 66
months; and
(c) All other conditions precedent set forth in Section 2.01(c) of the Sale
and Servicing Agreement relating to the conveyance of Subsequent Receivables
to the Trust have been satisfied.
Section 8. Severability. Any provision of this Agreement that 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 9. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 10. Headings. The headings of the various Sections herein are
for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
Section 11. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
<PAGE> IN WITNESS WHEREOF, the parties hereto have caused this Subsequent
Transfer Agreement to be duly executed by their respective officers as of the
day and year first above written.
FIRST MERCHANTS AUTO RECEIVABLES
CORPORATION II
By:
Name:
Title:
FIRST MERCHANTS ACCEPTANCE CORPORATION
By:
Name:
Title:
FIRST MERCHANTS AUTO TRUST 1996-C
By: THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Owner Trustee
By:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
as Collateral Agent and
as Indenture Trustee
By:
Name:
Title:<PAGE>SCHEDULE A TO
SUBSEQUENT TRANSFER AGREEMENT NO. ___
Schedule of Subsequent Receivables
<PAGE>SCHEDULE B TO
SUBSEQUENT TRANSFER AGREEMENT NO. ___
Schedule of Subsequent Eligible Investment Receivables
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
between
FIRST MERCHANTS ACCEPTANCE CORPORATION,
as Seller,
and
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
as Purchaser
Dated as of December 1, 1996
<PAGE>TABLE OF CONTENTS
ARTICLE I
Certain Definitions 1
ARTICLE II
SECTION 2.01. Conveyance of Receivables and Eligible Investment
Receivables 2
SECTION 2.02. The Closing 3
SECTION 2.03. Subsequent Receivables 3
ARTICLE III
SECTION 3.01. Representations and Warranties of the Purchaser 4
SECTION 3.02. Representations and Warranties of Seller 4
ARTICLE IV
SECTION 4.01. Conditions to Obligation of the Purchaser 8
SECTION 4.02. Conditions to Obligation of the Seller 9
ARTICLE V
SECTION 5.01. Protection of Right, Title and Interest 9
SECTION 5.02. Other Liens or Interests 9
SECTION 5.03. Costs and Expenses 10
SECTION 5.04. Indemnification 10
ARTICLE VI
SECTION 6.01. Obligations of Seller 10
SECTION 6.02. Repurchase Events 10
SECTION 6.03. Purchaser Assignment of Repurchased Receivables 10
SECTION 6.04. Transfer to the Issuer 10
SECTION 6.05. Amendment 10
SECTION 6.06. Waivers 11
SECTION 6.07. Notices 11
SECTION 6.08. Costs and Expenses 11
SECTION 6.09. Representations of the Seller and the Purchaser 11
SECTION 6.10. Confidential Information 11
SECTION 6.11. Headings and Cross-References 12
SECTION 6.12. Governing Law 12
SECTION 6.13. Counterparts 12
EXHIBIT A Form of AssignmentA-1
EXHIBIT B Form of Subsequent Purchase AgreementB-1
SCHEDULE I Schedule of ReceivablesI-1
SCHEDULE II Schedule of Eligible Investment ReceivablesII-1
SCHEDULE III Location of Receivable FilesII-1<PAGE> RECEIVABLES
PURCHASE AGREEMENT dated as of December 1, 1996, between
FIRST MERCHANTS ACCEPTANCE CORPORATION, a Delaware corporation, as seller
(the "Seller"), and FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, a Delaware
corporation, as purchaser (the "Purchaser").
RECITALS
WHEREAS in the regular course of its business, the Seller has purchased
certain motor vehicle retail installment sale contracts secured by new and
used automobiles, light-duty trucks, vans and minivans from motor vehicle
dealers;
WHEREAS the Seller and the Purchaser wish to set forth the terms
pursuant
to which such contracts are to be sold by the Seller to the Purchaser; and
WHEREAS the Purchaser intends, concurrently with its purchases from time
to time hereunder, to convey all of its right, title and interest in and to
$144,673,000 of such contracts to First Merchants Auto Trust 1996-C (the
"Issuer") pursuant to a Sale and Servicing Agreement dated as of December 1,
1996 (the "Sale and Servicing Agreement"), by and among First Merchants Auto
Trust 1996-C, as Issuer, First Merchant Auto Receivables Corporation II, as
Seller, First Merchants Acceptance Corporation, as Servicer, and Harris Trust
and Savings Bank, as Indenture Trustee, Collateral Agent and Backup Servicer.
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration and the mutual terms and covenants contained herein,
the parties hereto agree as follows:
ARTICLE I
Certain Definitions
Terms not defined in this Agreement shall have the meanings assigned
thereto in the Sale and Servicing Agreement. As used in this Agreement, the
following terms shall, unless the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular
and plural forms of the terms defined):
"Agreement" shall mean this Receivables Purchase Agreement, as the same
may be amended and supplemented from time to time.
"Assignment" shall mean the document of assignment substantially in the
form attached to this Agreement as Exhibit A.
"Conveyance Date" shall mean the Cutoff Date in the case of the Initial
Receivables and the Subsequent Cutoff Date in the case of each transfer of
the Subsequent Receivables.
"Eligible Investment Receivables" shall mean the Initial Eligible
Investment Receivables and the Subsequent Eligible Investment Receivables.
"Initial Eligible Investment Receivable" shall mean any Contract listed
on Schedule II hereto (which Schedule may be in the form of microfiche).
"Initial Receivable" shall mean any Contract listed on Schedule I hereto
(which Schedule may be in the form of microfiche).
"Purchaser" shall mean First Merchants Auto Receivables Corporation II,
a Delaware corporation, its successors and assigns.
"Receivables" shall mean the Initial Receivables and the Subsequent
Receivables. An Eligible Investment Receivable is not a "Receivable".
"Repurchase Event" shall have the meaning specified in Section 6.02.
"Sale and Servicing Agreement" shall have the meaning set forth in the
recitals.
"Schedule of Eligible Investment Receivables" shall mean the list of
Eligible Investment Receivables annexed hereto as Schedule II.
"Schedule of Receivables" shall mean the list of Receivables annexed
hereto as Schedule I.
"Seller" shall mean First Merchants Acceptance Corporation, a Delaware
corporation, its successors and assigns.
"Subsequent Eligible Investment Receivable" shall mean any Contract sold
to the Purchaser during the Funding Period, listed on Schedule B to the
applicable Subsequent Purchase Agreement.
"Subsequent Purchase Agreement" a duly executed written purchase
agreement entered into during the Funding Period, substantially in the form
of Exhibit A attached hereto.
"Subsequent Receivable" shall mean any of the Contracts sold to the
Purchaser during the Funding Period, listed on Schedule A to the applicable
Subsequent Purchase Agreement.
"Subsequent Transfer Date" shall mean each date designated by the Seller
during the Funding Period on which Subsequent Receivables are to be
transferred to the Purchaser in accordance with Section 2.03 pursuant to a
Subsequent Purchase Agreement.
"Transfer Date" shall mean the Closing Date in the case of the Initial
Receivables and the applicable Subsequent Transfer Date in the case of the
Subsequent Receivables.
ARTICLE II
Conveyance of Receivables and Eligible Investment Receivables
SECTION 2.01. Conveyance of Initial Receivables. (a) In
consideration of the Purchaser's delivery to or upon the order of the Seller
on the Closing Date of $137,583,736, the Seller does hereby sell, transfer,
assign, set over and otherwise convey to the Purchaser, without recourse
(subject to the obligations herein) all right, title, and interest of the
Seller in and to:
(i) the Initial Receivables and the Initial Eligible Investment
Receivables and, in each case, all moneys received thereon on or after
November 14, 1996;
(ii) the security interests in the Financed Vehicles and any
accessions thereto granted by Obligors pursuant to the Initial Receivables
and the Initial Eligible Investment Receivables and any other interest of the
Seller in such Financed Vehicles;
(iii) any Liquidation Proceeds and any other proceeds with respect
to the Initial Receivables and the Initial Eligible Investment Receivables from
claims on any physical damage, credit life or disability insurance policies
covering Financed Vehicles or Obligors, including any vendor's single
interest or other collateral protection insurance policy;
(iv) any property that shall have secured an Initial Receivable or
an Initial Eligible Investment Receivable and that shall have been acquired by
or on behalf of the Seller;
(v) all documents and other items contained in the Receivable Files;
and
(vi) the proceeds of any and all of the foregoing.
(b) Except as otherwise provided herein, all of the provisions of
this Agreement (i) applicable to Initial Receivables shall also apply to each
Initial Eligible Investment Receivable and (ii) applicable to Subsequent
Receivables shall also apply to each Subsequent Eligible Investment
Receivable, except that, unless otherwise directed by the Collateral Agent,
the Seller shall deposit into the Spread Account all Purchase Amounts, if
any, to be paid by it in respect of Eligible Investment Receivables repurchased
pursuant to Section 6.04 and any Recoveries, net of liquidation expenses,
allocated to Eligible Investment Receivables.
(c) The Seller and the Purchaser intend that the transfer of assets
by the Seller to the Purchaser pursuant to this Agreement be a sale of the
ownership interest in such assets to the Purchaser, rather than the mere
granting of a security interest to secure a borrowing. In the event,
however, that such transfer is deemed not to be a sale but to be of a mere
security interest to secure a borrowing, the Seller shall be deemed to have
hereby granted to the Purchaser a perfected first priority security interest in
all such assets, and this Agreement shall constitute a security agreement under
applicable law. Pursuant to the Sale and Servicing Agreement and Section
6.04 hereof, the Purchaser may sell, transfer and reassign to the Issuer (i)
all or any portion of the assets assigned to the Purchaser hereunder, (ii) all
or any portion of the Purchaser's rights against the Seller under this Agreement
and (iii) all proceeds thereof. Such reassignment may be made by the Purchaser
with or without a reassignment by the Purchaser of its rights under this
Agreement, and without further notice to or acknowledgement from the Seller.
The Seller waives, to the extent permitted under applicable law, all claims,
causes of action and remedies, whether legal or equitable (including any
right of setoff), against the Purchaser or any assignee of the Purchaser
relating to such action by the Purchaser in connection with the transactions
contemplated by the Sale and Servicing Agreement.
SECTION 2.02. The Closing. The sale and purchase of the Initial
Receivables shall take place at a closing at the offices of Brown & Wood LLP,
One World Trade Center, New York, New York 10048 on the Closing Date,
simultaneously with the closing under (a) the Sale and Servicing Agreement
and (b) the Indenture.
SECTION 2.03. Conveyance of Subsequent Receivables. (a) Subject to
and upon the terms and conditions set forth in paragraph (b) below and in the
applicable Subsequent Purchase Agreement, Seller hereby agrees to sell,
transfer, assign, set over and otherwise convey to Purchaser, in
consideration of Purchaser's payment on the related Subsequent Transfer Date of
the purchase price therefor (as set forth in the related Subsequent Purchase
Agreement), and Purchaser hereby agrees to purchase, all right, title and
interest of the Seller in and to (1) the Subsequent Receivables and Subsequent
Eligible Investment Receivables set forth on Schedule A and Schedule B,
respectively, to the applicable Subsequent Purchase Agreement and all monies
due thereon on or after the related Subsequent Cutoff Date; (2) the security
interests in the Financed Vehicles and any accessions thereto granted by
Obligors pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles; (3) any Liquidation Proceeds and any other
proceeds with respect to the Subsequent Receivables from claims on any physical
damage, credit life or disability insurance policies covering Financed Vehicles
or Obligors, including any vendor's single interest or other collateral
protection insurance policy; (4) any property that shall have secured a
Subsequent Receivable and shall have been acquired by or on behalf of the
Seller; (5) all documents and other items contained in the Receivables Files;
and (6) the proceeds of any and all of the foregoing. Seller agrees, subject
to the terms and conditions herein applicable to transfers of Subsequent
Receivables, and subject to the execution of a Subsequent Purchase Agreement
by the parties hereto, to sell to the Purchaser during the Funding Period
Subsequent Receivables having an aggregate principal balance equal to the
Pre-Funded Amount.
(b) Seller shall transfer to Purchaser, and the Purchaser shall
purchase, the Subsequent Receivables and Subsequent Eligible Investment
Receivables and related assets on any Subsequent Transfer Date only if such
Subsequent Receivables and Subsequent Eligible Investment Receivables satisfy
the conditions set forth in Section 2.01(c) of the Sale and Servicing
Agreement.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants as follows to the Seller as of the
date hereof and the Transfer Date:
(a) Organization and Good Standing. The Purchaser has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted.
(b) Due Qualification. The Purchaser is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership
or lease of property or the conduct of its business shall require such
qualifications.
(c) Power and Authority. The Purchaser has the power and authority
to execute and deliver this Agreement and to carry out its terms; the
Purchaser had at all relevant times, and has, the power, authority and legal
right to acquire and own the Receivables; and the execution, delivery and
performance of this Agreement have been duly authorized by the Purchaser by
all necessary corporate action.
(d) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
the articles of incorporation or bylaws of the Purchaser, or any indenture,
agreement or other instrument to which the Purchaser is a party or by which
it is bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents), or violate any law
or, to the best of the Purchaser's knowledge, any order, rule or regulation
applicable to the Purchaser of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Purchaser or its properties.
(e) No Proceedings. There are no proceedings or investigations
pending or, to the Purchaser's knowledge, threatened against the Purchaser
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Purchaser or its
properties (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Purchaser of its obligations under, or
the validity or enforceability of, this Agreement.
SECTION 3.02. Representations and Warranties of Seller. (a) The
Seller hereby represents and warrants as follows to the Purchaser as of the
date hereof and as of the Transfer Date:
(1) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted.
(2) Due Qualification. The Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease
of property or the conduct of its business shall require such qualifications.
(3) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it
is a party and to carry out their respective terms; the Seller had at all
relevant times, and has, full power, authority and legal right to sell,
transfer and assign the property sold, transferred and assigned to the
Purchaser hereby and has duly authorized such sale, transfer and assignment
to the Purchaser by all necessary corporate action; and the execution, delivery
and performance of this Agreement and the other Basic Documents to which the
Seller is a party have been duly authorized by the Seller by all necessary
corporate action.
(4) No Violation. Upon giving effect to the consent described in
Section 3.02(b)(14), the consummation of the transactions contemplated by
this Agreement and the other Basic Documents to which the Seller is a party and
the fulfillment of their respective terms do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the articles of
incorporation or bylaws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it is bound, or result
in the creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument (other than
this Agreement), or violate any law or, to the best of the Seller's
knowledge, any order, rule or regulation applicable to the Seller of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties.
(5) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller before
any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties (i)
asserting the invalidity of this Agreement or any other Basic Document to
which the Seller is a party, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or any other Basic
Document to which the Seller is a party or (iii) seeking any determination or
ruling that might materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this Agreement
or any other Basic Document to which the Seller is a party.
(6) Valid Sale, Binding Obligations. This Agreement and the other
Basic Documents to which the Seller is a party, when duly executed and
delivered by the other parties hereto and thereto, shall constitute legal,
valid and binding obligations of the Seller, enforceable against the Seller
in accordance with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization and similar laws now
or hereafter in effect relating to or affecting creditors' rights generally
and to general principles of equity (whether applied in a proceeding at law
or in equity).
(7) Chief Executive Office. The chief executive office of the
Seller is located at 570 Lake Cook Road, Suite 126, Deerfield, Illinois 60015.
(8) No Consents. The Seller is not required to obtain the consent
of any other party or any consent, license, approval, registration,
authorization, or declaration of or with any governmental authority, bureau
or agency in connection with the execution, delivery, performance, validity, or
enforceability of this Agreement or any other Basic Document to which it is a
party that has not already been obtained.
(b) The Seller makes the following representations and warranties
with respect to the Receivables and the Eligible Investment Receivables, on
which the Purchaser relies in accepting the Receivables and the Eligible
Investment Receivables and in transferring the Receivables to the Issuer
under the Sale and Servicing Agreement, and on which the Issuer relies in
pledging the same to the Indenture Trustee. As to the Initial Receivables and
to the Initial Eligible Investment Receivables, such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date, and as to the Subsequent Receivables and the Subsequent
Eligible Investment Receivables, such representations and warranties speak as of
the applicable Subsequent Transfer Date, but shall survive the sale, transfer
and assignment of the Receivables and the Eligible Investment Receivables to
the Purchaser, the subsequent sale, transfer and assignment of the Receivables
by the Purchaser to the Issuer pursuant to the Sale and Servicing Agreement and
the Grant thereof, pursuant to the Indenture and the conveyance of a lien on
and a security interest in the Eligible Investment Receivables to the
Collateral Agent.
