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
June 26, 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 June 26, 1996, First Merchants Acceptance Corporation (the
Registrant )effected a securitization of approximately $97 million of its
motor vehicle installment contract receivables (the Receivables ) by means of
an institutional private placement pursuant to Rule 144A under the Securities
Act of 1933, as amended. In connection with the securitization, First
Merchants Auto Receivables Corporation II, a bankruptcy-remote special purpose
wholly owned subsidiary of the Registrant (the Depositor ), acquired the
Receivables from Registrant with proceeds received from its sale of
certificates issued by First Merchants Grantor Trust 1996-2 (the Trust ).
The Trust was formed pursuant to a pooling and servicing agreement dated as of
June 1, 1996 among Registrant, Depositor and Harris Trust and Savings Bank, as
trustee (the Pooling and Servicing Agreement ). The Trust acquired the
Receivables and certain related property from Depositor and issued to the
Depositor its 6.85% Asset Backed Certificates, Class A issued in the initial
aggregate principal amount of $90,413,079.89 (the Class A Certificates ) and
its 6.85% Asset Backed Certificates, Class B issued in the initial aggregate
principal amount of $6,805,285.58 (the Class B Certificates ). (The Class A
Certificates and the Class B Certificates are together referred to as the
Certificates .) The Class A Certificates and the Class B Certificates were
issued pursuant to the Pooling and Servicing Agreement and evidence an
undivided ownership interest in 93% and 7% of the Trust, respectively. The
Class A Certificates were sold to institutional investors and the Class B
Certificates will be retained by Depositor and are subordinated to the Class A
Certificates. The assets of the Trust include the Receivables and the related
security interests in the underlying motor vehicles. In addition, regular
payments of principal and interest on the Class A Certificates have been
guaranteed by Financial Security Assurance Inc. The obligations of the Trust
to pay principal and interest under the Certificates are non-recourse to the
Registrant.
Principal and interest on the Certificates is payable on the fifteenth day of
each month (or if such fifteenth day is not a business day, the next
succeeding business day), commencing July 15, 1996. The Final Scheduled
Distribution Date for the Certificates is November 15, 2001; however, payment
in full of the Class A Certificates could occur earlier than the Final
Distribution Date. The Class A Certificates will be subject to redemption in
whole, but not in part, on any Distribution Date on which the Servicer of the
Receivables exercises its option to purchase the Receivables, which it may do
on or after the date on which the outstanding principal balance of the
Receivables has been reduced to 10% or less of their aggregate initial balance
at the time of transfer to the Trust.
The Registrant used the estimated net proceeds of approximately $90 million
from the sale of the Receivables to the Depositor 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 June 28, 1996.
Exhibit 2: Purchase Agreement, dated June 19, 1996, among First
Merchants Acceptance Corporation, First Merchants Auto
Receivables Corporation II and Salomon Brothers Inc.
Exhibit 3: Receivables Purchase Agreement, dated June 1, 1996
between First Merchants Acceptance Corporation and
First Merchants Auto Receivables Corporation II.
Exhibit 4: Pooling and Servicing Agreement dated as of June 1,
1996 among First Merchants Acceptance Corporation, as
servicer, First Merchants Auto Receivables Corporation
II, as depositor and Harris Trust and Savings Bank, as
Trustee and backup servicer.
<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
/S/ Mitchell C. Kahn
President and Chief Executive
Officer
Dated: June 26, 1996
<PAGE>
EXHIBIT INDEX
Sequentially-
Exhibit Numbered
No. Description Page
1 Copy of Press Release issued by First
Merchants Acceptance Corporation on
June 28, 1996........................
2 Purchase Agreement, dated June 19, 1996,
Among First Merchants Acceptance
Corporation, First Merchants Auto
Receivables Corporation II, and Salomon
Brothers Inc.........................
3 Receivables Purchase Agreement, dated as
of June 1, 1996 between First Merchants
Acceptance Corporation and First Merchants
Auto Receivables Corporation II......
4 Pooling and Servicing Agreement dated as of
June 1, 1996 among First Merchants Acceptance
Corporation, as servicer, First Merchants Auto
Receivables Corporation II, as depositor and
Harris Trust and Savings Bank, as Trustee and
Backup servicer......................
Press Release
Contacts: Thomas R. Ehmann
Vice President & Chief Financial Officer
(847)948-9300
Michele Katz/Jason Langer
(Investor Relations)
Brian Maddox/Erika Brown
(Media Relations)
Morgen-Walke Associates
(212)850-5600
FIRST MERCHANTS ANNOUNCES COMPLETION OF AUTO FINANCE RECEIVABLES
SECURITIZATION
DEERFIELD, ILLINOIS, June 28, 1996--First Merchants Acceptance Corporation
(Nasdaq:FMAC) today announced the completion of a $90.4 million asset
securitization through the sale of 6.85% automobile receivables-backed Class A
Certificates. Proceeds of the offering will be used to reduce borrowings
under First Merchant s senior bank line.
The Certificates were issued by First Merchants Grantor Trust 1996-2, a trust
formed specifically for purposes of the securitization structure. The Class A
certificates have been rated Aaa by Moody s and AAA by Standard & Poor's, and
include an irrevocable financial guaranty insurance policy issued by Financial
Security Assurance Inc. Salomon Brothers Inc acted as the sole placement
agent for this offering. First Merchants will act as servicer for this
portfolio.
"This is our second consecutive quarterly off-balance sheet securitization.
We have now completed three securitizations totaling more than $270 million
during the first half of 1996," commented Mitchell Kahn, First Merchants'
President and Chief Executive Officer. "Our securitization program is a well-
established, important part of our funding strategy and complements our $205
million bank line of credit."
First Merchants Acceptance Corporation is a 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 in 35 states. First Merchants operates
regional dealer service centers located in Alabama, Arizona, California,
Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland,
Massachusetts, Minnesota, Missouri, New Jersey, North Carolina, Ohio,
Oklahoma, Tennessee, Texas, Utah, Virginia and Washington.
<PAGE>
EXECUTION COPY
$90,413,079.89
FIRST MERCHANTS GRANTOR TRUST 1996-2
6.85% ASSET BACKED CERTIFICATES, CLASS A
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
as Depositor
PURCHASE AGREEMENT
June 19, 1996
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
First Merchants Auto Receivables Corporation II, a Delaware corporation
(the "Depositor") and a wholly-owned subsidiary of First Merchants Acceptance
Corporation, a Delaware corporation ("First Merchants"), proposes to sell to
you (the "Initial Purchaser") $90,413,079.89 principal amount of 6.85% Asset
Backed Certificates, Class A (the "Class A Certificates") issued by First
Merchants Grantor Trust 1996-2 (the "Trust"). The Trust is also issuing
$6,805,285.58 principal amount of 6.85% Asset Backed Certificates, Class B
(the "Class B Certificates" and with the Class A "Certificates", the
"Certificates"). The Certificates are to be issued pursuant to a Pooling and
Servicing Agreement to be dated as of June 1, 1996 (the "Pooling and Servicing
Agreement"), among the Depositor, First Merchants, as servicer (in such
capacity, the "Servicer"), and Harris Trust and Savings Bank, as trustee and
as backup servicer (the "Bank" or, in its capacity as trustee under the
Pooling and Servicing Agreement, the "Trustee"). Capitalized terms that are
used and not otherwise defined herein shall have the respective meanings
assigned thereto in the Pooling and Servicing Agreement.
The Class A Certificates will evidence in the aggregate an undivided
ownership interest in 93% of the Trust. The Class B Certificates will
evidence in the aggregate an undivided ownership interest in 7% of the Trust.
The Trust Property will include, among other things, the Receivables, the
related security interests in the Financed Vehicles, the proceeds from certain
insurance policies relating to the Receivables, and certain rights with
respect to funds on deposit from time to time in the Spread Account. Holders
of the Class A Certificates also will have the benefit of a financial guaranty
insurance policy issued by the Security Insurer (the "Policy"). All of the
assets conveyed to the Trust pursuant to Section 2.02 of the Pooling and
Servicing Agreement are referred to herein as the "Trust Property".
In connection with the sale of the Class A Certificates, the Depositor
has prepared a preliminary offering memorandum dated June 13, 1996 (including
any and all exhibits thereto, the "Preliminary Memorandum"), and a final
offering memorandum, dated June 19, 1996 (including any and all exhibits
thereto, the "Final Memorandum"). Each of the Preliminary Memorandum and the
Final Memorandum sets forth certain information concerning the Depositor,
First Merchants and the Class A Certificates. The Depositor hereby confirms
that it has authorized the use of the Preliminary Memorandum and the Final
Memorandum, and any amendment or supplement thereto, in connection with the
offer and sale of the Class A Certificates by the Initial Purchaser. Unless
stated to the contrary, all references herein to the Final Memorandum are to
the Final Memorandum at the Execution Time (as defined below) and are not
meant to include any amendment or supplement subsequent to the Execution Time.
The sale of the Class A Certificates to the Initial Purchaser will be
made without registration of the Class A Certificates under the Securities Act
of 1933, as amended (the "Securities Act"), in reliance upon exemptions from
the registration requirements of the Securities Act. You have advised the
Depositor that you will offer and sell the Class A Certificates purchased by
you hereunder in accordance with Section 5 hereof as soon as you deem
advisable.
1. Representations and Warranties of the Depositor. The Depositor
represents and warrants to the Initial Purchaser as set forth below in
this Section 1:
a. The Preliminary Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The Final Memorandum, at the date hereof, does not,
and at the Closing Date (as defined below) will not (and any
amendment or supplement thereto, at the date thereof and at the
Closing Date, will not), contain any untrue statement of a
material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
Depositor makes no representation or warranty as to the
information contained in or omitted from the Preliminary
Memorandum or the Final Memorandum, or any amendment or supplement
thereto, in reliance upon and in conformity with information
furnished in writing to the Depositor by or on behalf of the
Initial Purchaser specifically for inclusion therein.
b. None of the Depositor, any of its affiliates, as defined in
Rule 501(b) of Regulation D under the Securities Act ("Regulation
D") (such affiliates,including First Merchants, being hereinafter
referred to as "Affiliates"), or any person acting on its or their
behalf has, directly or indirectly, made offers or sales of any
security, or solicited offers to buy any security, under
circumstances that would require the registration of the Class A
Certificates under the Securities Act.