(1) Characteristics of Receivables. Each Receivable (A) was
originated in the United States by a Dealer for the retail sale of a Financed
Vehicle in the ordinary course of such Dealer's business in accordance with
the Seller's credit policies, was fully and properly executed by the parties
thereto, was purchased by the Seller from such Dealer under an existing
Dealer Agreement and was validly assigned by such Dealer to the Seller, (B) has
created or shall create a valid, subsisting and enforceable first priority
security interest in favor of the Seller in the Financed Vehicle, which
security interest is assignable by the Seller to the Purchaser, and by the
Purchaser to the Issuer, (C) contains customary and enforceable provisions
such that the rights and remedies of the holder thereof are adequate for
realization against the collateral of the benefits of the security and (D)
provides for level monthly payments (provided that the payment in the last
month of the term of the Receivable may be different from the level payments)
that fully amortize the Amount Financed by maturity and yield interest at the
APR.
(2) Compliance with Law. Each Receivable and the sale of the
related Financed Vehicle complied at the time it was originated or made, and at
the time of execution of this Agreement complies, in all material respects with
all requirements of applicable federal, state and local laws and regulations
thereunder, including usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief Act of 1940,
and state adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code, and other consumer credit laws and equal credit opportunity and
disclosure laws.
(3) Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation of the Obligor thereon,
enforceable by the holder thereof in accordance with its terms, except (A) as
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law and (B) as such Receivable may be modified by
the application after the Transfer Date of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended.
(4) No Government Obligor. No Receivable is due from the United
States of America or any State or any agency, department, subdivision or
instrumentality thereof.
(5) Obligor Bankruptcy. No Obligor had been identified on the
records of the Seller as being the subject of a current bankruptcy proceeding.
(6) Schedule of Receivables and Schedule of Eligible Investment
Receivables. The information set forth in Schedule I and Schedule II to this
Agreement is true and correct in all material respects as of the close of
business on the Cutoff Date.
(7) Marking Records. By the Transfer Date, the Seller will have
caused its records relating to each Receivable, including any computer
records, to be clearly and unambiguously marked to show that the Receivables
have been sold to the Purchaser by the Seller and transferred and assigned by
the Purchaser to the Issuer in accordance with the terms of the Sale and
Servicing Agreement and pledged by the Issuer to the Indenture Trustee in
accordance with the terms of the Indenture.
(8) Computer Tape. The computer tape regarding the Receivables made
available by the Seller to the Purchaser is complete and accurate in all
respects as of the Conveyance Date.
(9) No Adverse Selection. No selection procedures believed by the
Seller to be adverse to the Noteholders or Certificateholders were utilized
in selecting the Receivables.
(10) Chattel Paper. The Receivables constitute chattel paper within
the meaning of the UCC as in effect in the State of Illinois.
(11) One Original. There is only one original executed copy of each
Receivable.
(12) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from
the lien of the related Receivable in whole or in part. None of the terms of
any Receivable has been waived, altered or modified in any respect since its
origination, except by instruments or documents identified in the related
Receivable File. No Receivable has been modified as a result of the
application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
(13) Lawful Assignment. No Receivable has been originated in, or is
subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such
Receivable under this Agreement or the Sale and Servicing Agreement or the
pledge of such Receivable under the Indenture.
(14) Title. It is the intention of the Seller that the transfers
and assignments herein contemplated constitute sales of the Receivables from
the Seller to the Purchaser and that the beneficial interest in and title to
the Receivables not be part of the debtor's estate in the event of the filing of
a bankruptcy petition by or against the Seller under any bankruptcy law. No
Receivable has been sold, transferred, assigned or pledged by the Seller to
any Person other than to the Purchaser or pursuant to this Agreement (or by
the Purchaser to the Issuer pursuant to the Sale and Servicing Agreement).
Immediately prior to the transfers and assignments herein contemplated, the
Seller has good and marketable title to each Receivable free and clear of all
Liens (other than the Lien of the Seller's senior lenders identified in the
Consent dated as of December 18, 1996 under the Fourth Amended and Restated
Loan and Security Agreement dated as of February 29, 1996, by and among the
Seller and such secured lenders), which Lien is being released simultaneously
with the transfers and assignments herein contemplated) and, immediately upon
the transfer thereof, the Purchaser shall have good and marketable title to
each Receivable, free and clear of all Liens.
(15) Security Interest in Financed Vehicle. Immediately prior to its
sale, assignment and transfer to the Purchaser pursuant to this Agreement,
each Receivable shall be secured by a validly perfected first priority
security interest in the related Financed Vehicle in favor of the Seller as
secured party, or all necessary and appropriate actions have been commenced
that will result in the valid perfection of a first priority security
interest in such Financed Vehicle in favor of the Seller as secured party.
(16) All Filings Made. All filings (including UCC filings) required
to be made in any jurisdiction to give the Purchaser a first perfected
ownership interest in the Receivables have been made.
(17) No Defenses. No Receivable is subject to any right of
rescission, setoff, counterclaim or defense, and no such right has been
asserted or threatened with respect to any Receivable.
(18) No Default. There has been no default, breach, violation or
event permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than 31 days), and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or
both would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable, and there has been no waiver
of any of the foregoing. As of the Cutoff Date, no Financed Vehicle has been
repossessed.
(19) Insurance. The Seller, in accordance with its customary
procedures, has determined that the Obligor has obtained physical damage
insurance covering each Financed Vehicle and, under the terms of the related
Contract, the Obligor is required to maintain such insurance.
(20) Final Scheduled Maturity Date. No Receivable has a final
scheduled payment date after May 24, 2002.
(21) Certain Characteristics of the Receivables. As of the
Conveyance Date, (A) each Receivable had an original maturity of not more
than 66 months; (B) no Receivable was more than 30 days past due; and (C) no
funds have been advanced by the Seller, any Dealer or anyone acting on behalf of
either of them in order to cause any Receivable to qualify under clause (B)
above.
ARTICLE IV
Conditions
SECTION 4.01. Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to purchase the Receivables is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller hereunder shall be true and correct on the Transfer
Date with the same effect as if then made, and the Seller shall have
performed
all obligations to be performed by it hereunder on or prior to the Transfer
Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on
or prior to the Transfer Date, indicate in its computer files that the
Receivables have been sold to the Purchaser pursuant to this Agreement and
deliver to the Purchaser the Schedule of Receivables and the Schedule of
Eligible Investment Receivables, certified by the Seller's President, a Vice
President or the Treasurer to be true, correct and complete.
(c) Documents To Be Delivered by the Seller on the Transfer Date.
(1) The Assignment. On the Transfer Date, the Seller will execute
and deliver an Assignment with respect to the Receivables, substantially in
the form of Exhibit A hereto.
(2) Evidence of UCC Filing. On or prior to the Transfer Date, the
Seller shall record and file, at its own expense, a UCC-1 financing statement
in each jurisdiction in which required by applicable law, executed by the
Seller, as seller or debtor, and naming the Purchaser, as purchaser or
secured party, describing the Receivables and the other assets assigned to the
Purchaser pursuant to Section 2.01 hereof, meeting the requirements of the
laws of each such jurisdiction and in such manner as is necessary to perfect
the sale, transfer, assignment and conveyance of the Receivables and such
other assets to the Purchaser. The Seller shall deliver to the Purchaser a
file-stamped copy or other evidence satisfactory to the Purchaser of such
filing on or prior to the Transfer Date.
(3) Other Documents. Such other documents as the Purchaser may
reasonably request.
(d) Other Transactions. The transactions contemplated by the Sale
and Servicing Agreement, the Indenture and the Trust Agreement to be
consummated on the Transfer Date shall be consummated on such date.
SECTION 4.02. Conditions to Obligation of the Seller. The
obligation of the Seller to sell the Receivables to the Purchaser is subject to
the satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Purchaser hereunder shall be true and correct on the
Transfer Date with the same effect as if then made, and the Seller shall have
performed all obligations to be performed by it hereunder on or prior to the
Transfer Date.
(b) Receivables Purchase Price. On the Transfer Date, the Purchaser
shall have delivered to the Seller the purchase price specified in Section
2.01 in the case of the Initial Receivables, or specified in the Subsequent
Purchase Agreement in the case of the Subsequent Receivables.
ARTICLE V
Covenants of the Seller
The Seller agrees with the Purchaser as follows:
SECTION 5.01. Protection of Right, Title and Interest. (a)
Filings. The Seller shall cause all financing statements and continuation
statements and any other necessary documents covering the right, title and
interest of the Seller and the Purchaser, respectively, in and to the
Receivables and the other property included in the Owner Trust Estate to be
promptly filed and at all times to be kept recorded, registered and filed, all
in such manner and in such places as may be required by law fully to preserve
and protect the right, title and interest of the Purchaser hereunder in and to
the Receivables and the other property included in the Owner Trust Estate.
The Seller shall deliver to the Purchaser file stamped copies of, or filing
receipts for, any document recorded, registered or filed as provided above, as
soon as available following such recordation, registration or filing. The
Purchaser shall cooperate fully with the Seller in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this paragraph.
(b) Name Change. If the Seller makes any change in its name,
identity or corporate structure that would make any financing statement or
continuation statement filed in accordance with paragraph (a) above seriously
misleading within the applicable provisions of the UCC or any title statute,
the Seller shall give the Purchaser, the Indenture Trustee, the Owner Trustee
and the Security Insurer written notice thereof at least 5 days prior to such
change and shall promptly file such financing statements or amendments as may
be necessary to continue the perfection of the Purchaser's interest in the
property included in the Owner Trust Estate.
SECTION 5.02. Other Liens or Interests. Except for the conveyances
hereunder and pursuant to the Basic Documents, the Seller shall not sell,
pledge, assign or transfer to any Person, or grant, create, incur, assume, or
suffer to exist any Lien on, or any interest in, to or under the Receivables,
and the Seller shall defend the right, title and interest of the Purchaser
in, to and under the Receivables against all claims of third parties claiming
through or under the Seller; provided, however, that the Seller's obligations
under this Section shall terminate upon the termination of the Issuer
pursuant to the Trust Agreement.
SECTION 5.03. Costs and Expenses. The Seller agrees to pay all
reasonable costs and disbursements in connection with the perfection, as
against all third parties, of the Purchaser's and the Issuer's right, title
and interest in and to the Receivables.
SECTION 5.04. Indemnification. The Seller shall indemnify the
Purchaser, the Issuer and the Security Insurer for any liability resulting
from the failure of a Receivable to be originated in compliance with all
requirements of law and for any breach of any of its representations and
warranties contained herein. These indemnity obligations shall be in
addition to any obligation that the Seller may otherwise have.
ARTICLE VI
Miscellaneous Provisions
SECTION 6.01. Obligations of Seller. The obligations of the Seller
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable.
SECTION 6.02. Repurchase Events. The Seller hereby covenants and
agrees with the Purchaser for the benefit of the Purchaser, the Indenture
Trustee, the Owner Trustee, the Certificateholders, the Noteholders and the
Security Insurer that the occurrence of a breach of any of the Seller's
representations and warranties contained in Section 3.02(b) shall constitute
an event obligating the Seller to repurchase the Receivables and Eligible
Investment Receivables to which the breach is applicable ("Repurchase
Events"), at the Purchase Amount, from the Purchaser or from the Issuer, as
applicable, unless any such breach shall have been cured by the last day of
the first Collection Period following the discovery or notice thereof by or
to the Seller or the Servicer. The repurchase obligation of the Seller shall
constitute the sole remedy available to the Purchaser, the Indenture Trustee,
the Owner Trustee, the Issuer, the Noteholders or the Certificateholders
against the Seller with respect to any Repurchase Event.
SECTION 6.03. Purchaser Assignment of Repurchased Receivables. With
respect to all Receivables repurchased by the Seller pursuant to this
Agreement, the Purchaser shall assign, without recourse, representation or
warranty, to the Seller all of the Purchaser's right, title and interest in
and to such Receivables and all security and documents relating thereto.
SECTION 6.04. Transfer to the Issuer. The Seller acknowledges and
agrees that (a) the Purchaser will, pursuant to the Sale and Servicing
Agreement, transfer and assign the Receivables and assign its rights under
this Agreement with respect thereto to the Issuer and the Issuer will pledge
the Receivables to the Indenture Trustee and (b) the Purchaser will pledge
the Eligible Investment Receivables and assign its rights under this Agreement
with respect thereto to the Collateral Agent and (c) the representations and
warranties contained in this Agreement and the rights of the Purchaser under
this Agreement, including under Section 6.02, are intended to benefit the
Issuer, the Noteholders, the Certificateholders and the Security Insurer.
The Seller hereby consents to such transfers and assignments.
SECTION 6.05. Amendment. This Agreement may be amended from time to
time, with prior written notice to the Rating Agencies and, so long as the
Security Insurer is the Controlling Party under the Sale and Servicing
Agreement, the prior written consent of the Security Insurer but without the
consent of the Noteholders or the Certificateholders, by a written amendment
duly executed and delivered by the Seller and the Purchaser, for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement or of modifying in any manner the rights of
Noteholders or Certificateholders; provided that such amendment shall not, as
evidenced by an Opinion of Counsel, materially and adversely affect the
interest of any Noteholder or Certificateholder. This Agreement may also be
amended by the Seller and the Purchaser, with prior written notice to the
Rating Agencies and the prior written consent of Holders of Notes evidencing
at least a majority of the Outstanding Amount of the Notes and Holders of
Certificates evidencing at least a majority of the Certificate Balance
(excluding, for purposes of this Section 6.05, Certificates held by the
Seller or any of its affiliates) and, so long as the Security Insurer is the
Controlling Party under the Sale and Servicing Agreement, the prior written
consent of the Security Insurer, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Noteholders or
Certificateholders; provided, however, that no such amendment may (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or distributions that are
required to be made for the benefit of Noteholders or Certificateholders or
(ii) reduce the aforesaid percentage of the Notes or the Certificates that is
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes and Certificates.
SECTION 6.06. Waivers. No failure or delay on the part of the
Purchaser in exercising any power, right or remedy under this Agreement or
the Assignment shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other or
further exercise thereof or the exercise of any other power, right or remedy.
SECTION 6.07. Notices. All demands, notices and communications
under this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, to: (a) in the case of the Seller,
First Merchants Acceptance Corporation, 570 Lake Cook Road, Suite 126,
Deerfield, Illinois 60015, Attention: Thomas R. Ehmann, Vice President; (b)
in the case of the Purchaser, First Merchants Auto Receivables Corporation II,
570 Lake Cook Road, Suite 126B, Deerfield, Illinois 60015, Attention: Thomas
R. Ehmann, Vice President; (c) in the case of Moody's, Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New
York 10007; (d) in the case of Standard & Poor's, Standard & Poor's Ratings
Service, 26 Broadway (20th Floor), New York, New York 10004, Attention: Asset
Backed Surveillance Department; (e) in the case of the Security Insurer,
Financial Security Assurance Inc., 350 Park Avenue, New York, New York 10022,
Attention: Surveillance Department; or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 6.08. Costs and Expenses. The Seller shall pay all expenses
incident to the performance of its obligations under this Agreement and the
Seller agrees to pay all reasonable out-of-pocket costs and expenses of the
Purchaser, excluding fees and expenses of counsel, in connection with the
perfection as against third parties of the Purchaser's right, title and
interest in and to the Receivables and the enforcement of any obligation of
the Seller hereunder.
SECTION 6.09. Representations of the Seller and the Purchaser. The
respective agreements, representations, warranties and other statements by
the Seller and the Purchaser set forth in or made pursuant to this Agreement
shall remain in full force and effect and will survive the closing under
Section 2.02 and the transfers and assignments referred to in Section 6.04.
SECTION 6.10. Confidential Information. The Purchaser agrees that
it will neither use nor disclose to any Person the names and addresses of the
Obligors, except in connection with the enforcement of the Purchaser's rights
hereunder, under the Receivables, under the Sale and Servicing Agreement or
any other Basic Document, or as required by any of the foregoing or by law.
SECTION 6.11. Headings and Cross-References. The various headings
in this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in
this Agreement to section names or numbers are to such Sections of this
Agreement.
SECTION 6.12. Governing Law. This Agreement and the Assignment
shall be construed in accordance with the laws of the State of New York,
without reference to its conflict of law provisions, and the obligations, rights
and remedies of the parties hereunder or thereunder shall be determined in
accordance with such laws.
SECTION 6.13. Counterparts. This Agreement may be executed in two
or more counterparts and by different parties on separate counterparts, each of
which shall be an original, but all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date and year
first above written.
FIRST MERCHANTS ACCEPTANCE CORPORATION
By:
Name:
Title:
FIRST MERCHANTS AUTO
RECEIVABLES CORPORATION II
By:
Name:
Title:
EXHIBIT A
Form of Assignment
ASSIGNMENT
For value received, in accordance with the Receivables Purchase
Agreement
dated as of December 1, 1996 (the "Receivables Purchase Agreement"), between
the undersigned and First Merchants Auto Receivables Corporation II (the
"Purchaser"), the undersigned does hereby sell, assign, transfer and
otherwise
convey unto the Purchaser, without recourse, all right, title and interest of
the undersigned in and to (i) the Receivables and the Eligible Investment
Receivables and, in each case, all moneys received thereon on or after
November 14, 1996; (ii) the security interests in the Financed Vehicles and
any accessions thereto granted by Obligors pursuant to the Receivables and
the Eligible Investment Receivables and any other interest of the Seller in
such Financed Vehicles; (iii) any Liquidation Proceeds and any other proceeds
with respect to the Receivables and the Eligible Investment Receivables from
claims on any physical damage, credit life or disability insurance policies
covering Financed Vehicles or Obligors, including any vendor's single interest
or other collateral protection insurance policy; (iv) any property that shall
have secured a Receivable or an Eligible Investment Receivable and that shall
have been acquired by or on behalf of the Seller; (v) all documents and other
items contained in the Receivable Files; and (vi) proceeds of any and all of
the foregoing. The foregoing sale does not constitute and is not intended to
result in any assumption by the Purchaser of any obligation of the
undersigned to the Obligors, insurers or any other person in connection with
the Receivables, the Eligible Investment Receivables, the Receivable Files, any
insurance policies or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Receivables Purchase Agreement and is to be governed by the Receivables
Purchase Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meaning assigned to them in the Receivables Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of December 18, 1996.
FIRST MERCHANTS ACCEPTANCE CORPORATION,
By:
Name:
Title:
EXHIBIT B
Form of Subsequent Purchase Agreement
SUBSEQUENT PURCHASE AGREEMENT
SUBSEQUENT PURCHASE AGREEMENT (the "Agreement") dated as of [ ],
between First Merchants Auto Receivables Corporation II, a Delaware
corporation ("FMARC II") and First Merchants Acceptance Corporation, a
Delaware corporation ("First Merchants").
Reference is hereby made to the Sale and Servicing Agreement (the "Sale
and Servicing Agreement") dated as of December 1, 1996, among FMARC II, First
Merchants Auto Trust 1996-C (the "Trust"), First Merchants and Harris Trust
and Savings Bank, and the Receivables Purchase Agreement (the "Purchase
Agreement") dated as of December 1, 1996, between First Merchants and FMARC
II.
WHEREAS, First Merchants wishes to sell the Contracts listed on Schedule
A hereto having an aggregate outstanding principal balance of $[ ] (the
"Subsequent Receivables") to FMARC II, and FMARC II wishes to purchase such
Subsequent Receivables for the purchase price of $[ ]; and
WHEREAS, First Merchants wishes to sell the Contracts listed on Schedule
B hereto having an aggregate outstanding principal balance of $[ ] (the
"Subsequent Eligible Investment Receivables") to FMARC II, and FMARC II
wishes
to purchase such Subsequent Eligible Investment Receivables for the purchase
price of $[ ];
NOW, THEREFORE, First Merchants and FMARC II hereby agree as follows:
Section 1. Definitions. Capitalized terms used herein and not
otherwise
defined herein shall the meanings ascribed to them in the Purchase Agreement.
Section 2. Subsequent Receivables and Subsequent Eligible Investment
Receivables. Schedule A and Schedule B attached hereto constitute the
Subsequent Receivables and the Subsequent Eligible Investment Receivables to
be sold to FMARC II, respectively.
Section 3. Transfer of Subsequent Contracts and Subsequent Eligible
Investment Receivables to FMARC II. Pursuant to and upon the
representations,
warranties and agreements on the part of First Merchants in the Purchase
Agreement and herein and in consideration of payment of the purchase price
above stated, First Merchants does hereby sell, assign, transfer and
otherwise convey unto FMARC II, without recourse (except as expressly provided
in the Purchase Agreement), all right, title and interest of First Merchants
in and to (1) the Subsequent Receivables and Subsequent Eligible Investment
Receivables and all monies due thereon on or after the Subsequent Cutoff
Date; (2) the security interests in the Financed Vehicles and any accessions
thereto granted by Obligors pursuant to the Subsequent Receivables and
Subsequent Eligible Investment Receivables and any other interest of First
Merchants in such Financed Vehicles; (3) any Liquidation Proceeds and any other
proceeds with respect to the Subsequent Receivables and Subsequent Eligible
Investment Receivables from claims on any physical damage, credit life or
disability insurance policies covering Financed Vehicles or Obligors, including
any vendor's single interest or other collateral protection insurance policy;
(4) any property that shall have secured a Subsequent Receivable or Subsequent
Eligible Investment Receivable and shall have been acquired by or on behalf
of First Merchants; (5) all documents and other items contained in the
Receivables Files; and (6) the proceeds of any and all of the foregoing. The
foregoing sale does not constitute and is not intended to result in any
assumption by FMARC II of any obligation of First Merchants to the Obligors,
insurers or any other person in connection with the Subsequent Receivables,
Subsequent Eligible Investment Receivables, Receivable Files, any insurance
policies or any agreement or instrument relating to any of them. It is the
intention of First Merchants and FMARC II that the transfer contemplated by
this Agreement shall constitute a sale of the Subsequent Receivables and
Subsequent Eligible Investment Receivables from First Merchants to FMARC II,
conveying good title thereto free and clear of any Liens, and that the
Subsequent Receivables and Subsequent Eligible Investment Receivables shall
not be a part of First Merchants' estate in the event of the filing of a
bankruptcy petition by or against First Merchants under any bankruptcy or
similar law.
Section 4. Representations of First Merchants. First Merchants hereby
represents and warrants to FMARC II that the representations and warranties
of First Merchants in the Purchase Agreement with respect to the Subsequent
Receivables and the Subsequent Eligible Investment Receivables, and the
representations and warranties of First Merchants stated in Section 3.02 of
the Purchase Agreement are true and correct as of the date of this Agreement.
Section 5. Severability. Any provision of this Agreement that 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 6. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 7. Headings. The headings of the various Sections herein are
for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
Section 8. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Subsequent Purchase
Agreement to be duly executed as of the date first above written.
FIRST MERCHANTS AUTO RECEIVABLES
CORPORATION II
By:
Name:
Title:
FIRST MERCHANTS ACCEPTANCE CORPORATION
By:
Name:
Title:
<PAGE>SCHEDULE A TO
SUBSEQUENT PURCHASE AGREEMENT NO. ___
Schedule of Subsequent Receivables
<PAGE>SCHEDULE B TO
SUBSEQUENT PURCHASE AGREEMENT NO. ___
Schedule of Subsequent Eligible Investment Receivables
<PAGE>SCHEDULE I
Schedule of Receivables
<PAGE>SCHEDULE II
Schedule of Eligible Investment Receivables
<PAGE>SCHEDULE III
Location of Receivable Files
<PAGE>
INDENTURE
between
FIRST MERCHANTS AUTO TRUST 1996-C,
as Issuer
and
HARRIS TRUST AND SAVINGS BANK,
as Indenture Trustee
Dated as of December 1, 1996
<PAGE>TABLE OF
CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions 2
SECTION 1.02. Rules of Construction 8
SECTION 1.03. Incorporation by Reference of Trust Indenture Act 9
ARTICLE II
The Notes
SECTION 2.01. Form 9
SECTION 2.02. Execution, Authentication and Delivery 10
SECTION 2.03. Temporary Notes 10
SECTION 2.04. Registration; Registration of Transfer and Exchange 11
SECTION 2.05. [Reserved.] 12
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes 12
SECTION 2.07. Persons Deemed Owner 12
SECTION 2.08. Payment of Principal and Interest; Defaulted Interest 13
SECTION 2.09. Cancellation 14
SECTION 2.10. Book-Entry Notes 14
SECTION 2.11. Notices to Clearing Agency 15
SECTION 2.12. Definitive Notes 15
SECTION 2.13. Tax Treatment 15
SECTION 2.14. Determination of LIBOR 15
SECTION 2.15. Initial Calculation Agent; Replacement of Calculation Agent
16
ARTICLE III
Covenants
SECTION 3.01. Payment of Principal and Interest 16
SECTION 3.02. Maintenance of Office or Agency 16
SECTION 3.03. Money for Payments To Be Held in Trust 16
SECTION 3.04. Existence 18
SECTION 3.05. Protection of Trust Estate 18
SECTION 3.06. Opinions as to Trust Estate 18
SECTION 3.07. Performance of Obligations; Servicing of Receivables 19
SECTION 3.08. Negative Covenants 21
SECTION 3.09. Annual Statement as to Compliance 21
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms 22
SECTION 3.11. Successor or Transferee 23
SECTION 3.12. No Other Business 23
SECTION 3.13. No Borrowing 23
SECTION 3.14. Servicer's Obligations 23
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities 24
SECTION 3.16. Capital Expenditures 24
SECTION 3.17. Removal of Administrator 24
SECTION 3.18. Restricted Payments 24
SECTION 3.19. Notice of Events of Default 24
SECTION 3.20. Further Instruments and Acts 24
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture 24
SECTION 4.02. Application of Trust Money 26
SECTION 4.03. Repayment of Moneys Held by Paying Agent 26
SECTION 4.04. Release of Collateral 26
ARTICLE V
Remedies
SECTION 5.01. Events of Default 26
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment 27
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee; 29
SECTION 5.04. Remedies; Priorities 31
SECTION 5.05. Optional Preservation of the Receivables 33
SECTION 5.06. Limitation of Suits 33
SECTION 5.07. Unconditional Rights of Noteholders To Receive Principal
and Interest 34
SECTION 5.08. Restoration of Rights and Remedies 34
SECTION 5.09. Rights and Remedies Cumulative 34
SECTION 5.10. Delay or Omission Not a Waiver 34
SECTION 5.11. Control by Noteholders 34
SECTION 5.12. Waiver of Past Defaults 35
SECTION 5.13. Undertaking for Costs 35
SECTION 5.14. Waiver of Stay or Extension Laws 36
SECTION 5.15. Action on Notes 36
SECTION 5.16. Performance and Enforcement of Certain Obligations 36
ARTICLE VI
The Indenture Trustee
SECTION 6.01. Duties of Indenture Trustee 37
SECTION 6.02. Rights of Indenture Trustee 38
SECTION 6.03. Individual Rights of Indenture Trustee 38
SECTION 6.04. Indenture Trustee's Disclaimer 39
SECTION 6.05. Notice of Defaults 39
SECTION 6.06. Reports by Indenture Trustee to Holders 39
SECTION 6.07. Compensation and Indemnity 39
SECTION 6.08. Replacement of Indenture Trustee 40
SECTION 6.09. Successor Indenture Trustee by Merger 41
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee 41
SECTION 6.11. Eligibility; Disqualification 42
SECTION 6.12. Pennsylvania Motor Vehicle Sales Finance Act Licenses 42
SECTION 6.13. Preferential Collection of Claims Against Issuer 42
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses
of Noteholders 43
SECTION 7.02. Preservation of Information; Communications to Noteholders
43
SECTION 7.03. Reports by Issuer 43
SECTION 7.04. Reports by Indenture Trustee 44
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money 44
SECTION 8.02. Trust Accounts 44
SECTION 8.03. General Provisions Regarding Accounts 45
SECTION 8.04. Release of Trust Estate 46
SECTION 8.05. Opinion of Counsel 46
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders 47
SECTION 9.02. Supplemental Indentures with Consent of Noteholders 48
SECTION 9.03. Execution of Supplemental Indentures 49
SECTION 9.04. Effect of Supplemental Indenture 49
SECTION 9.05. Reference in Notes to Supplemental Indentures 49
SECTION 9.06. Conformity with Trust Indenture Act 50
ARTICLE X
Redemption of Notes
SECTION 10.01. Redemption 50
SECTION 10.02. Form of Redemption Notice 50
SECTION 10.03. Notes Payable on Redemption Date 51
ARTICLE XI
Miscellaneous
SECTION 11.01. Compliance Certificates and Opinions, etc. 51
SECTION 11.02. Form of Documents Delivered to Indenture Trustee 53
SECTION 11.03. Acts of Noteholders 53
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies 54
SECTION 11.05. Notices to Noteholders; Waiver 55
SECTION 11.06. Alternate Payment and Notice Provisions 55
SECTION 11.07. Effect of Headings and Table of Contents 55
SECTION 11.08. Successors and Assigns 55
SECTION 11.09. Separability 56
SECTION 11.10. Benefits of Indenture 56
SECTION 11.11. Legal Holidays 56
SECTION 11.12. GOVERNING LAW 56
SECTION 11.13. Counterparts 56
SECTION 11.14. Recording of Indenture 56
SECTION 11.15. Trust Obligation 56
SECTION 11.16. No Petition 57
SECTION 11.17. Inspection 57
SECTION 11.18. Conflict with Trust Indenture Act 57
SCHEDULE A Schedule of Receivables
EXHIBIT A-1 Form of Class A-1 Note
EXHIBIT A-2 Form of Class A-2 Note
EXHIBIT BForm of the Note Depository Agreement<PAGE> INDENTURE dated as of
December 1, 1996, between FIRST MERCHANTS AUTO
TRUST 1996-C, a Delaware business trust (the "Issuer"), and HARRIS TRUST AND
SAVINGS BANK, an Illinois banking corporation, as trustee and not in its
individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Floating Rate
Asset Backed Notes, Class A-1 (the "Class A-1 Notes") and 6.15% Asset Backed
Notes, Class A-2 (the "Class A-2 Notes" and, together with the Class A-1
Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date,
as Indenture Trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest in and to (a) the Initial Receivables and
all moneys received thereon on or after November 14, 1996, and the Subsequent
Receivables listed on Schedule A to the related Subsequent Transfer
Agreements and all moneys received thereon on or after the related Subsequent
Cutoff Dates; (b) the security interests in the Financed Vehicles and any
accessions thereto granted by Obligors pursuant to the Receivables and any
other interest of the Issuer in such Financed Vehicles; (c) any Liquidation
Proceeds and any other proceeds with respect to the Receivables from claims on
any physical damage, credit life or disability insurance policies covering
Financed Vehicles or Obligors, including any vendor's single interest or other
collateral protection insurance policy; (d) any property that shall have
secured a Receivable and that shall have been acquired by or on behalf of the
Seller, the Servicer, or the Issuer; (e) all documents and other items
contained in the Receivables Files; (f) all funds on deposit from time to
time in the Trust Accounts and in all investments and proceeds thereof
(including all income thereon); (g) the Sale and Servicing Agreement (including
the Issuer's right to cause the Seller to repurchase Receivables from the
Issuer under certain circumstances described therein); and (h) all present and
future claims, demands, causes of action and choses in action in respect of any
or all of the foregoing and all payments on or under and all proceeds of every
kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion thereof, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any
and every kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or are included
in the proceeds of any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that
the interests of the Holders of the Notes may be adequately and effectively
protected.<PAGE>ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. (a) Definitions. Except as otherwise specified
herein or as the context may otherwise require, the following terms have the
respective meanings set forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement dated as
of December 1, 1996, among the Administrator, the Issuer and the Indenture
Trustee.
"Administrator" means First Merchants, or any successor Administrator
under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter) and, so long as the Administration Agreement is in effect, any
Vice President or more senior officer of the Administrator who is authorized
to act for the Administrator in matters relating to the Issuer and to be
acted upon by the Administrator pursuant to the Administration Agreement and who
is identified on the list of Authorized Officers delivered by the Administrator
to the Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).
"Book-Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing
Agency as described in Section 2.10.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York, Chicago,
Illinois or the city in which the Corporate Trust Office is located are
authorized or obligated by law, regulation or executive order to remain
closed.
"Calculation Agent" means the Indenture Trustee or any other Person
authorized by the Issuer to make the calculations described in Section 2.12
on behalf of the Trust and the Noteholders. The Indenture Trustee shall be the
initial Calculation Agent.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Notes" means the Floating Rate Asset Backed Notes, Class A-1,
substantially in the form of Exhibit A-1.
"Class A-1 Rate" means a per annum rate equal to LIBOR plus 0.11%,
subject to a maximum rate with respect to any Floating Rate Interest Accrual
Period of 11% per annum (computed on the basis of the actual number of days
in each Floating Rate Interest Accrual Period divided by 360).
"Class A-2 Notes" means the 6.15% Asset Backed Notes, Class A-2,
substantially in the form of Exhibit A-2.
"Class A-2 Rate" means 6.15% per annum (computed on the basis of a
360-day year consisting of twelve 30-day months).