c. None of the Depositor, any of its Affiliates or any person
acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of the Class A
Certificates.
d. The Class A Certificates satisfy the eligibility
requirements of Rule 144A(d)(3) under the Securities Act.
e. It is not necessary to qualify the Pooling and Servicing
Agreement under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act").
f. The Depositor is not an "investment company" or "controlled"
by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act"),
without taking account of any exemption arising out of the number
of holders of the Depositor's securities.
g. The Depositor has not paid or agreed to pay to any person
any compensation for soliciting another to purchase any
Certificates (except as contemplated by this Agreement).
h. As of the Closing Date, the Depositor's representations and
warranties in the Basic Documents (as defined herein) will be true
and correct.
i. This Agreement has been duly authorized, executed and
delivered by the Depositor.
j. Upon the execution and delivery of the Receivables Purchase
Agreement and the Pooling and Servicing Agreement by the
respective parties thereto and the filing with the Secretary of
State of Illinois of (i) the UCC-3 partial termination statements
relating to the release by First Merchants' secured lenders of
their security interests in the Receivables and (ii) UCC-1
financing statements evidencing the conveyance of the Receivables
(A) by First Merchants to the Depositor and (B) by the Depositor
to the Trustee for the benefit of the Certificateholders, the
Depositor's conveyance of the Trust Property to the Trustee
pursuant to the Pooling and Servicing Agreement will vest in the
Trustee, for the benefit of the Certificateholders, all right,
title and interest of the Depositor therein, subject to no prior
lien, mortgage, security interest, pledge, adverse claim, charge
or other encumbrance (other than as shall be identified to you
prior to the Closing Date).
k. None of the Depositor, any of its Affiliates or anyone
acting on behalf of the Depositor or any of its Affiliates has
taken any action that would require registration of the Class A
Certificates under the Securities Act, qualification of the
Pooling and Servicing Agreement under the Trust Indenture Act or
registration of the Depositor under the Investment Company Act,
nor will the Depositor or any of its Affiliates act, nor have they
authorized or will they authorize any person to act, in such
manner.
2. Representations and Warranties of First Merchants. First
Merchants represents and warrants to the Initial Purchaser as set forth
below in this Section 2.
a. The Preliminary Memorandum, at the date thereof, did not
contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The Final Memorandum, at the date hereof, does not,
and at the Closing Date (as defined below) will not (and any
amendment or supplement thereto, at the date thereof and at the
Closing Date, will not), contain any untrue statement of a
material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that
First Merchants makes no representation or warranty as to the
information contained in or omitted from the Preliminary
Memorandum or the Final Memorandum, or any amendment or supplement
thereto, in reliance upon and in conformity with information
furnished in writing to the Depositor by or on behalf of the
Initial Purchaser specifically for inclusion therein.
b. As of the Closing Date, First Merchants' representations and
warranties in the Basic Documents (as defined herein) will be true
and correct.
c. This Agreement has been duly authorized, executed and
delivered by First Merchants.
d. Under generally accepted accounting principles, First
Merchants will report its transfer of the Receivables to the
Depositor pursuant to the Receivables Purchase Agreement as a sale
of the Receivables. First Merchants has been advised by Deloitte
& Touche LLP, independent certified public accountants, that the
transfer will be so classified under generally accepted accounting
principles in accordance with Statement No. 77 of the Financial
Accounting Standards Board (December 1983).
3. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the
Depositor agrees to sell to the Initial Purchaser, and the Initial
Purchaser agrees to purchase from the Depositor the Class A Certificates
at a purchase price of 99.568% of the principal amount thereof plus
$189,239.60 of accrued interest on the Class A Certificates.
4. Delivery and Payment. Delivery of and payment for the Class A
Certificates shall be made at 10:00 AM, New York City time, on June 26,
1996, or such later date (not later than July 38, 1996) as the Initial
Purchaser shall designate, which date and time may be postponed by
agreement between the Initial Purchaser and the Depositor (such date and
time of delivery and payment for the Class A Certificates being herein
called the "Closing Date"). Delivery of the Class A Certificates shall
be made to the Initial Purchaser for the account of the Initial
Purchaser against payment by the Initial Purchaser of the purchase price
thereof payable in same day funds wired to such bank as may be
designated by the Depositor, or such other manner of payment as may be
agreed by the Depositor and the Initial Purchaser. Delivery of the
Class A Certificates shall be made at such location as the Initial
Purchaser shall reasonably designate at least one business day in
advance of the Closing Date, and payment for the Class A Certificates
shall be made at the office of Brown & Wood ("Counsel for the Initial
Purchaser"), One World Trade Center, New York, New York. The Class A
Certificates shall be registered in such names and in such denominations
as the Initial Purchaser may request not less than three full business
days in advance of the Closing Date.
The Depositor agrees to authorize and direct the Trustee to have the
Class A Certificates available for inspection, checking and packaging by
the Initial Purchaser in New York, New York, not later than 1:00 PM on
the business day prior to the Closing Date.