"Clearing Agency" means an organization registered as a "clearing
agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means December 18, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business is
administered, which office at the date of execution of this Agreement is
located at Harris Trust and Savings Bank, 311 West Monroe Street, 12th Floor,
Chicago, Illinois 60606 (facsimile number (312) 461-3525); Attention:
Indenture Trust Administration, or at such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders, the
Security Insurer and the Issuer, or the principal corporate trust office of
any successor Indenture Trustee at the address designated by such successor
Indenture Trustee by notice to the Noteholders, the Security Insurer and the
Issuer.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"Floating Rate Interest Accrual Period" means, with respect to the Class
A-1 Notes and a given Distribution Date, the period from and including the
most recent Distribution Date on which interest has been paid on the Class
A-1
Notes (or, in the case of the first Distribution Date, the Closing Date) to
but excluding such given Distribution Date.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise,
release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and a right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights
and options, to bring Proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party
is or may be entitled to do or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means (a) a Person in whose name a Note is
registered on the Note Register or (b) if the Security Insurer has made a
payment under the Policy, the Security Insurer to the extent provided in
Section 2.08(c) of this Indenture, Section 5.10 of the Sale and Servicing
Agreement and the proviso to the definition of "Outstanding".
"Indenture Trustee" means Harris Trust and Savings Bank, an Illinois
banking corporation, not in its individual capacity, but as Indenture Trustee
under this Indenture, or any successor Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor on
the Notes, the Seller and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Seller or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in this Indenture and that the signer is Independent within
the meaning thereof.
"Interest Accrual Period" means, with respect to the Class A-2 Notes and
a given Distribution Date, the period from and including the 15th day of the
month preceding the month of such Distribution Date (or, in the case of the
first Distribution Date, the Closing Date) to, but excluding, the 15th day of
the month of such Distribution Date.
"Interest Rate" means the Class A-1 Rate or the Class A-2 Rate.
"Issuance Date" means the date on which the Notes are first
authenticated and issued.
"Issuer" means First Merchants Auto Trust 1996-C until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"LIBOR" means, with respect to the applicable Floating Rate Interest
Accrual Period, the London interbank offered rate for U.S. dollar deposits
for one month determined by the Calculation Agent on the related LIBOR
Determination Date pursuant to Section 2.14.
"LIBOR Business Day" means any day that is both a Business Day and a day
on which banking institutions in the City of London, England are not required
or authorized by law to be closed.
"LIBOR Determination Date" means (i) with respect to the first Floating
Rate Interest Accrual Period, the second LIBOR Business Day prior to the
Closing Date and (ii) with respect to each Floating Rate Interest Accrual
Period thereafter, the second LIBOR Business Day prior to the first day of
such Floating Rate Interest Accrual Period for so long as the Class A-1 Notes
are outstanding.
"Note" means a Class A-1 Note or a Class A-2 Note.
"Note Depository Agreement" means the agreement dated December 18, 1996,
among the Issuer, the Administrator, the Indenture Trustee and The Depository
Trust Company, as the initial Clearing Agency, relating to the Class A-1
Notes and the Class A-2 Notes, substantially in the form of Exhibit B.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered
to the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be an employee
of or counsel to the Issuer and who shall be satisfactory to the Indenture
Trustee and (if the Security Insurer is an addressee of such Opinion of
Counsel) to the Security Insurer, and which opinion or opinions shall be
addressed to the Indenture Trustee, shall comply with any applicable
requirements of Section 11.01 and shall be in form and substance satisfactory
to the Indenture Trustee and (if the Security Insurer is an addressee of such
Opinion of Counsel) to the Security Insurer.
"Outstanding" means, as of any date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee or
any Paying Agent in trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision for such notice has been
made, satisfactory to the Indenture Trustee); and
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that Notes that have been paid with proceeds of the Policy
shall continue to remain Outstanding for purposes of this Indenture until the
Security Insurer has been paid as subrogee hereunder or reimbursed pursuant
to the Insurance Agreement, as evidenced by a written notice from the Security
Insurer delivered to the Indenture Trustee, and the Security Insurer shall be
deemed to be the Holder of such Notes to the extent of any payments made
thereon by the Security Insurer; provided, further that in determining
whether the Holders of the requisite Outstanding Amount of the Notes have given
any request, demand, authorization, direction, notice, consent or waiver
hereunder or under any Basic Document, Notes owned by the Issuer, any other
obligor upon the Notes, the Seller or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Indenture Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Notes that the Indenture Trustee knows to be so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Indenture Trustee the pledgee's right so to act with respect to such Notes
and that the pledgee is not the Issuer, any other obligor upon the Notes, the
Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means, as of any date of determination the
aggregate principal amount of all Notes, or a Class of Notes, as applicable,
Outstanding as of such date of determination.
"Owner Trustee" means Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 and is authorized by the Issuer to make payments to and
distributions from the Collection Account and the Note Distribution Account,
including payments of principal of or interest on the Notes on behalf of the
Issuer.
"Payment Date" means a Distribution Date.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Policy" means the Notes Policy.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced
by such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.06 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Issuer and
(if the Security Insurer is the Controlling Party) the Security Insurer in
writing that such action will not result in a reduction or withdrawal of the
then current rating of the Notes and will not result in an increased capital
charge to the Security Insurer.
"Rating Agency" means each of Moody's and Standard & Poor's. If no such
organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other comparable
Person designated by the Issuer, notice of which designation shall be given
to the Indenture Trustee, the Owner Trustee and the Servicer.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the day immediately preceding such
Distribution Date or Redemption Date.
"Redemption Date" means, as the context requires, (A) in the case of a
redemption of the Notes pursuant to Section 10.01(a) or a payment to
Noteholders pursuant to Section 10.01(b), the Distribution Date specified by
the Servicer or the Issuer pursuant to Section 10.01(a) or (b), as applicable
or (B) in the case of a redemption of Notes pursuant to Section 10.01(c), the
Distribution Date specified in Section 5.12(b) of the Sale and Servicing
Agreement on which the Indenture Trustee shall withdraw the remaining
Pre-Funded Amount and deposit the applicable amount thereof payable to any
Class of Notes in the Note Distribution Account.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the unpaid principal amount
of the Notes redeemed plus accrued and unpaid interest thereon at the Class
A-2 Rate for each Note being so redeemed to but excluding the Redemption
Date, or (b) in the case of a payment made to Noteholders pursuant to Section
10.01(b), the amount on deposit in the Note Distribution Account, but not in
excess of the amount specified in clause (a) above.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of December 1, 1996, among the Issuer, the Seller, the Servicer and
the Indenture Trustee, as Backup Servicer, Collateral Agent and Indenture
Trustee.
"Schedule of Receivables" means the list of Receivables set forth in
Schedule A (which Schedule may be in the form of microfiche), as supplemented
as of each Subsequent Transfer Date by the Subsequent Receivables listed on
Schedule A to the related Subsequent Transfer Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means FMARC II, in its capacity as seller under the Sale and
Servicing Agreement, and its successors in interest.
"Servicer" means First Merchants, in its capacity as servicer under the
Sale and Servicing Agreement, and any Successor Servicer thereunder.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
"Telerate Page 3750" means the page so designated on the Dow Jones
Telerate Service or such other page as may replace that page on that service,
or such other service as may be nominated as the information vendor, for the
purpose of displaying London interbank offered rates of major banks.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest
of this Indenture for the benefit of the Noteholders (including, without
limitation, all property and interests Granted to the Indenture Trustee),
including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from
time to time.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein
have the respective meanings set forth in the Sale and Servicing Agreement
for all purposes of this Indenture.
SECTION 1.02. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as
in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) definitions are applicable to the singular and plural forms of
such terms and to the masculine, feminine and neuter genders of such terms;
and
(vi) any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
ARTICLE II
The Notes
SECTION 2.01. Form. The Class A-1 Notes and the Class A-2 Notes,
in each case together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form set forth in Exhibit A-1 and
Exhibit A-2, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit A-1 and Exhibit A-2 are part of the terms of
this Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers.
The signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and deliver
Class A-1 Notes for original issue in an aggregate principal amount of
$101,000,000 and Class A-2 Notes for original issue in an aggregate principal
amount of $37,886,000. The aggregate principal amount of Class A-1 Notes and
Class A-2 Notes outstanding at any time may not exceed such respective
amounts except as provided in Section 2.06.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of
definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Indenture Trustee shall authenticate and deliver, temporary Notes that
are printed, lithographed, typewritten, mimeographed or otherwise produced, of
the tenor of the definitive Notes in lieu of which they are issued and with
such variations not inconsistent with the terms of this Indenture as the
officers executing such Notes may determine, as evidenced by their execution of
such Notes.
If temporary Notes are issued, the Issuer shall cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer
shall execute, and the Indenture Trustee shall authenticate and deliver in
exchange therefor, a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange.
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe and the
restrictions on transfers of the Notes set forth herein, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee initially shall be the "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon
any resignation of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to
conclusively rely upon a certificate executed on behalf of the Note Registrar
by an Executive Officer thereof as to the names and addresses of the Holders
of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or
agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(1) of the UCC are met the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the Indenture Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Notes, other
than exchanges pursuant to Section 2.03 or 9.05 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
SECTION 2.05. [Reserved.]
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Notes. If (i)
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, and (ii) there is delivered to the Indenture Trustee such
security or indemnity as may be required by it to hold the Issuer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of
the UCC are met, the Issuer shall execute, and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Note, a replacement Note of the same
Class; provided, however, that if any such destroyed, lost or stolen Note,
but not a mutilated Note, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when
so due or payable or upon the Redemption Date without surrender thereof. If,
after the delivery of such replacement Note or payment of a destroyed, lost
or stolen Note pursuant to the proviso to the preceding sentence, a bona fide
purchaser of the original Note in lieu of which such replacement Note was
issued presents for payment such original Note, the Issuer and the Indenture
Trustee shall be entitled to recover such replacement Note (or such payment)
from the Person to whom it was delivered or any Person taking such
replacement Note from such Person to whom such replacement Note was delivered or
any assignee of such Person, except a bona fide purchaser, and shall be
entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.07. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Security Insurer and any agent of the Issuer, the Indenture Trustee or the
Security Insurer may treat the Person in whose name any Note is registered
(as of the day of determination) as the owner of such Note for the purpose of
receiving payments of principal of and interest, if any, on such Note and for
all other purposes whatsoever, whether or not such Note be overdue, and none
of the Issuer, the Indenture Trustee, the Security Insurer or any agent of
the Issuer, the Indenture Trustee or the Security Insurer shall be affected by
notice to the contrary.
SECTION 2.08. Payment of Principal and Interest; Defaulted
Interest. (a) The Class A-1 Notes and the Class A-2 Notes shall accrue
interest at the Class A-1 Rate and the Class A-2 Rate, respectively, as set
forth in Exhibits A-1 and A-2, respectively, and such interest shall be
payable on each Distribution Date as specified therein, subject to Section
3.01. Any installment of interest or principal payable on a Note that is
punctually paid or duly provided for by the Issuer on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one
or more Predecessor Notes) is registered on the Record Date (i) by check
mailed first-class postage prepaid to such Person's address as it appears on
the Note Register on such Record Date, except that, unless Definitive Notes
have been issued pursuant to Section 2.12, with respect to Notes registered
on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee; provided, however, that the final installment of principal payable
with respect to such Note on a Distribution Date or on the Final Scheduled
Distribution Date (including the Redemption Price for any Note called for
redemption pursuant to Section 10.01) shall be payable as provided in
paragraph (b) below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the forms of the Notes set forth in
Exhibit A-1 and A-2. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes may be declared immediately due and payable, if
not previously paid, in the manner provided in Section 5.02 on the date on
which an Event of Default shall have occurred and be continuing by the
Indenture Trustee or Holders of Notes representing not less than a majority
of the Outstanding Amount; provided, however, that if on the date any such
Event of Default occurs or is continuing the Security Insurer is the
Controlling Party, the Security Insurer, in its sole discretion, may determine
whether or not to accelerate payments on the Notes. All principal payments on
each Class of Notes shall be made pro rata to the Noteholders of each Class
entitled thereto. The Indenture Trustee shall notify the Person in whose name a
Note is registered at the close of business on the Record Date preceding the
Distribution Date on which the Issuer expects the final installment of
principal of and interest on such Note to be paid. Such notice shall be
mailed no later than five days prior to such final Distribution Date and
shall specify that such final installment will be payable only upon
presentation and surrender of such Note and shall specify the place where such
Note may be presented and surrendered for payment of such installment. Notices
in connection with redemptions of Notes shall be mailed to Noteholders as
provided in Section 10.02.
(c) Promptly following the date on which all principal of and
interest on the Notes have been paid in full and the Notes have been
surrendered to the Indenture Trustee, the Indenture Trustee shall, if the
Security Insurer has paid any amount in respect of the Notes under the Policy
that has not been reimbursed to the Security Insurer, deliver such
surrendered Notes to the Security Insurer.
(d) If the Issuer defaults in a payment of interest on the Notes,
the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Interest Rate in any lawful
manner on the next Distribution Date.
SECTION 2.09. Cancellation. Subject to Section 2.08(c), all Notes
surrendered for payment, registration of transfer, exchange or redemption
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly cancelled by the
Indenture Trustee. Subject to Section 2.08(c), the Issuer may at any time
deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in
any manner whatsoever, and all Notes so delivered shall be promptly cancelled
by the Indenture Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. Subject to Section 2.08(c), all
cancelled Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed
or returned to it; provided, that such Issuer Order is timely and the Notes
have not been previously disposed of by the Indenture Trustee.
SECTION 2.10. Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. The Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Owner thereof will receive a
definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.12. Unless and until definitive, fully registered
Notes (the "Definitive Notes") have been issued to such Note Owners pursuant
to Section 2.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to Section 2.12, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Note Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.
SECTION 2.11. Notices to Clearing Agency. Whenever a notice or
other communication to the Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to such Note Owners
pursuant to Section 2.12, the Indenture Trustee shall give all such notices
and communications specified herein to be given to Holders of the Notes to
the Clearing Agency, and shall have no obligation to such Note Owners.
SECTION 2.12. Definitive Notes. If (i) the Administrator advises
the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Book-Entry Notes and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Indenture Trustee
in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default or a
Servicer Default, Owners of the Book-Entry Notes representing beneficial
interests aggregating at least a majority of the Outstanding Amount of such
Notes advise the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best
interests of such Note Owners, then the Clearing Agency shall notify all Note
Owners and the Indenture Trustee of the occurrence of any such event and of
the availability of Definitive Notes to Note Owners requesting the same.
Upon surrender to the Indenture Trustee of the typewritten Notes representing
the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the written instructions
of the Clearing Agency. None of the Issuer, the Note Registrar or the
Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Notes, the Indenture
Trustee shall recognize the Holders of the Definitive Notes as Noteholders.
SECTION 2.13. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for
federal, state and local income, single business and franchise tax purposes, the
Notes will qualify as indebtedness secured by the Trust Estate. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local
income and franchise tax purposes as indebtedness.
SECTION 2.14. Determination of LIBOR. On each LIBOR Determination
Date, the Calculation Agent shall calculate LIBOR for the related Floating
Rate Interest Accrual Period using the following method. If the offered rate
for United States dollar deposits for one month appears on Telerate Page 3750
as of 11:00 A.M., London Time, on such LIBOR Determination Date, LIBOR for
the related Floating Interest Accrual Period shall be such rate as it appears on
Telerate Page 3750. If such rate does not appear on Telerate Page 3750 on
any LIBOR Determination Date, the Calculation Agent will request each of the
reference banks (which shall be major banks that are engaged in transactions
in the London interbank market selected by the Calculation Agent) to provide
the Calculation Agent with its offered quotation for United States dollar
deposits for one month to prime banks in the London interbank market as of
11:00 A.M., London time, on such date. If at least two reference banks
provide the Calculation Agent with such offered quotations, LIBOR on such
date will be the arithmetic mean, rounded upwards, if necessary, to the nearest
one-sixteenth (1/16) of 1% of all such quotations. If on such date fewer
than two reference banks provide the Calculation Agent with such offered
quotations, LIBOR on such date will be the arithmetic mean, rounded upwards,
if necessary, to the nearest one-sixteenth (1/16) of 1% of the offered per
annum rates that one or more leading banks in the City of New York selected
by the Calculation Agent are quoting as of 11:00 A.M., New York City time, on
such date to leading European banks for United States dollar deposits for one
month. If such banks in the City of New York are not quoting as provided
above, LIBOR for such date will be LIBOR applicable to the immediately
preceding Distribution Date.
SECTION 2.15. Initial Calculation Agent; Replacement of Calculation
Agent. The Indenture Trustee shall be the initial Calculation Agent. If the
Calculation Agent is unable to perform its obligations under Section 2.14,
the Owner Trustee shall appoint a successor Calculation Agent, which successor
Calculation Agent shall be acceptable to the Indenture Trustee and shall meet
the eligibility requirements hereunder for the Indenture Trustee.