5. Offering of Certificates: The Initial Purchaser represents and
warrants to and agrees with the Depositor that:
a. It has not offered or sold, and will not offer or sell, any Class
A Certificates except (i) to those it reasonably believes to be
qualified institutional buyers (as defined in Rule 144A under the
Securities Act) and, in connection with each such sale, it has
taken or will take reasonable steps to ensure that the purchaser
of such Class A Certificates is aware that such sale is being made
in reliance on Rule 144A, or (ii) to other institutional
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D) who provide to it and to the Depositor a
letter in the form of Exhibit A hereto or (iii) in a transaction
complying with or exempt from the registration requirements of the
Securities Act and in accordance with any applicable securities
laws of any state of the United States or any other jurisdiction.
b. Neither it nor any person acting on its behalf has made or
will make offers or sales of the Class A Certificates by means of
any form of general solicitation or general advertising (within
the meaning of Regulation D).
c. Agreements. The Depositor agrees with the Initial Purchaser that:
d. The Depositor will furnish to the Initial Purchaser and to
Counsel for the Initial Purchaser, without charge, during the
period referred to in paragraph (c) below, as many copies of the
Final Memorandum and any amendments and supplements thereto as the
Initial Purchaser may reasonably request. The Depositor will pay
the expenses of printing or other production of all documents
relating to the offering.
e. The Depositor will not amend or supplement the Final
Memorandum without the prior written consent of the Initial
Purchaser, which consent shall not be unreasonably withheld.
f. If at any time prior to the completion of the sale of the
Class A Certificates by the Initial Purchaser (as determined by
the Initial Purchaser), any event occurs as a result of which the
Final Memorandum, as then amended or supplemented, would include
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading, or if it should be necessary to amend or supplement
the Final Memorandum to comply with applicable law, the Depositor
will promptly notify the Initial Purchaser of the same and,
subject to the requirements of paragraph (b) of this Section 6,
will prepare and provide to the Initial Purchaser pursuant to
paragraph (a) of this Section 6 an amendment or supplement that
will correct such statement or omission or effect such compliance.
g. The Depositor will arrange for the qualification of the
Class A Certificates for sale by the Initial Purchaser under the
laws of such jurisdictions as the Initial Purchaser may designate
and will maintain such qualifications in effect so long as
required for the sale of the Class A Certificates. The Depositor
will promptly advise the Initial Purchaser of the receipt by the
Depositor of any notification with respect to the suspension of
the qualification of the Class A Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purpose.
h. The Depositor will not, and will not permit any of its
Affiliates to, resell any Class A Certificates that have been
acquired by any of them.
i. None of the Depositor, any of its Affiliates or any person
acting on its or their behalf will, directly or indirectly, make
offers or sales of any security, or solicit offers to buy any
security, under circumstances that would require the registration
of the Class A Certificates under the Securities Act.
j. None of the Depositor, any of its Affiliates or any person
acting on its or their behalf will engage in any form of general
solicitation or general advertising (within the meaning of
Regulation D) in connection with any offer or sale of the Class A
Certificates.
k. So long as any of the Class A Certificates are "restricted
securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Depositor will, unless it becomes subject to
and complies with Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), provide to each
holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective
purchaser, any information required to be provided by Rule
144A(d)(4) under the Securities Act. This covenant is intended to
be for the benefit of the holders, and the prospective purchasers
designated by such holders, from time to time of such restricted
securities.
l. The Depositor will cooperate with the Initial Purchaser and
use its best efforts to permit the Class A Certificates to be
eligible for clearance and settlement through The Depository Trust
Company.
m. Neither the Depositor nor any of its Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in the Securities Act) the
offering of which security will be integrated with the sale of the
Class A Certificates in a manner which would require the
registration of the Class A Certificates under the Securities Act.
n. In connection with any disposition of the Class A
Certificates pursuant to a transaction made in compliance with
paragraph 1 of Exhibit A, the Depositor will reissue certificates
evidencing such Class A Certificates (provided, in the case of a
transaction made in compliance with clause (y)(iv) of paragraph 1
of Exhibit A, that the legal opinion referred to therein so
permits).
o. For a period from the date of this Agreement until the
retirement of the Class A Certificates, the Servicer will deliver
to you the monthly servicing report, the annual statements of
compliance and the annual independent certified public
accountants' reports furnished to the Trustee pursuant to the
Pooling and Servicing Agreement, as soon as such statements and
reports are furnished to the Trustee.
p. To the extent, if any, that the rating provided with respect
to the Class A Certificates by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Service ("S&P" and
together with Moody's, the "Rating Agencies") is conditional upon
the furnishing of documents or the taking of any actions by the
Depositor, the Depositor shall furnish such documents and take
such actions.
q. Until 30 days following the Closing Date, neither the
Depositor nor any trust or other entity originated, directly or
indirectly, by the Depositor will, without the prior written
consent of the Initial Purchaser, offer, sell or contract to sell,
or otherwise dispose of, directly or indirectly, or announce the
offering of, any asset-backed securities (other than the
Certificates).