ARTICLE III
Covenants
SECTION 3.01. Payment of Principal and Interest. The Issuer will
duly and punctually pay the principal, if any, of and the interest, if any,
on the Notes in accordance with the terms of the Notes and this Indenture.
Without limiting the foregoing, subject to Section 8.02(c), on each
Distribution Date the Issuer will cause to be distributed all amounts
deposited pursuant to the Sale and Servicing Agreement into the Note
Distribution Account, (i) for the benefit of the Class A-1 Notes, to the
Class A-1 Noteholders and (ii) for the benefit of the Class A-2 Notes, to the
Class A-2 Noteholders. Amounts properly withheld under the Code by any Person
from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will
maintain in the Borough of Manhattan, the City of New York, an office or
agency where Notes may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of
the Notes and this Indenture may be served. Such office will initially be
located at 77 Water Street, 4th Floor, New York, New York 10005. The Issuer
will give prompt written notice to the Indenture Trustee and the Security
Insurer of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Indenture
Trustee as its agent to receive all such surrenders, notices and demands.
SECTION 3.03. Money for Payments To Be Held in Trust. All payments
of amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the Collection Account and the Note Distribution
Account pursuant to Section 8.02(c) shall be made on behalf of the Issuer by
the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn
from the Collection Account and the Note Distribution Account for payments of
Notes shall be paid over to the Issuer except as provided in this Section.
On or before the Business Day preceding each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the
Note Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due under the Notes, such sum to be held in trust for the benefit of
the Persons entitled thereto, and (unless the Paying Agent is the Indenture
Trustee) shall promptly notify the Indenture Trustee in writing of its action
or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions
of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) of which it has actual knowledge
in the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay
to the Indenture Trustee all sums held by it in trust for the payment of Notes
if at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order
direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent;
and upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such
trust and be paid either (i) upon Issuer Request and with the consent of the
Security Insurer (if the Security Insurer is at any such time the Controlling
Party) to the Issuer or (ii) if such money or any portion thereof was paid by
the Security Insurer to the Indenture Trustee for the payment of principal of
or interest on such Note to the extent of such unreimbursed amounts, to the
Security Insurer in lieu of the Issuer; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Indenture Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Indenture Trustee or such Paying Agent, before being required to make any
such repayment, shall at the expense and direction of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the City of New
York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be
repaid to the Issuer or the Security Insurer, as applicable. The Indenture
Trustee shall also adopt and employ, at the expense and direction of the Issuer,
any other reasonable means of notification of such repayment (including, but
not limited to, mailing notice of such repayment to Holders whose Notes have
been called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address
of record for each such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other State or of the United States
of America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.05. Protection of Trust Estate. The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Trust Estate
against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement
or other instrument required to be executed pursuant to this Section 3.05.
SECTION 3.06. Opinions as to Trust Estate. (a) On the Closing
Date, the Issuer shall furnish to the Indenture Trustee and the Security
Insurer an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and filing
of this Indenture, any indentures supplemental hereto, and any other
requisite documents, and with respect to the execution and filing of any
financing statements and continuation statements, as are necessary to perfect
and make effective the lien and security interest of this Indenture and reciting
the details of such action, or stating that, in the opinion of such counsel, no
such action is necessary to make such lien and security interest effective.
(b) On or before September 30, in each calendar year, beginning in
1997, the Issuer shall furnish to the Indenture Trustee and the Security
Insurer an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and with respect to the execution
and filing of any financing statements and continuation statements as is
necessary to maintain the lien and security interest created by this Indenture
and reciting the details of such action, or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until September 30 in the following calendar year.
SECTION 3.07. Performance of Obligations; Servicing of
Receivables.
(a) The Issuer will not take any action and will use its best efforts not to
permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or
such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the
Controlling Party to assist it in performing its duties under this Indenture,
and any performance of such duties by a Person identified to the Indenture
Trustee and the Security Insurer in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents
and in the instruments and agreements included in the Trust Estate, including
but not limited to filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this
Indenture and the Sale and Servicing Agreement in accordance with and within
the time periods provided for herein and therein. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without
the consent of the Security Insurer (so long as no Security Insurer Default
shall have occurred and be continuing) and either the Indenture Trustee or
the Holders of at least a majority of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee, the Security Insurer (if the Security
Insurer is the Controlling Party at such time) and the Rating Agencies
thereof, and shall specify in such notice the action, if any, the Issuer is
taking with respect to such default. If a Servicer Default shall arise from
the failure of the Servicer to perform any of its duties or obligations under
the Sale and Servicing Agreement with respect to the Receivables, the Issuer
shall take all reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of
termination
to the Servicer of the Servicer's rights and powers pursuant to Section 8.01
of the Sale and Servicing Agreement, the Issuer or, if the Security Insurer
is the Controlling Party, the Security Insurer shall appoint the Backup
Servicer as the successor servicer (the "Successor Servicer"), and such
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Indenture Trustee and, if the Security Insurer is the
Controlling Party, the Security Insurer. In the event that a Successor
Servicer has not been appointed and accepted its appointment at the time when
the Servicer ceases to act as Servicer, the Indenture Trustee without further
action shall automatically be appointed the Successor Servicer. The
Indenture Trustee may resign as the Successor Servicer by giving written notice
of such resignation to the Security Insurer (if the Security Insurer is the
Controlling Party) and the Issuer and in such event will be released from
such duties and obligations, such release not to be effective until the date a
new servicer enters into a servicing agreement with the Security Insurer or the
Issuer, as applicable, as provided below. Upon delivery of any such notice
to the Security Insurer or the Issuer, the Security Insurer or the Issuer shall
obtain a new servicer as the Successor Servicer under the Sale and Servicing
Agreement. Any Successor Servicer other than the Indenture Trustee or the
Backup Servicer shall (i) be an established financial institution having a
net worth of not less than $100,000,000 and whose regular business includes the
servicing of Contracts and (ii) enter into a servicing agreement with the
Security Insurer or the Issuer having substantially the same provisions as
the provisions of the Sale and Servicing Agreement applicable to the Servicer.
If within 30 days after the delivery of the notice referred to above, the
Security Insurer or the Issuer shall not have obtained such a new servicer,
the Indenture Trustee may appoint, or may petition a court of competent
jurisdiction to appoint, a Successor Servicer. In connection with any such
appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject
to the limitations set forth below and in the Sale and Servicing Agreement,
and in accordance with Section 8.02 of the Sale and Servicing Agreement, the
Security Insurer or the Issuer, as applicable, shall enter into an agreement
with such successor for the servicing of the Receivables (such agreement to
be in form and substance satisfactory to the Indenture Trustee). If the
Indenture Trustee shall succeed to the Servicer's duties as servicer of the
Receivables as provided herein, it shall do so in its individual capacity and
not in its capacity as Indenture Trustee and, accordingly, the provisions of
Article VI hereof shall be inapplicable to the Indenture Trustee in its
duties as the successor to the Servicer and the servicing of the Receivables.
In case the Indenture Trustee shall become successor to the Servicer under the
Sale and Servicing Agreement, the Indenture Trustee shall be entitled to
appoint as Servicer any one of its affiliates, provided that it shall be
fully liable for the actions and omissions of such affiliate in such capacity as
Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee and, if the Security Insurer is the Controlling Party,
the Security Insurer. As soon as a Successor Servicer is appointed, the Issuer
shall notify the Indenture Trustee in writing and, if the Security Insurer is
the Controlling Party, the Security Insurer of such appointment, specifying
in such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees (i) that it will not, without
the prior written consent of the Security Insurer (if the Security Insurer is
the Controlling Party) and either the Indenture Trustee or the Holders of at
least a majority in Outstanding Amount of the Notes, amend, modify, waive,
supplement, terminate or surrender, or agree to any amendment, modification,
supplement, termination, waiver or surrender of, the terms of any Collateral
(except to the extent otherwise provided in the Sale and Servicing Agreement)
or the Basic Documents, or waive timely performance or observance by the
Servicer or the Seller under the Sale and Servicing Agreement; and (ii) that
any such amendment shall not (A) increase or reduce in any manner the amount
of, or accelerate or delay the timing of, distributions that are required to
be made for the benefit of the Noteholders or (B) reduce the aforesaid
percentage of the Notes that is required to consent to any such amendment,
without the consent of the Holders of all the Outstanding Notes. If the
Security Insurer and the Indenture Trustee or such Holders, as applicable,
agree to any such amendment, modification, supplement or waiver, the Issuer
agrees, promptly following a request by the Indenture Trustee or the Security
Insurer to do so, to execute and deliver, in its own name and at its own
expense, such agreements, instruments, consents and other documents as the
Indenture Trustee or the Security Insurer may deem necessary or appropriate
in the circumstances.
SECTION 3.08. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture, the
Receivables Purchase Agreement or the Sale and Servicing Agreement, sell,
transfer, exchange or otherwise dispose of any of the properties or assets of
the Issuer, including those included in the Trust Estate, unless directed to
do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person to
be released from any covenants or obligations with respect to the Notes under
this Indenture except as may be expressly permitted hereby, (B) permit any
lien, charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics'
liens and other liens that arise by operation of law, in each case on any of
the Financed Vehicles and arising solely as a result of an action or omission
of the related Obligor) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Trust Estate.
SECTION 3.09. Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and the Security Insurer (if the Security
Insurer is the Controlling Party), within 120 days after the end of each
fiscal year of the Issuer (commencing with the fiscal year 1996), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of its performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year or, if there has been a default in
its compliance with any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any State and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and interest on all
Notes and the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as provided
herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax consequence
to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filing required by
the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted (A) shall be a United States citizen or a Person organized
and existing under the laws of the United States of America or any State, (B)
expressly assumes, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and interest on all
Notes and the performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as provided
herein, (C) expressly agrees by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, (D) unless otherwise provided
in such supplemental indenture, expressly agrees to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense arising
under or related to this Indenture and the Notes and (E) expressly agrees by
means of such supplemental indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax consequence
to the Issuer, any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filing required by
the Exchange Act).
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation
or merger of the Issuer in accordance with Section 3.10(a), the Person formed
by or surviving such consolidation or merger (if other than the Issuer) shall
succeed to, and be substituted for, and may exercise every right and power
of, the Issuer under this Indenture with the same effect as if such Person had
been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.10(b), First Merchants Auto Trust 1996-C
will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Indenture Trustee stating
that First Merchants Auto Trust 1996-C is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in
any business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto. After the Funding Period, the
Issuer shall not fund the purchase of any new Contracts.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.09, 4.10, 4.11 and Article IX of the Sale
and Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Trust Agreement, Sale and Servicing Agreement
or this Indenture, the Issuer shall not make any loan or advance or credit to,
or guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of
so doing or otherwise), endorse or otherwise become contingently liable,
directly or indirectly, in connection with the obligations, stocks or
dividends of, or own, purchase, repurchase or acquire (or agree contingently
to do so) any stock, obligations, assets or securities of, or any other
interest in, or make any capital contribution to, any Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Removal of Administrator. So long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection
with such removal.
SECTION 3.18. Restricted Payments. Except with respect to the
proceeds from issuance of the Notes, the Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Issuer may make, or cause to be made,
(x) distributions as contemplated by, and to the extent funds are available for
such purpose under, the Sale and Servicing Agreement or the Trust Agreement
and (y) payments to the Indenture Trustee pursuant to Section 1(a)(ii) of the
Administration Agreement. The Issuer will not, directly or indirectly, make
payments to or distributions from the Collection Account except in accordance
with this Indenture and the Basic Documents.
SECTION 3.19. Notice of Events of Default. The Issuer shall give
the Indenture Trustee, the Security Insurer (if the Security Insurer is at
such time the Controlling Party) and the Rating Agencies prompt written
notice of each Event of Default hereunder, and of each default on the part of
the Servicer or the Seller of its obligations under the Sale and Servicing
Agreement.
SECTION 3.20. Further Instruments and Acts. Upon request of the
Indenture Trustee, or the Security Insurer (if the Security Insurer is at
such time the Controlling Party), the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes
except
as to (i) rights of registration of transfer and exchange, (ii) substitution
of mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon (including any
such right of the Security Insurer pursuant to Section 2.08(c), Section 5.10 of
the Sale and Servicing Agreement and the proviso to the definition of
"Outstanding"), (iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10, 3.12 and 3.13,
(v) the rights, obligations and immunities of the Indenture Trustee hereunder
(including the rights of the Indenture Trustee under Section 6.07 and the
obligations of the Indenture Trustee under Section 4.02) and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them, and the Indenture
Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than
(i)
Notes that have been destroyed, lost or stolen and that have been replaced or
paid as provided in Section 2.06 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Indenture Trustee for
cancellation and the Policy has expired and been returned to the Security
Insurer for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a. have become due and payable,
b. will become due and payable at the Class A-2 Final Scheduled
Distribution Date within one year, or
c. are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the expense, of the
Issuer,and the Issuer, in the case of a., b. or c. above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee cash
or direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on (a) such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the applicable final scheduled
Distribution Date or Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.01(a)), as the case may be, and (b) all
amounts due to the Security Insurer pursuant to Section 5.06(b)(7) of the
Sale and Servicing Agreement and as subrogee to the rights of Holders of the
Notes pursuant to Section 5.10 of the Sale and Servicing Agreement;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate and, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01(a)
and, subject to Section 11.02, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.02. Application of Trust Money. All moneys deposited
with the Indenture Trustee pursuant to Section 4.01 hereof shall be held in
trust and applied by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or through any Paying Agent, as
the Indenture Trustee may determine, to the Holders of the particular Notes for
the payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal
and interest; but such moneys need not be segregated from other funds except to
the extent required herein or in the Sale and Servicing Agreement or required
by law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect
to the Notes, all moneys then held by any Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to
be held and applied according to Section 3.03 and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.
SECTION 4.04. Release of Collateral. Subject to Section 11.01 and
the terms of the Basic Documents, the Indenture Trustee shall release
property from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate and an Opinion of Counsel and
Independent Certificates in accordance with TIA §§ 314(c) and
314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates
to the effect that the TIA does not require any such Independent Certificates.
The Trustee shall surrender the Policy to the Security Insurer upon the
expiration of the term of the Policy (as defined in Section 1 of the Policy).
ARTICLE V
Remedies
SECTION 5.01. Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a
period
of five days (solely for purposes of this clause, a payment on the Notes
funded by the Security Insurer shall be deemed to be a payment made by the
Issuer); or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable
(solely for purposes of this clause, a payment on the Notes funded by the
Security Insurer shall be deemed to be a payment made by the Issuer); or
(iii) an Insurance Agreement Event of Default shall have
occurred at any time while the Security Insurer is the Controlling Party;
provided, however, that the occurrence of an Insurance Agreement Event of
Default may not form the basis of an Event of Default unless the Security
Insurer shall have delivered to the Issuer and the Trustee a written notice
specifying that such Insurance Agreement Event of Default constitutes an
Event
of Default under this Indenture;
(iv) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere
in this Section specifically dealt with), or any representation or warranty of
the Issuer made in this Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the circumstance
or condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a period of 30
days after there shall have been given, by registered or certified mail, to the
Issuer by the Indenture Trustee or the Security Insurer (so long as no
Security Insurer Default shall have occurred and be continuing) or to the
Issuer and the Indenture Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such default or
incorrect representation or warranty and requiring it to be remedied and
stating that such notice is a notice of Default hereunder; or
(v) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(vi) the commencement by the Issuer of a voluntary case under
any applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent by
the Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer
or for any substantial part of the Trust Estate, or the making by the Issuer
of any general assignment for the benefit of creditors, or the failure by the
Issuer generally to pay its debts as such debts become due, or the taking of
any action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee and, if the Security
Insurer is the Controlling Party, the Security Insurer, within five days after
the occurrence thereof, written notice in the form of an Officer's Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (iii), its status and what action the Issuer
is taking or proposes to take with respect thereto.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default should occur and be continuing, then and in every
such case the Indenture Trustee or the Holders of Notes representing not less
than a majority of the Outstanding Amount of the Notes may declare all the
Notes to be immediately due and payable, by a notice in writing to the Issuer
(and to the Indenture Trustee if given by Noteholders), and upon any such
declaration the unpaid principal amount of such Notes, together with accrued
and unpaid interest thereon through the date of acceleration, shall become
immediately due and payable; provided, however, that, if on the date any such
Event of Default occurs or is continuing, the Security Insurer is the
Controlling Party, then the Security Insurer, in its sole discretion, may
determine whether or not to accelerate payment on the Notes. In the event of
any acceleration of the Notes by operation of this Section 5.02, the
Indenture Trustee shall continue to be entitled to make claims under the Policy
pursuant to Section 5.07 of the Sale and Servicing Agreement for Scheduled
Payments on the Notes. Payments under the Policy following acceleration of the
Notes shall be applied by the Indenture Trustee:
FIRST: to the payment of amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind,
SECOND: to the payment of amounts due and unpaid on the Class A-1
Notes for principal, ratably, without preference or priority of any kind until
the Class A-1 Notes are paid in full, and
THIRD: to the payment of amounts due and unpaid on the Class A-2 Notes
for principal, ratably, without preference or priority of any kind until the
Class A-2 Notes are paid in full.
(b) If an Event of Default occurs at any time when the Security
Insurer is the Controlling Party, the Security Insurer shall have the right,
but not the obligation, to make one or more accelerated payments on the Notes
and to prepay the Notes, in whole or in part, on any date or dates following
the occurrence of such Event of Default if the Security Insurer, in its sole
discretion, shall so elect. This right of the Security Insurer to make
accelerated payments on the Notes is in addition to its obligation to pay
Scheduled Payments on the Notes under the Policy, and in no event shall the
Security Insurer make a Scheduled Payment to the Indenture Trustee for
distribution to the Noteholders later than the date on which such amount is
due under the terms of the Notes and the Policy.
(c) If an Event of Default under this Indenture shall have occurred
and be continuing at any time when the Indenture Trustee is the Controlling
Party, the Indenture Trustee in its discretion may or, if so requested in
writing by Holders of Notes representing at least a majority of the
Outstanding Amount of the Notes, shall declare by written notice to the
Issuer all the Notes immediately due and payable, and upon any such declaration,
the unpaid principal amount of the Notes, together with accrued interest
thereon through the date of acceleration, shall become immediately due and
payable. Notwithstanding anything to the contrary in this paragraph (c), if an
Event of Default specified in clauses (v) and (vi) of Section 5.01 shall have
occurred and be continuing at any time when the Indenture Trustee is the
Controlling Party, the Notes shall become immediately due and payable at par,
together with accrued interest thereon.
(d) At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due
has been obtained by the Indenture Trustee as hereinafter in this Article V
provided, either the Security Insurer (so long as a Security Insurer Default
has not occurred and is continuing) or the Holders of Notes representing a
majority of the Outstanding Amount of the Notes (if a Security Insurer
Default has occurred and is continuing), by written notice to the Issuer and
the Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal of and interest on all Notes and all
other amounts that would then be due hereunder or upon such Notes if the
Event of Default giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration, have
been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
(e) In the event of a sale of the assets of the Trust pursuant to
Section 9.01 of the Trust Agreement
(i) if, based on offers to purchase the Receivables accepted
by the Indenture Trustee, the Security Insurer would not be reimbursed in
full for all amounts due to it under the Insurance Agreement following the
distribution of the proceeds of such sale pursuant to Section 5.06(b) of the
Sale and Servicing Agreement and (ii) the Certificateholders have been given
prior written notice and five business days to bid thereon, the Security
Insurer shall be permitted to request an assignment of Receivables and all
other assets of the Trust Estate in lieu of such a distribution of such sale
proceeds. In the event that the Security Insurer elects to request such an
assignment, promptly following receipt by the Indenture Trustee of notice of
such request, the Indenture Trustee shall file with the Security Insurer a
Notice of Claim in accordance with the Policy in respect of the principal
amount, if any, of the Notes that are unpaid on the Distribution Date
immediately preceding the date of the receipt by the Indenture Trustee of
such notice plus accrued interest thereon. All amounts received by the
Indenture Trustee from the Security Insurer pursuant to this Section 5.02 shall
be distributed to the Noteholders. Immediately upon payment by the Security
Insurer of all amounts required to be paid by the Security Insurer pursuant
to this Section 5.02, the Indenture Trustee shall be deemed to have assigned
the Receivables and all other assets of the Trust Estate to the Security
Insurer or its designee. To effect such deemed assignment, the Indenture
Trustee shall do and perform any reasonable acts and execute any further
instruments reasonably requested by the Security Insurer.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee; Authority of the Controlling Party. (a) The Issuer
covenants that if (i) default is made in the payment of any interest on any
Note when the same becomes due and payable, and such default continues for a
period of five days, (ii) default is made in the payment of the principal of
or any installment of the principal of any Note when the same becomes due and
payable, or (iii) default is made in payment of amounts under Section
10.01(c), the Issuer will, upon demand of the Indenture Trustee, pay to it,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on such Notes for principal and interest, with interest on the
overdue principal and, to the extent payment at such rate of interest shall be
legally enforceable, on overdue installments of interest at the rate borne by
the Notes and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee
and its agents and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, may (with the consent of the Security Insurer (so long as no
Security Insurer Default shall have occurred and be continuing)) institute a
Proceeding for the collection of the sums so due and unpaid, and may
prosecute such Proceeding to judgment or final decree, and may enforce the same
against the Issuer or other obligor upon such Notes and collect in the manner
provided by law out of the property of the Issuer or other obligor upon such
Notes, wherever situated, the moneys adjudged or decreed to be payable. At any
time when (i) the Security Insurer is the Controlling Party or (ii) (A) the
Security Insurer is the Holder of Notes pursuant to Section 2.08(c) or
Section 5.10 of the Sale and Servicing Agreement and (B) all amounts due to all
other Holders of the Notes pursuant to the Notes and this Indenture have been
paid in full, the Security Insurer may, in its own name, institute any
Proceeding or take any other action permitted under this section to collect
amounts due hereunder from the Issuer or any other obligor on the Notes.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.04, in its
discretion, proceed to protect and enforce its rights and the rights of the
Noteholders, by such appropriate Proceedings as the Indenture Trustee shall deem
most effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy
or legal or equitable right vested in the Indenture Trustee by this Indenture or
by law.
(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, or liquidator, sequestrator or similar official shall have
been appointed for or taken possession of the Issuer or its property or such
other obligor or Person, or in case of any other comparable judicial
Proceedings relative to the Issuer or other obligor upon the Notes, or to the
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered
but only at the written direction of the Security Insurer if the Security
Insurer is the Controlling Party, by intervention in such Proceedings or
otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture Trustee,
and their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the Indenture
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Holders of Notes allowed in any Proceedings relative
to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture
Trustee shall consent to the making of payments directly to such Noteholders, to
pay to the Indenture Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt
on behalf of any Noteholder any plan of reorganization, arrangement, adjustment
or composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture
Trustee without the possession of any of the Notes or the production thereof in
any Proceedings relative thereto, and any such Proceedings instituted by the
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary
to make any Noteholder a party to any such Proceedings.
SECTION 5.04. Remedies; Priorities. (a) If an Event of Default
shall have occurred and be continuing and either (i) a Security Insurer
Default shall also have occurred or (ii) if the Security Insurer is the
Controlling Party and the Security Insurer so directs the Indenture Trustee
in writing, the Indenture Trustee may do one or more of the following (subject
to Section 5.05):
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on the Notes or
under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any judgment obtained and collect from the Issuer and any
other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Holders of the Notes; and
(iv) sell the Trust Estate or any portion thereof or rights
or interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that (x) if a Security Insurer Default shall have
occurred, the Indenture Trustee may not sell or otherwise liquidate the Trust
Estate following an Event of Default, other than an Event of Default described
in Section 5.01(i) or (ii), unless (A) the Holders of 100% of the Outstanding
Amount of the Notes consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Noteholders are sufficient to discharge in
full all amounts then due and unpaid upon such Notes for principal and
interest or (C) the Indenture Trustee determines that the Trust Estate will
not continue to provide sufficient funds for the payment of principal of and
interest on the Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the consent of
Holders of a majority of the Outstanding Amount of the Notes, (y) if the
Security Insurer is the Controlling Party, the Security Insurer may not
direct the Indenture Trustee, and the Indenture Trustee shall not comply with
any such direction, to sell or otherwise liquidate the Collateral following an
Event of Default unless (1) the conditions set forth in clause (x) are met or
(2) the Security Insurer has paid the Notes in full under the Policy. In
determining such sufficiency or insufficiency with respect to clause (B) and
(C), the Indenture Trustee may, but need not, obtain and conclusively rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to
the sufficiency of the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant
to this Article V, it shall pay out the money or property in the following
order:
FIRST: to the Indenture Trustee for amounts due under Section 6.07;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
interest (including any premium), ratably, without preference or priority of
any kind, according to the amounts due and payable on the Notes for interest
(including any premium);
THIRD: to Holders of the Class A-1 Notes for amounts due and unpaid
on the Class A-1 Notes for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class A-1 Notes
for principal, until the Outstanding Amount of the Class A-1 Notes is reduced
to zero;
FOURTH: to Holders of the Class A-2 Notes for amounts due and unpaid
on the Class A-2 Notes for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class A-2 Notes
for principal, until the Outstanding Amount of the Class A-2 Notes is reduced
to zero;
FIFTH: to the Certificate Distribution Account for amounts due and
unpaid on the Certificates for interest (including any premium) and
principal, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Certificates for interest (including any premium)
and principal;
SIXTH: to the Security Insurer pursuant to Section 5.06(b)(7) of the
Sale and Servicing Agreement and Section 5.10 of the Sale and Servicing
Agreement; and
SEVENTH: pursuant to Section 5.06 of the Sale and Servicing
Agreement;
provided, however, that any amounts collected from the Pre-Funding Account or
Capitalized Interest Account shall be paid on the Notes and the Certificates
pro rata, based upon their respective principal balances as of the preceding
Distribution Date, for amounts allocable to principal due and unpaid, prior
to the application of priorities FIRST through SIXTH, above.
The Indenture Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Noteholder and the Indenture Trustee a
notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.05. Optional Preservation of the Receivables. If the
Indenture Trustee is the Controlling Party and the Notes have been declared
to be due and payable under Section 5.02 following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the Trust
Estate. In determining whether to maintain possession of the Trust Estate, the
Indenture Trustee may, but need not, obtain and conclusively rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
SECTION 5.06. Limitation of Suits. No Holder of any Note shall
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its own name
as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities to
be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute such
Proceedings;
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the Holders
of a majority of the Outstanding Amount of the Notes; and
(vi) the Indenture Trustee is the Controlling Party.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of
Notes, each representing less than a majority of the Outstanding Amount of
the Notes, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture.
SECTION 5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any,
on such Note on or after the respective due dates thereof expressed in such
Note or in this Indenture (or, in the case of redemption, on or after the
Redemption Date) and to institute suit for the enforcement of any such
payment, and such right shall not be impaired without the consent of such
Holder.
SECTION 5.08. Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right
or remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had
been instituted.
SECTION 5.09. Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the
Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission
of the Indenture Trustee, or any Holder of any Note or the Security Insurer
to exercise any right or remedy accruing upon any Default or Event of Default
shall impair any such right or remedy or constitute a waiver of any such
Default or Event of Default or an acquiescence therein. Every right and
remedy given by this Article V or by law to the Indenture Trustee, to the
Noteholders or the Security Insurer may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee, the Noteholders
or the Security Insurer as the case may be.
SECTION 5.11. Control by Noteholders. If the Indenture Trustee is
the Controlling Party, the Holders of a majority of the Outstanding Amount of
the Notes shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee
with respect to the Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.04, any
direction to the Indenture Trustee to sell or liquidate the Trust Estate
shall be by Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any written direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Outstanding Amount of the
Notes to sell or liquidate the Trust Estate shall be of no force and effect;
and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject
to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the declaration of
the acceleration of the maturity of the Notes as provided in Section 5.02, at
any time when the Security Insurer is not the Controlling Party, the Holders
of Notes of not less than a majority of the Outstanding Amount of the Notes
may waive any past Default or Event of Default and its consequences except a
Default (a) in payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of each Note. In the case of any
such waiver, the Issuer, the Indenture Trustee and the Holders of the Notes
shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right
consequent thereto.
SECTION 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of a Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on
or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 5.15. Action on Notes. The Indenture Trustee's right to
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under
or with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion
of the Trust Estate or upon any of the assets of the Issuer. Any money or
property collected by the Indenture Trustee shall be applied in accordance
with Section 5.04(b).
SECTION 5.16. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so and at
the Administrator's expense, the Issuer shall take all such lawful action as
the Indenture Trustee may request to compel or secure the performance and
observance by the Seller or the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement or the Receivables Purchase Agreement, as applicable, and to
exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale and Servicing
Agreement or the Receivables Purchase Agreement to the extent and in the
manner directed by the Indenture Trustee, including the transmission of
notices of default on the part of the Seller or the Servicer thereunder and
the institution of legal or administrative actions or proceedings to compel
or secure performance by the Seller or the Servicer of each of their
obligations under the Sale and Servicing Agreement or the Receivables Purchase
Agreement.
(b) If an Event of Default has occurred and is continuing at any
time when the Security Insurer is not the Controlling Party, the Indenture
Trustee may, and at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of not less
than a majority of the Outstanding Amount of the Notes shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the Seller
or the Servicer under or in connection with the Sale and Servicing Agreement
and the Receivables Purchase Agreement including the right or power to take any
action to compel or secure performance or observance by the Seller or the
Servicer, as the case may be, of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement and the
Receivables Purchase Agreement, as the case may be, and any right of the Issuer
to take such action shall be suspended.
ARTICLE VI
The Indenture Trustee
SECTION 6.01. Duties of Indenture Trustee. (a) If an Event of
Default has occurred and is continuing of which a Responsible Officer of the
Indenture Trustee has actual knowledge, the Indenture Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same degree
of care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements of this
Indenture; however, the Indenture Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of this
Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms
of this Indenture or the Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers, if it shall have reasonable grounds to believe
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of
the TIA.
(i) In no event shall the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer or any other party under the Sale and Servicing Agreement, except
that Harris Trust and Savings Bank, solely in its capacity as Backup
Servicer, shall perform and be responsible for such obligations during such time
, if any, as the Backup Servicer shall be the successor to, and be vested with
the rights, powers, duties and privileges of, the Servicer in accordance with
the terms of the Sale and Servicing Agreement.
(j) The Indenture Trustee shall, and hereby agrees that it will,
hold the Policy in trust, and will hold any proceeds of any claim on the Policy
in trust solely for the use and benefit of the Noteholders. The Indenture
Trustee will deliver to the Rating Agency notice of any change made to the
Policy prior to the Termination Date.
For purposes of this Section 6.01 and Section 8.03(c), the Indenture
Trustee, or a Responsible Officer thereof, shall be charged with actual
knowledge of an Event of Default if the Indenture Trustee receives written
notice of such Event of Default from the Issuer, the Servicer, the Backup
Servicer, the Security Insurer or Noteholders owning Notes aggregating not
less than 10% of the Outstanding Amount of the Notes.
SECTION 6.02. Rights of Indenture Trustee. (a) The Indenture
Trustee may conclusively rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, or
for the supervision of, any such agent, attorney, custodian or nominee appointed
with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.03. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any
Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Indenture Trustee must comply with Sections
6.11 and 6.12.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be accountable
for the Issuer's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Issuer in the Indenture or in any document
issued in connection with the sale of the Notes or in the Notes other than the
Indenture Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Responsible Officer of the Indenture
Trustee, the Indenture Trustee shall mail to each Noteholder and the Security
Insurer notice of the Default within 30 days after it occurs. Except in the
case of a Default in payment of principal of or interest on any Note
(including payments pursuant to the mandatory redemption provisions of such
Note), the Indenture Trustee may withhold the notice to Noteholders if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Holders. The
Indenture Trustee shall deliver to each Noteholder such information as may be
required to enable such holder to prepare its federal and state income tax
returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall, or
shall cause the Administrator to, pay to the Indenture Trustee from time to
time reasonable compensation for its services. The Indenture Trustee's
compensation shall not be limited by any law on compensation of a trustee of
an express trust. The Issuer shall, or shall cause the Administrator to,
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture
Trustee's agents, counsel, accountants and experts. The Issuer shall, or
shall cause the Administrator to, indemnify the Indenture Trustee against any
and all loss, liability or expense (including attorneys' fees and expenses)
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder or under the Sale and Servicing
Agreement. The Indenture Trustee shall notify the Issuer and the
Administrator promptly of any claim for which it may seek indemnity. Failure
by the Indenture Trustee to so notify the Issuer and the Administrator shall
not relieve the Issuer or the Administrator of its obligations hereunder.
The Issuer shall, or shall cause the Administrator to, defend any such claim,
and the Indenture Trustee may have separate counsel and the Issuer shall, or
shall cause the Administrator to, pay the fees and expenses of such counsel.