r. The information provided by the Depositor pursuant to
Section 6(h) hereof will not, at the date thereof, contain any
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
6. Payment of Expenses, Etc. If the transactions contemplated by
this Agreement are consummated or this Agreement is terminated pursuant
to Section 11, the Depositor will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
printing of the Preliminary Memorandum, the Final Memorandum and each
amendment thereto, (ii) the fees of the Trustee and its counsel, (iii)
the preparation, issuance and delivery of the Class A Certificates to
the Initial Purchaser, (iv) the fees and disbursements of the
Depositor's accountants, (v) the qualification of the Class A
Certificates under securities laws in accordance with the provisions of
Section 6(d), including filing fees and the fees and disbursements of
Brown & Wood in connection therewith and in connection with the
preparation of any blue sky or legal investment survey, (vi) the
printing and delivery to the Initial Purchaser of copies of the Final
Memorandum and of each amendment thereto, (vii) the printing and
delivery to the Initial Purchaser of copies of any blue sky or legal
investment survey prepared in connection with the Class A Certificates,
(viii) any fees charged by Rating Agencies for the rating of the Class A
Certificates, and (ix) subject to the provisions of Section 11 hereof,
the portion of the fees and disbursements of Brown & Wood as agreed
upon.
7. Conditions to the Obligation of the Initial Purchaser. The
obligation of the Initial Purchaser to purchase the Class A Certificates
shall be subject to the accuracy of the representations and warranties
on the part of the Depositor and First Merchants contained herein at the
date and time that this Agreement is executed and delivered by the
parties hereto (the "Execution Time") and the Closing Date, to the
accuracy of the statements of the Depositor made in any certificates
pursuant to the provisions hereof, to the performance by the Depositor
of its obligations hereunder and to the following additional conditions:
a. The Depositor shall have furnished to the Initial Purchaser
the opinion of Sonnenschein Nath & Rosenthal, counsel for the
Depositor, dated the Closing Date and satisfactory in form and
substance to the Initial Purchaser and Counsel for the Initial
Purchaser, to the effect that:
i. the Depositor has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with full corporate power and
authority to own its properties and conduct its business as
described in the Final Memorandum, and is duly qualified to
do business as a foreign corporation and is in good standing
under the laws of the State of Illinois;
ii. all the outstanding shares of capital stock of the
Depositor have been duly and validly authorized and issued
and are fully paid and nonassessable, and all outstanding
shares of capital stock of the Depositor are owned by First
Merchants free and clear of any security interest and, to
the knowledge of such counsel, any other interests, claims,
liens or encumbrances (other than as shall be identified to
you therein);
iii. the Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Depositor, and
constitutes a legal, valid and binding instrument
enforceable against the Depositor in accordance with its
terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights
generally from time to time in effect); the Class A
Certificates have been duly and validly authorized by the
Depositor and, when executed and authenticated by the
Trustee in accordance with the provisions of the Pooling and
Servicing Agreement and delivered to and paid for by the
Initial Purchaser pursuant to this Agreement, will be
validly issued and outstanding and will be entitled to the
benefits of the Pooling and Servicing Agreement; and the
statements set forth under the heading "Description of the
Certificates" in the Final Memorandum, insofar as such
statements purport to summarize certain provisions of the
Certificates and the Pooling and Servicing Agreement,
provide a fair summary of such provisions;
iv. the Receivables Purchase Agreement has been duly
authorized, executed and delivered by the Depositor, and
constitutes a legal, valid and binding obligation of the
Depositor enforceable against the Depositor in accordance
with its terms (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights
generally from time to time in effect);
v. the Master Spread Account Agreement and the Series
1996-2 Supplement to Master Spread Account Agreement dated
as of June 1, 1996 (the "Supplement") among the parties to
the Master Spread Account Agreement have each been duly
authorized, executed and delivered by the Depositor, and the
Master Spread Account Agreement and the Supplement
constitute legal, valid and binding obligations of the
Depositor enforceable against the Depositor in accordance
with their respective terms (subject, as to the enforcement
of remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect);
vi. the Insurance Agreement has been duly authorized,
executed and delivered by the Depositor, and constitutes a
legal, valid and binding obligation of the Depositor
enforceable against the Depositor in accordance with its
terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights
generally from time to time in effect);
vii. this Agreement has been duly authorized, executed and
delivered by the Depositor;
viii. no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is
required for the consummation by the Depositor of the
transactions contemplated herein or in the Receivables
Purchase Agreement, the Pooling and Servicing Agreement, the
Master Spread Account Agreement, the Supplement, and the
Insurance Agreement (collectively, the "Basic Documents"),
except such as may be required under the blue sky or
securities laws of any jurisdiction in connection with the
purchase and sale of the Class A Certificates by the Initial
Purchaser, the filing of the UCC-3 partial release
statements relating to the release of the existing liens on
the Receivables of First Merchants' secured lenders, the
filing of the UCC-1 financing statements relating to the
conveyance of the Receivables by First Merchants to the
Depositor and of the Receivables and the other Trust
Property by the Depositor to the Trustee on behalf of the
Certificateholders and the filing of the UCC-1 financing