Neither the Issuer nor the Administrator need reimburse any expense or
indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
The Issuer's payment obligations to the Indenture Trustee and the
Administrator's indemnities to the Indenture Trustee pursuant to this Section
shall survive the discharge of this Indenture or the earlier resignation or
removal of the Indenture Trustee. When the Indenture Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01(iv) or (v) with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. Replacement of Indenture Trustee. No resignation or
removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.08. The Indenture
Trustee may resign at any time by so notifying the Issuer and (if the
Security Insurer is the Controlling Party) the Security Insurer. The Holders of
a majority in Outstanding Amount of the Notes may, with the consent of the
Controlling Party, remove the Indenture Trustee by so notifying the Indenture
Trustee and may appoint a successor Indenture Trustee. The Issuer shall,
with the consent of the Controlling Party, and at the request of the
Controlling Party, remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or
insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the
office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable (if the
Security Insurer is the Controlling Party) to the Security Insurer. If the
Issuer fails to appoint such a successor Indenture Trustee and the Security
Insurer is the Controlling Party, the Security Insurer may appoint a
successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The
retiring Indenture Trustee shall be paid all amounts owed to it upon its
resignation or removal. The successor Indenture Trustee shall mail a notice of
its succession to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the successor
Indenture Trustee. The retiring Indenture Trustee shall not be liable for
the acts or omissions of any Successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Security Insurer (if the Security Insurer is the
Controlling Party), the Issuer or the Holders of a majority in Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section, the Issuer's and the Administrator's obligations under Section
6.07 shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.09. Successor Indenture Trustee by Merger. If the
Indenture Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall
provide the Rating Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Indenture Trustee shall
have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. (a) Notwithstanding any other provisions of this
Indenture, at any time, for the purpose of meeting any legal requirement of
any jurisdiction in which any part of the Trust Estate may at the time be
located, the Indenture Trustee, with the consent of the Security Insurer (if
the Security Insurer is the Controlling Party), shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all
or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust Estate,
or any part hereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Indenture Trustee may
consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee
under Section 6.11 and no notice to Noteholders of the appointment of any
co-trustee or separate trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the
Indenture Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
the holding of title to the Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article VI. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee
shall at all times satisfy the requirements of TIA § 310(a). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition, and the time deposits of the Indenture Trustee shall be rated at
least A-1 by Standard & Poor's and P-1 by Moody's. At any time that the
Security Insurer is the Controlling Party, the Indenture Trustee shall
provide copies of such reports to the Security Insurer upon request. The
Indenture Trustee shall comply with TIA § 310(b), including the optional
provision permitted by the second sentence of TIA § 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA § 310(b)(1)
any indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA §
310(b)(1) are met.
SECTION 6.12. Pennsylvania Motor Vehicle Sales Finance Act
Licenses. The Indenture Trustee shall use its best efforts to maintain the
effectiveness of all licenses required under the Pennsylvania Motor Vehicle
Sales Finance Act in connection with this Indenture and the transactions
contemplated hereby until the lien and security interest of this Indenture
shall no longer be in effect in accordance with the terms hereof.
SECTION 6.13. Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA § 311(a), excluding any
creditor relationship listed in TIA § 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA § 311(a) to the
extent indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and
addresses of the Holders of Notes as of such Record Date, and (b) at such
other times as the Indenture Trustee may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Indenture Trustee is the
Note Registrar, no such list shall be required to be furnished. The
Indenture Trustee or, if the Indenture Trustee is not the Note Registrar, the
Issuer shall furnish to the Security Insurer (if the Security Insurer is the
Controlling Party) in writing on an annual basis and at such other times as
the Security Insurer may request a copy of the list of Noteholders.
SECTION 7.02. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as
provided in Section 7.01 and the names and addresses of Holders of Notes
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished. The Indenture Trustee
shall make such list available to the Security Insurer (if the Security
Insurer is the Controlling Party) on request, and to the Noteholders upon
written request of three or more Noteholders or one or more Noteholders
evidencing not less than 25% of the Outstanding Amount of the Notes.
(b) Noteholders may communicate pursuant to TIA § 312(b) with
other Noteholders with respect to their rights under this Indenture or under
the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA § 312(c).
SECTION 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required (if at all) to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) that the Issuer may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to compliance by
the Issuer with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA § 313(c))
such summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.03(a) and by
rules and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.04. Reports by Indenture Trustee. If required by TIA
§ 313(a), within 60 days after each February 1 beginning with February
1, 1997, the Indenture Trustee shall mail to each Noteholder as required by TIA
§ 313(c) a brief report dated as of such date that complies with TIA
§ 313(a). The Indenture Trustee also shall comply with TIA §
313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable
to or receivable by the Indenture Trustee pursuant to this Indenture. The
Indenture Trustee shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if
any default occurs in the making of any payment or performance under any
agreement or instrument that is part of the Trust Estate, the Indenture
Trustee may take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
Proceedings. Any such action shall be without prejudice to any right to
claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
SECTION 8.02. Trust Accounts. (a) On or prior to the Closing
Date, the Issuer shall cause the Servicer to establish and maintain, in the
name of the Indenture Trustee, for the benefit of the Noteholders and the
Certificateholders, the Trust Accounts as provided in Section 5.02 of the
Sale and Servicing Agreement.
(b) Upon receipt of the monthly Servicer's Certificate separately
identifying the collections received on the Eligible Investment Receivables,
the Indenture Trustee shall withdraw the amount of such collections from the
Collection Account and deposit such amount into the Spread Account. On or
before each Distribution Date, the Total Distribution Amount with respect to
the preceding Collection Period will be deposited in the Collection Account
as provided in Section 5.02 of the Sale and Servicing Agreement. On or before
each Distribution Date, all amounts required to be deposited in the Note
Distribution Account with respect to the preceding Collection Period pursuant
to Section 5.05 of the Sale and Servicing Agreement will be transferred from
the Collection Account and/or the Spread Account to the Note Distribution
Account.
(c) On each Distribution Date and Redemption Date, the Indenture
Trustee shall distribute all amounts on deposit in the Note Distribution
Account to Noteholders in respect of the Notes to the extent of amounts due
and unpaid on the Notes for principal and interest (including any premium) in
the following amounts and in the following order of priority (except as
otherwise provided in Section 5.04(b)):
(i) accrued and unpaid interest on the Notes; provided, that
if there are not sufficient funds in the Note Distribution Account to pay the
entire amount of accrued and unpaid interest then due on the Notes, the
amount in the Note Distribution Account shall be applied to the payment of such
interest on the Notes pro rata on the basis of the total such interest due on
the Notes;
(ii) to the Holders of each Class of Notes in reduction of
the Outstanding Amount of such Class, pursuant to Section 5.12(b) of the Sale
and Servicing Agreement, the amounts allocated thereto, if any, from the
amount withdrawn from the Pre-Funding Account and deposited in the Note
Distribution Account;
(iii) to the Holders of the Class A-1 Notes on account of
principal until the Outstanding Amount of the Class A-1 Notes is reduced to
zero; and
(iv) to the Holders of the Class A-2 Notes on account of
principal until the Outstanding Amount of the Class A-2 Notes is reduced to
zero.
SECTION 8.03. General Provisions Regarding Accounts. (a) So long
as no Default or Event of Default shall have occurred and be continuing, all
or a portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and reinvested by the Indenture Trustee (or the investment
manager referred to in the definition of "Eligible Investments" in the Sale and
Servicing Agreement) upon Issuer Order, subject to the provisions of Section
5.02 of the Sale and Servicing Agreement. All income or other gain from
investments of moneys deposited in the Trust Accounts shall be deposited by
the Indenture Trustee in the Collection Account, and any loss resulting from
such investments shall be charged to such account. The Issuer will not
direct the Indenture Trustee to make any investment of any funds or to sell any
investment held in any of the Trust Accounts unless the security interest
Granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Indenture
Trustee to make any such investment or sale, if requested by the Indenture
Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of
Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment included therein
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance
with their terms.
(c) If (i) the Issuer (or the Servicer or any investment manager
pursuant to Section 5.02 of the Sale and Servicing Agreement) shall have
failed to give investment directions for any funds on deposit in the Trust
Accounts to the Indenture Trustee by 11:00 a.m. Eastern Time (or such other
time as may be agreed by the Issuer and Indenture Trustee) on any Business
Day or (ii) a Default or Event of Default shall have occurred and be continuing
of which a Responsible Officer of the Indenture Trustee has actual knowledge
with respect to the Notes but the Notes shall not have been declared due and
payable pursuant to Section 5.02 or (iii) if such Notes shall have been
declared due and payable following an Event of Default but amounts collected
or receivable from the Trust Estate are being applied in accordance with
Section 5.05 as if there had not been such a declaration, then the
Controlling Party shall, to the fullest extent practicable, invest and reinvest
funds in the Trust Accounts in one or more Eligible Investments.
SECTION 8.04. Release of Trust Estate. (a) Subject to the
payment of its fees and expenses pursuant to Section 6.07, the Indenture Trustee
may, and when required by the provisions of this Indenture shall, execute
instruments to release property from the lien of this Indenture, or convey
the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Indenture Trustee as
provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07
have been paid and all amounts due to the Security Insurer have been paid,
release any remaining portion of the Trust Estate that secured the Notes from
the lien of this Indenture and release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Trust Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.04(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA
§§ 314(c) and 314(d)(1) meeting the applicable requirements of
Section 11.01.
The Issuer agrees, upon request by the Servicer and representation by
the Servicer that it has complied with the procedure in Section 9.01 of the
Sale and Servicing Agreement, to render the Issuer Request to the Indenture
Trustee in accordance with Section 4.04, and take such other actions as are
required in that Section.
SECTION 8.05. Opinion of Counsel. The Indenture Trustee shall
receive at least seven days prior written notice when requested by the Issuer
to take any action pursuant to Section 8.04(a), accompanied by copies of any
instruments involved, and the Indenture Trustee shall also require, as a
condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and concluding
that all conditions precedent to the taking of such action have been complied
with and such action will not materially and adversely impair the security for
the Notes or the rights of the Noteholders in contravention of the provisions of
this Indenture; provided, however, that such Opinion of Counsel shall not be
required to express an opinion as to the fair value of the Trust Estate.
Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Holders of any Notes but with
the consent of the Security Insurer (if the Security Insurer is the
Controlling Party) and prior notice to the Rating Agencies, the Issuer and
the Indenture Trustee, when authorized by an Issuer Order, at any time and from
time to time, may enter into one or more indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as in force at
the date of the execution thereof), in form satisfactory to the Indenture
Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be inconsistent
with any other provision herein or in any supplemental indenture or to make
any other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided, that such action shall
not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes and to
add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more than
one trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Holders of the
Notes but with the consent of the Security Insurer (if the Security Insurer is
the Controlling Party) and prior notice to the Rating Agencies, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Noteholder (including the interests of the
Security Insurer to the extent it is, or will become, upon payment in full of
all amounts due to any other Noteholder hereunder or pursuant to a Note, a
Noteholder pursuant to Section 2.08(c) or Section 5.10 or the Sale and
Servicing Agreement.
SECTION 9.02. Supplemental Indentures with Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies and with the consent of (i)
the Security Insurer (if the Security Insurer is the Controlling Party) or (ii)
of the Holders of not less than a majority of the Outstanding Amount of the
Notes (if the Security Insurer is not the Controlling Party), by Act of such
Holders delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions of
, this Indenture or of modifying in any manner the rights of the Holders of the
Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the principal amount thereof,
the interest rate thereon or the Redemption Price with respect thereto, change
the provisions of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair the
right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided
in Article V, to the payment of any such amount due on the Notes on or after
the respective due dates thereof (or, in the case of redemption, on or after
the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of interest
or principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation) or to
affect the rights of the Holders of Notes to the benefit of any provisions
for the mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on
a parity with the lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein, terminate
the lien of this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien of this
Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee
shall mail to the Holders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing,
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts
created by this Indenture, the Indenture Trustee shall be entitled to receive,
and subject to Sections 6.01 and 6.02, shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Indenture
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture that affects the Indenture Trustee's own rights, duties, liabilities
or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and shall be deemed to be modified and amended in
accordance therewith with respect to the Notes affected thereby, and the
respective rights, limitations of rights, obligations, duties, liabilities
and immunities under this Indenture of the Indenture Trustee, the Issuer and
the Holders of the Notes shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and
all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any
and all purposes.
SECTION 9.05. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee
shall, bear a notation in form approved by the Indenture Trustee as to any
matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
SECTION 9.06. Conformity with Trust Indenture Act. Every amendment
of this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as
then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
ARTICLE X
Redemption of Notes
SECTION 10.01. Redemption. (a) The Class A-2 Notes are subject
to redemption in whole, but not in part, at the direction of the Servicer
pursuant to Section 9.01(a) of the Sale and Servicing Agreement, on any
Distribution Date on which the Servicer exercises its option to purchase the
Trust Estate pursuant to said Section 9.01(a), for a purchase price equal to
the Redemption Price; provided, that the Issuer has available funds
sufficient to pay the Redemption Price. The Servicer or the Issuer shall
furnish the Security Insurer (if the Security Insurer is the Controlling Party)
and the Rating Agencies notice of such redemption. If the Class A-2 Notes are
to be redeemed pursuant to this Section 10.01(a), the Servicer or the Issuer
shall furnish notice of such election to the Indenture Trustee not later than 20
days prior to the Redemption Date and the Issuer shall deposit by 10:00 A.M.
New York City time on the Redemption Date with the Indenture Trustee in the
Note Distribution Account the Redemption Price of the Class A-2 Notes to be
redeemed, whereupon all such Class A-2 Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.02
to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.02 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts
are to be paid to Noteholders pursuant to this Section 10.01(b), the Servicer
or the Issuer shall, to the extent practicable, furnish notice of such event
to the Indenture Trustee not later than 20 days prior to the Redemption Date,
whereupon all such amounts shall be payable on the Redemption Date.
(c) If the Pre-Funded Amount has not been reduced to zero at the end
of the Funding Period after giving effect to any reductions on such day
pursuant to Section 5.12(a) of the Sale and Servicing Agreement, one or more
classes of Notes then Outstanding will be redeemed in part, as described in
Section 8.02(c)(ii).
SECTION 10.02. Form of Redemption Notice. (a) Notice of
redemption under Section 10.01(a) shall be given by the Indenture Trustee by
first-class mail, postage prepaid, or by facsimile mailed or transmitted not
later than 10 days prior to the applicable Redemption Date to each Holder of
Notes, as of the close of business on the Record Date preceding the
applicable Redemption Date, at such Holder's address or facsimile number
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of the
Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture Trustee in
the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair
or affect the validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.01(b) is not
required to be given to Noteholders.
SECTION 10.03. Notes Payable on Redemption Date. The Notes or
portions thereof to be redeemed shall, following notice of redemption as
required by Section 10.02 (in the case of redemption pursuant to Section
10.01(a)), on the Redemption Date become due and payable at the Redemption
Price and (unless the Issuer shall default in the payment of the Redemption
Price) no interest shall accrue on the Redemption Price for any period after
the date to which accrued interest is calculated for purposes of calculating
the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.01. Compliance Certificates and Opinions, etc. (a)
Upon any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Indenture Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and (ii) an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate
from a firm of certified public accountants meeting the applicable
requirements of this Section, except that, in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
signatory,
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture,
the Issuer shall, in addition to any obligation imposed in Section 11.01(a)
or elsewhere in this Indenture, furnish to the Indenture Trustee and the
Security Insurer (if the Security Insurer is the Controlling Party) an
Officer's Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such deposit) to the
Issuer of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Security Insurer an Officer's Certificate
certifying or stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver to the Indenture
Trustee and the Security Insurer an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so deposited
and of all other such securities made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any securities so deposited,
if the fair value thereof to the Issuer as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the Outstanding
Amount of the Notes.
(iii) Whenever any property or securities are to be released
from the lien of this Indenture, the Issuer shall also furnish to the
Indenture Trustee and the Security Insurer (if the Security Insurer is the
Controlling Party) an Officer's Certificate certifying or stating the opinion
of each person signing such certificate as to the fair value (within 90 days
of such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will not
impair the security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Security Insurer an Officer's Certificate
certifying or stating the opinion of any signer thereof as to the matters
described in clause (iii) above, the Issuer shall also furnish to the Indenture
Trustee and the Security Insurer an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property, other than property as contemplated by clause (v) below or securities
released from the lien of this Indenture since the commencement of the then-
current calendar year, as set forth in the certificates required by clause (iii)
above and this clause (iv), equals 10% or more of the Outstanding Amount of the
Notes, but such certificate need not be furnished in the case of any release of
property or securities if the fair value thereof as set forth in the related
Officer's Certificate is less than $25,000 or less than one percent of the then
Outstanding Amount of the Notes.