statements relating to the security interests created
pursuant to the Spread Account Agreement, and such other
approvals (which shall be specified in such opinion) as have
been obtained and filings as have been made or are in the
process of being made;
ix. none of the sale of the Receivables by First Merchants
to the Depositor pursuant to the Receivables Purchase
Agreement, the transfer of the Trust Property by the
Depositor to the Trustee pursuant to the Pooling and
Servicing Agreement, the issue and sale of the Class A
Certificates or the Class B Certificates, the execution and
delivery of this Agreement, the Pooling and Servicing
Agreement, the Receivables Purchase Agreement, the Spread
Account Agreement or the Insurance Agreement, the
consummation of any other of the transactions herein or
therein contemplated nor the fulfillment of the terms hereof
or thereof will conflict with, result in a breach or
violation of, or constitute a default under, any law binding
on the Depositor or the charter or bylaws of the Depositor
or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Depositor
is a party or by which it is bound, or any judgment, order
or decree known to such counsel to be applicable to the
Depositor of any court, regulatory body, administrative
agency, governmental body, or arbitrator having jurisdiction
over the Depositor;
x. there are no actions, proceedings or investigations
pending or, to the best of such counsel's knowledge,
threatened before any court, administrative agency or other
tribunal (1) asserting the invalidity of any of the Basic
Documents, (2) seeking to prevent the consummation of any of
the transactions contemplated by any of the Basic Documents
or the execution and delivery thereof or (3) that might
materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or
enforceability of, this Agreement or any Basic Document;
xi. to the knowledge of such counsel and except as set
forth in the Final Memorandum (and any supplement thereto),
no default exists and no event has occurred which, with
notice, lapse of time or both, would constitute a default in
the due performance and observance of any term, covenant or
condition of any agreement to which the Depositor is a party
or by which it is bound, which default is or would have a
material adverse effect on the financial condition,
earnings, prospects, business, or properties of the
Depositor, taken as a whole;
xii. the provisions of the Receivables Purchase Agreement
are effective to transfer to the Depositor all right, title
and interest of First Merchants in and to the Receivables,
and upon filing of the form UCC-3 partial release statements
with respect to the interests of First Merchants' secured
lenders in the Receivables, the Receivables and, to the
knowledge of such counsel, the other Trust Property will be
owned by the Depositor free and clear of any Lien except for
the Lien of the Pooling and Servicing Agreement;
xiii. the provisions of the Pooling and Servicing Agreement
are effective to transfer either an ownership interest or a
security interest in the Receivables and the other Trust
Property and the proceeds thereof to the Trustee for the
benefit of the Certificateholders;
xiv. the form UCC-1 financing statements naming (A) First
Merchants as seller and the Depositor as purchaser and (B)
the Depositor as seller and the Trustee as purchaser are in
appropriate form for filing with the Secretary of State of
the State of Illinois; the interest of the Trustee in the
Receivables and the proceeds thereof and, to the extent that
the filing of a financing statement is effective to perfect
an interest in the other Trust Property under Article 9 of
the Illinois Uniform Commercial Code, the other Trust
Property will be perfected upon the filing of such financing
statements in such filing offices; and upon the filing of
the form UCC-3 partial release statements with respect to
the interests of First Merchants' secured lenders in such
filing offices, no other interest of any other purchaser
from or creditor of the Depositor is equal or prior to the
interest of the Trustee in the Receivables and, to the
knowledge of such counsel, such other Trust Property;
xv. the Contracts are "chattel paper" under Article 9 of
the Illinois Uniform Commercial Code;
xvi. the Basic Documents conform in all material respects
with the descriptions thereof contained in the Final
Memorandum;
xvii. the statements in the Final Memorandum under the
headings "Risk Factors Certain Legal Aspects" and "Certain
Legal Aspects of the Receivables", to the extent they
constitute matters of law or legal conclusions with respect
thereto, have been reviewed by such counsel and are correct
in all material respects;
xviii. the statements contained in the Final Memorandum
under the heading "Description of the Certificates"
and "Description of the Transaction Documents",
insofar as such statements constitute a summary of the
Certificates and the Basic Documents, constitute a
fair summary of such documents;
xix. assuming the accuracy of the representations and
warranties and compliance with the agreements contained
herein, no registration of the Class A Certificates under
the Securities Act is required, and no qualification of the
Pooling and Servicing Agreement under the Trust Indenture
Act is necessary, for the offer and sale by the Initial
Purchaser of the Class A Certificates in the manner
contemplated by this Agreement;
xx. the Depositor is not, nor will the Depositor as a
result of the offer and sale of the Class A Certificates as
contemplated in the Final Memorandum and the Basic
Documents, become an "investment company" as defined in the
Investment Company Act or a company "controlled by" an
"investment company" within the meaning of the Investment
Company Act; and
xxi. to the knowledge of such counsel, the Depositor has
obtained all material licenses, permits and other
governmental authorizations that are necessary to the
conduct of its business; such licenses, permits and other
governmental authorizations are in full force and effect,
and the Depositor is in all material respects complying
therewith; and the Depositor is otherwise in compliance with
all laws, rules, regulations and statutes of any
jurisdiction as to which such counsel's opinion relates and
to which the Depositor is subject, except where non-
compliance would not have a material adverse effect on the
Depositor.
Such counsel shall also state that such counsel has no reason to believe
that at the Execution Time the Final Memorandum contained an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading or that, at the Closing Date, the Final
Memorandum includes an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Illinois, the State of New York, the State of Delaware or the United States,
to the extent such counsel deems proper and specifies in such opinion, upon
the opinion of other counsel of good standing whom such counsel believes to be
reliable and who are satisfactory to Counsel for the Initial Purchaser and (B)
as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Depositor and public officials.
All references in this Section 8(a) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
b. The Initial Purchaser shall have received the opinion of
Richard P. Vogelman, Esquire, General Counsel for First Merchants,
dated the Closing Date and satisfactory in form and substance to
the Initial Purchaser and to Counsel for the Initial Purchaser, to
the effect that:
i. First Merchants is duly qualified to do business as a
foreign corporation and is in good standing under the laws
of each jurisdiction wherein it owns or leases material
properties or conducts material business and which requires
such qualification;
ii. First Merchants has no subsidiaries in any form,
whether wholly-owned or other than wholly-owned, direct or
indirect, other than the Depositor and First Merchants Auto
Receivables Corporation, a Delaware corporation and wholly-
owned subsidiary of First Merchants;
iii. First Merchants has obtained all material licenses,
permits and other governmental authorizations that are
necessary to the conduct of its business; such licenses,
permits and other governmental authorizations are in full
force and effect, and First Merchants is in all material
respects complying therewith; and First Merchants is
otherwise in compliance with all laws, rules, regulations
and statutes of any jurisdiction to which it is subject,
except where non-compliance would not have a material
adverse effect on First Merchants; and
iv. none of the execution and delivery of this Agreement,
the Receivables Purchase Agreement or the Insurance
Agreement, the consummation of any of the transactions
therein contemplated or the fulfillment of the terms thereof
will conflict with, result in a breach or violation of, or
constitute a default under, any law or the charter or bylaws
of First Merchants or the terms of any indenture or other
agreement or instrument known to such counsel and to which
First Merchants or the Depositor is a party or by which it
is bound or any judgment, order or decree known to such
counsel to be applicable to First Merchants or the Depositor
of any court, regulatory body, administrative agency,
governmental body, or arbitrator having jurisdiction over
First Merchants or the Depositor.
Such counsel shall also state that such counsel has no reason to believe
that at the Execution Time the Final Memorandum contained an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading or that, at the Closing Date, the Final
Memorandum includes an untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Illinois or the United States, to the extent such counsel deems proper and
specifies in such opinion, upon the opinion of other counsel of good standing
whom such counsel believes to be reliable and who are satisfactory to Counsel
for the Initial Purchaser and (B) as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of First
Merchants and public officials.
All references in this Section 8(b) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
c. The Initial Purchaser shall have received the opinion of
Sonnenschein Nath & Rosenthal, counsel for First Merchants, dated
the Closing Date and satisfactory in form and substance to the
Initial Purchaser and to Counsel for the Initial Purchaser, to the
effect that:
i. First Merchants has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with full corporate power and
authority to own its properties and conduct its business as
described in the Final Memorandum;
ii. this Agreement has been duly authorized, executed and
delivered by First Merchants;
iii. the Pooling and Servicing Agreement has been duly
authorized, executed and delivered by First Merchants and
constitutes a legal, valid and binding obligation of First
Merchants, enforceable against First Merchants in accordance
with its terms (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency,
moratorium, or other laws affecting creditors' rights
generally from time to time in effect);
iv. the Insurance Agreement has been duly authorized,
executed and delivered by First Merchants and constitutes a
legal, valid and binding obligation of First Merchants,
enforceable against First Merchants in accordance with its
terms (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium, or other laws affecting creditors' rights
generally from time to time in effect);
v. the Receivables Purchase Agreement has been duly
authorized, executed and delivered by First Merchants and
constitutes a legal, valid and binding obligation of First
Merchants, enforceable against First Merchants in accordance
with its terms (subject, as to the enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency,
moratorium, or other laws affecting creditors' rights
generally from time to time in effect);
vi. no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is
required for the consummation by the Company of the
transactions contemplated herein or in any Basic Document,
except such as may be required under the blue sky or
securities laws of any jurisdiction in connection with the
purchase and sale of the Class A Certificates by the Initial
Purchaser, the filing of the UCC-3 partial termination
statements relating to the release of the existing liens of
First Merchants' secured lenders on the Receivables, the
filing of the UCC-1 financing statements relating to the
conveyance of the Receivables by First Merchants to the
Depositor pursuant to the Receivables Purchase Agreement and
of the Receivables and other Trust Property to the Trustee
for the benefit of the Certificateholders pursuant to the
Pooling and Servicing Agreement, the filing of the UCC-1
financing statements relating to the security interests
created pursuant to the Spread Account Agreement, and such
other approvals (which shall be specified in such opinion)
as have been obtained and filings as have been made or are
in the process of being made; and
vii. none of the execution and delivery of this Agreement,
the Pooling and Servicing Agreement, the Receivables
Purchase Agreement or the Insurance Agreement, the
consummation of any of the transactions therein contemplated
or the fulfillment of the terms thereof will conflict with,
result in a breach or violation of, or constitute a default
under, the charter or bylaws of First Merchants.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
New York, the State of Delaware, the State of Illinois or the United States,
to the extent such counsel deems proper and specifies in such opinion, upon
the opinion of other counsel of good standing whom such counsel believes to be
reliable and who are satisfactory to Counsel for the Initial Purchaser and (B)
as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of First Merchants and public officials.