(v) Notwithstanding Section 4.04 or any other provision of
this Section, the Issuer may, without compliance with the requirements of the
other provisions of this Section, (A) collect, liquidate, sell or otherwise
dispose of Receivables and Financed Vehicles as and to the extent permitted
or required by the Basic Documents and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by the Basic Documents,
so long as the Issuer shall deliver to the Indenture Trustee every six months,
commencing December 15, 1997, an Officer's Certificate of the Issuer stating
that all the dispositions of Collateral described in clauses (A) or (B) above
that occurred during the preceding six calendar months were in the ordinary
course of the Issuer's business and that the proceeds thereof were applied in
accordance with the Basic Documents.
SECTION 11.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Servicer, the Seller, the Issuer or the
Administrator, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Seller, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application
granted or to the sufficiency of such certificate or report. The foregoing
shall not, however, be construed to affect the Indenture Trustee's right to
rely upon the truth and accuracy of any statement or opinion contained in any
such document as provided in Article VI.
SECTION 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except
as herein otherwise expressly provided such action shall become effective
when such instrument or instruments are delivered to the Indenture Trustee and,
where it is hereby expressly required, to the Issuer. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are
herein sometimes referred to as the "Act" of the Noteholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Indenture
Trustee and the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of
every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by
the Indenture Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders or other documents provided or permitted
by this Indenture shall be in writing and, if such request, demand,
authorization, direction, notice, consent, waiver or act of Noteholders is to be
made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer,
shall be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Indenture Trustee at its Corporate Trust
Office; or
(ii) the Issuer by the Indenture Trustee or by any
Noteholder,
shall be sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid to the Issuer addressed to: First Merchants
Auto Trust 1996-C, in care of Chase Manhattan Bank Delaware, 1201 Market
Street, Wilmington, Delaware 19801, Attention of Corporate Trustee
Administration Department, or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer or the Administrator. The Issuer
shall promptly transmit any notice received by it from the Noteholders to the
Indenture Trustee;
(iii) the Security Insurer shall be sufficient for any
purpose hereunder if in writing and mailed by registered mail or personally
delivered or telexed or faxed to the Security Insurer at: Financial Security
Assurance Inc., 350 Park Avenue, New York, New York 10022, Attention:
Surveillance Department; Telex No.: (212) 688-3101, Confirmation: (212)
826-0100; Facsimile Nos.: (212) 339-3518, (212) 339-3529. (In each case in
which notice or other communication to the Security Insurer refers to an Event
of Default, a claim on the Policy or with respect to which failure on the part
of the Security Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head Financial Guaranty
Group "URGENT MATERIAL ENCLOSED".)
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to (i) in
the case of Moody's, at the following address: Moody's Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007 and
(ii)
in the case of Standard & Poor's, at the following address: Standard &
Poor's Ratings Services, a Division of The McGraw Hill Companies, Inc., 25
Broadway (15th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department; or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Holder's address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest date, prescribed for
the giving of such notice. In any case where notice to Noteholders is given
by mail, neither the failure to mail such notice nor any defect in any notice
so mailed to any particular Noteholder shall affect the sufficiency of such
notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to
mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event
of Default.
SECTION 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for
in this Indenture for such payments or notices. The Issuer will furnish to
the Indenture Trustee a copy of each such agreement and the Indenture Trustee
will cause payments to be made and notices to be given in accordance with
such agreements.
SECTION 11.07. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.08. Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, co-trustees and
agents.
SECTION 11.09. Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
SECTION 11.10. Benefits of Indenture. The Security Insurer and its
successors and assigns shall be third-party beneficiaries to the provisions
of this Indenture, and shall be entitled to rely upon and directly to enforce
the provisions of this Indenture so long as the Security Insurer is the
Controlling Party. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto, the
Security Insurer and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 11.11. Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no
interest shall accrue for the period from and after any such nominal date.
SECTION 11.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.14. Recording of Indenture. If this Indenture is
subject
to recording in any appropriate public recording offices, such recording is
to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
SECTION 11.15. Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or
any certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer, including
the Seller, or (iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Article VI, VII and VIII of the Trust
Agreement.
SECTION 11.16. No Petition. The Indenture Trustee, by entering
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they will not at any time institute against the Seller or the
Issuer, or join in any institution against the Seller or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the Basic Documents.
SECTION 11.17. Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee or
of the Security Insurer (if the Security Insurer is the Controlling Party),
during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent
certified public accountants, and to discuss the Issuer's affairs, finances and
accounts with the Issuer's officers, employees and Independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall, and shall cause its representatives
to, hold in confidence all such information except to the extent disclosure
may be required by law (and all reasonable applications for confidential
treatment are unavailing) and except to the extent that the Indenture Trustee
may reasonably determine that such disclosure is consistent with its
obligations hereunder.
SECTION 11.18. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
The provisions of TIA §§ 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
* * * * *<PAGE> IN WITNESS WHEREOF, the Issuer and the
Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
FIRST MERCHANTS AUTO TRUST 1996-C,
by: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee,
by:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity but solely as
Indenture Trustee,
by:
Name:
Title:
<PAGE>STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ___________________, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said FIRST
MERCHANTS AUTO TRUST 1996-C, a Delaware business trust, and that s/he
executed
the same as the act of said business trust for the purpose and consideration
therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of December, 1996.
Notary Public in and for the State of New York.
My commission expires:
________________________________________________
<PAGE>STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ______________________,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of
HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation, and that s/he
executed the same as the act of said corporation for the purpose and
consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of December, 1996.
Notary Public in and for the State of New York.
My commission expires:
________________________________________
<PAGE>SCHEDULE A
[To be Provided on the Closing Date and Supplemented on each Subsequent
Transfer Date]
<PAGE>
EXHIBIT A-1
[FORM OF CLASS A-1 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK,
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.<PAGE>REGISTERED$ <F2>
No. R- CUSIP NO. 32081Y AH3
FIRST MERCHANTS AUTO TRUST 1996-C
FLOATING RATE ASSET BACKED NOTE, CLASS A-1
FIRST MERCHANTS AUTO TRUST 1996-C, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to
______________________, or registered assigns, the principal sum of [ ]
DOLLARS, payable on each Distribution Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is $ [INSERT
INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is
$101,000,000 by (ii) the aggregate amount, if any, payable from the Note
Distribution Account in respect of principal on the Class A-1 Notes pursuant to
Section 3.01 of the Indenture dated as of December 1, 1996 (the "Indenture"),
between the Issuer and Harris Trust and Savings Bank, an Illinois banking
corporation, as Indenture Trustee (the "Indenture Trustee"); provided, however,
that the entire unpaid principal amount of this Note shall be due and payable on
June 15, 2000 (the "Class A-1 Final Scheduled Distribution Date"). Capitalized
terms used but not defined herein are defined in the Indenture, which also
contains rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at a rate per annum equal to
LIBOR plus 0.11%, subject to a maximum rate of 11% per annum, on each
Distribution Date until the principal of this Note is paid or made available
for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.01 of the Indenture. LIBOR for each Floating Rate
Interest Accrual Period and related Distribution Date will be determined on the
related LIBOR Determination Date by the Calculation Agent as set forth in
Section 2.14 of the Indenture. All determinations of LIBOR by the Calculation
Agent shall, in the absence of manifest error, be conclusive for all purposes,
and each Holder of this Note, by accepting a Class A-1 Note, agrees to be bound
by such determination. Interest on this Note will accrue for each Distribution
Date from the Closing Date (in the case of the first Distribution Date) or from
the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date. Interest will be computed on the basis of the
actual number of days in each Floating Rate Interest Accrual Period divided by
360. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of
this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Policy") issued by Financial Security Assurance, Inc. ("the
Security Insurer"), pursuant to which the Security Insurer has
unconditionally guaranteed payments of the Noteholders' Interest Distributable
Amount and the Noteholders' Principal Distributable Amount on each Distribution
Date
Denominations of $1,000 and integral multiples of $1,000 in excess
thereof.(collectively, the "Scheduled Payment"), all as more fully set forth in
the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: FIRST MERCHANTS AUTO TRUST 1996-C,
by:CHASE MANHATTAN BANK DELAWARE, not in its
individual
capacity but solely as Owner
Trustee under the Trust Agreement,
by: _________________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: HARRIS TRUST AND SAVINGS BANK, not in its individual capacity but
solely as Indenture Trustee,
by: _________________________________
Authorized Signatory<PAGE>REVERSE OF CLASS
A-1 NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Asset Backed Notes, Class A-1 (herein called
the "Class A-1 Notes"), all issued under the Indenture, to which Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Holders of the Notes. The Class A-1 Notes are
subject to all terms of the Indenture.
The Class A-1 Notes and the Class A-2 Notes (collectively, the "Notes")
are and will be secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means
the 15th day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing January 15, 1996.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the Class A-1 Final Scheduled Distribution Date.
Notwithstanding the foregoing, (i) if an Event of Default occurs at a time
when no Security Insurer Default has occurred under the Policy, the Security
Insurer may elect either to continue to make Scheduled Payments on the Notes
or to make one or more accelerated payments on the Notes and (ii) if an Event
of Default occurs at any time after a Security Insurer Default has occurred
under the Policy, the Indenture Trustee or the Holders of Notes representing
not less than a majority of the Outstanding Amount of the Notes have declared
the Notes to be immediately due and payable in the manner provided in Section
5.02 of the Indenture. All principal payments on the Class A-1 Notes shall
be made pro rata to the Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not
in full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments
made on any Distribution Date shall be binding upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Distribution Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Registered Holder hereof as of the Record Date
preceding such Distribution Date by notice mailed or transmitted by facsimile
prior to such Distribution Date, and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-1 Rate to the extent lawful.
In the event that any amount remains on deposit in the Pre-Funding
Account at the end of the Funding Period after giving effect to the purchase
of all Subsequent Receivables, including any such purchase on such date, the
Class A-1 Notes will be redeemed in part on the Mandatory Redemption Date in
the manner and to the extent described in the Indenture and the Sale and
Servicing Agreement.
As provided in the Indenture and subject to the limitations set forth
therein and on the face hereof, the transfer of this Note may be registered
on the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law,
for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee, the Security Insurer and any agent of the
Issuer, the Indenture Trustee or the Security Insurer may treat the Person in
whose name this Note (as of the day of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and none of the Issuer,
the Indenture Trustee, the Security Insurer or any such agent shall be affected
by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Security Insurer and the Holders
of Notes representing a majority of the Outstanding Amount of all Notes at the
time Outstanding. The Indenture also contains provisions permitting the
Holders of Notes representing specified percentages of the Outstanding Amount
of the Notes, on behalf of the Holders of all the Notes, to waive compliance
by the Issuer with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one or more Predecessor Notes)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture with the consent of the Security Insurer but without the consent of
Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Chase Manhattan Bank Delaware in its
individual capacity, Harris Trust and Savings Bank in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.<PAGE>ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
__________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________________________, attorney, to
transfer said Note on the books kept for registration thereof, with full
power
of substitution in the premises.
Dated:
*/
Signature Guaranteed:
*/
________________________
*/NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
EXHIBIT A-2
[FORM OF CLASS A-2 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK,
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.<PAGE>REGISTERED$
No. R- CUSIP NO. 32081Y AJ9
FIRST MERCHANTS AUTO TRUST 1996-C
6.15% ASSET BACKED NOTE, CLASS A-2
FIRST MERCHANTS AUTO TRUST 1996-C, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to
______________________, or registered assigns, the principal sum of [ ]
DOLLARS, payable on each Distribution Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is $ [INSERT
INITIAL PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $37,886,000
by (ii) the aggregate amount, if any, payable from the Note Distribution
Account in respect of principal on the Class A-2 Notes pursuant to Section
3.01 of the Indenture dated as of December 1, 1996 (the "Indenture"), between
the Issuer and Harris Trust and Savings Bank, an Illinois banking
corporation, as Indenture Trustee (the "Indenture Trustee"); provided, however,
that the entire unpaid principal amount of this Note shall be due and payable on
the earlier of July 16, 2001 (the "Class A-2 Final Scheduled Distribution
Date") and the Redemption Date, if any, pursuant to Section 10.01(a) of the
Indenture. No payments of principal of the Class A-2 Notes shall be made
until the Class A-1 Notes have been paid in full. Capitalized terms used but
not defined herein are defined in the Indenture, which also contains rules as
to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the rate per annum set
forth above, on each Distribution Date until the principal of this Note is paid
or made available for payment, on the principal amount of this Note outstanding
on the preceding Distribution Date (after giving effect to all payments of
principal made on the preceding Distribution Date), subject to certain
limitations contained in Section 3.01 of the Indenture. Interest on this Note
will accrue for each Distribution Date from and including the 15th day of the
month preceding the month of such Distribution Date (in the case of the first
Distribution Date, from the Closing Date) to but excluding the 15th day of
the month of such Distribution Date. Interest will be computed on the basis of
a 360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of
this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Policy") issued by Financial Security Assurance, Inc. ("the
Security Insurer"), pursuant to which the Security Insurer has
unconditionally guaranteed payments of the Noteholders' Interest Distributable
Amount and the noteholders' Principal Distributable Amount on each Distribution
Date (collectively, the "Scheduled Payment"), all as more fully set forth in
the Indenture.
Reference is made to the further provisions of this Note set forth on
the Denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
<PAGE> IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date: FIRST MERCHANTS AUTO TRUST 1996-C,
by:CHASE MANHATTAN BANK DELAWARE, not in its
individual
capacity but solely as Owner
Trustee under the Trust Agreement,
by: _________________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: HARRIS TRUST AND SAVINGS BANK, not in its individual capacity but
solely as Indenture Trustee,
by: _________________________________
Authorized Signatory<PAGE>REVERSE OF CLASS
A-2 NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 6.15% Asset Backed Notes, Class A-2 (herein called the
"Class A-2 Notes"), all issued under the Indenture, to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Notes. The Class A-2 Notes are subject to all
terms of the Indenture.
The Class A-1 Notes and the Class A-2 Notes (collectively, the "Notes")
are and will be secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means
the 15th day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing January 15, 1996.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A-2 Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, (i) if an Event of Default
occurs at a time when no Security Insurer Default has occurred under the
Policy, the Security Insurer may elect either to continue to make Scheduled
Payments on the Notes or to make one or more accelerated payments on the
Notes and (ii) if an Event of Default occurs at any time after a Security
Insurer Default has occurred under the Policy, the Indenture Trustee or the
Holders of Notes representing not less than a majority of the Outstanding Amount
of the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.02 of the Indenture. All principal payments on
the Class A-1 Notes shall be made pro rata to the Class A-1 Noteholders
entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not
in full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments
made on any Distribution Date shall be binding upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Distribution Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Registered Holder hereof as of the Record Date
preceding such Distribution Date by notice mailed or transmitted by facsimile
prior to such Distribution Date, and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Rate to the extent lawful.
In the event that any amount remains on deposit in the Pre-Funding
Account at the end of the Funding Period after giving effect to the purchase
of all Subsequent Receivables, including any such purchase on such date, the
Class A-2 Notes may be redeemed in part on the Mandatory Redemption Date in
the manner and to the extent described in the Indenture and the Sale and
Servicing Agreement. In addition, as provided in Section 10.01 of the
Indenture, the Class A-2 Notes may be redeemed in whole, but not in part, at
the option of the Servicer (with the consent of the Security Insurer under
certain circumstances), on any Distribution Date on or after the date on
which the Outstanding Amount of the Notes is less than or equal to 10% of the
original Outstanding Amount of the Notes.
As provided in the Indenture and subject to the limitations set forth
therein and on the face hereof, the transfer of this Note may be registered
on the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law,
for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee, the Security Insurer and any agent of the
Issuer, the Indenture Trustee or the Security Insurer may treat the Person in
whose name this Note (as of the day of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and none of the Issuer,
the Indenture Trustee, the Security Insurer or any such agent shall be affected
by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Security Insurer and the Holders
of Notes representing a majority of the Outstanding Amount of all Notes at the
time Outstanding. The Indenture also contains provisions permitting the
Holders of Notes representing specified percentages of the Outstanding Amount
of the Notes, on behalf of the Holders of all the Notes, to waive compliance
by the Issuer with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one or more Predecessor Notes)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture with the consent of the Security Insurer but without the consent of
Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Chase Manhattan Bank Delaware in its
individual capacity, Harris Trust and Savings Bank in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal of or interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note by its
acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.<PAGE>ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
__________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
______________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________________________, attorney, to
transfer said Note on the books kept for registration thereof, with full
power
of substitution in the premises.
Dated:
*/
Signature Guaranteed:
*/
________________________
*/NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.<PAGE>
EXHIBIT B
FORM OF NOTE DEPOSITORY AGREEMENT