All references in this Section 8(c) to the Final Memorandum shall be
deemed to include any amendment or supplement thereto at the Closing Date.
d. The Initial Purchaser shall have received an opinion
addressed to it of Brown & Wood, in its capacity as federal tax
counsel for the Depositor, to the effect that the statements in
the Final Memorandum under the headings "Summary Certain Federal
Income Tax Consequences" and "Certain Federal Income Tax
Consequences" accurately describe the material federal income tax
consequences to holders of the Class A Certificates. Brown &
Wood, in its capacity as special ERISA counsel to the Depositor,
shall have delivered an opinion to the effect that the statements
in the Final Memorandum under the headings "Summary ERISA
Considerations" and "ERISA Considerations", to the extent that
they constitute statements of matters of law or legal conclusions
with respect thereto, have been prepared or reviewed by such
counsel and accurately describe the material consequences to
holders of the Class A Certificates under ERISA.
e. The Initial Purchaser shall have received from Counsel for
the Initial Purchaser such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Class A
Certificates, the Final Memorandum (as amended or supplemented at
the Closing Date) and other related matters as the Initial
Purchaser may reasonably require, and the Depositor shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
f. The Initial Purchaser shall have received an opinion
addressed to the Initial Purchaser and the Depositor of Seward &
Kissel, counsel to the Bank, dated the Closing Date and
satisfactory in form and substance to the Initial Purchaser and
Counsel for the Initial Purchaser, to the effect that:
i. the Bank is a banking corporation duly incorporated
and validly existing under the laws of the State of
Illinois;
ii. the Bank has the full corporate trust power to accept
the office of trustee and backup servicer under the Pooling
and Servicing Agreement and of collateral agent under the
Spread Account Agreement and to enter into and perform its
obligations under the Pooling and Servicing Agreement and
the Spread Account Agreement;
iii. the execution and delivery of the Pooling and
Servicing Agreement, the Master Spread Account Agreement and
the Supplement and the performance by the Bank of its
obligations under the Pooling and Servicing Agreement, the
Master Spread Account Agreement and the Supplement have been
duly authorized by all necessary corporate action of the
Bank and each has been duly executed and delivered by the
Bank;
iv. the Pooling and Servicing Agreement and the Spread
Account Agreement constitute valid and binding obligations
of the Bank enforceable against the Bank in accordance with
their terms under the laws of the State of New York and the
federal law of the United States;
v. the execution and delivery by the Bank of the Pooling
and Servicing Agreement, the Master Spread Account Agreement
and the Supplement do not require any consent, approval or
authorization of, or any registration or filing with, any
Illinois, New York or United States federal governmental
authority;
vi. each of the Certificates has been duly executed and
authenticated by the Bank, as Trustee;
vii. neither the consummation by the Bank of the
transactions contemplated in the Pooling and Servicing
Agreement or the Spread Account Agreement nor the
fulfillment of the terms thereof by the Bank will conflict
with, result in a breach or violation of, or constitute a
default under, any law or the charter, bylaws or other
organizational documents of the Bank, or the terms of any
indenture or other agreement or instrument known to such
counsel and to which the Bank or any of its subsidiaries is
a party or by which it is bound, or any judgment, order or
decree known to such counsel to be applicable to the Bank or
any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body, or arbitrator
having jurisdiction over the Bank or any of its
subsidiaries;
viii. to the knowledge of such counsel there is no action,
suit or proceeding pending or threatened against the Bank
(as Trustee under the Pooling and Servicing Agreement, as
collateral agent under the Spread Account Agreement or in
its individual capacity) before or by any governmental
authority that, if adversely decided, would materially and
adversely affect the ability of the Bank to perform its
obligations under the Pooling and Servicing Agreement or the
Spread Account Agreement; and
ix. the execution and delivery by the Bank of, and the
performance by the Bank of its obligations under, the
Pooling and Servicing Agreement and the Spread Account
Agreement will not subject any of the property or assets of
the Trust, or any portion thereof, to any lien created by or
arising under the Bank that are unrelated to the
transactions contemplated in such Agreements.
g. The Initial Purchaser shall have received such opinions,
addressed to the Initial Purchaser and dated the Closing Date, as
are delivered to the Rating Agencies.
h. The Initial Purchaser shall have received an opinion from
Sonnenschein Nath & Rosenthal, counsel for the Depositor, dated
the Closing Date and satisfactory in form and substance to the
Initial Purchaser and Counsel for the Initial Purchaser regarding
the true-sale of the Receivables by First Merchants to the
Depositor and the conveyance of the Receivables and other Trust
Property to the Trustee for the benefit of the Certificateholders.
i. The Initial Purchaser shall have received an opinion from
Sonnenschein Nath & Rosenthal, counsel for the Depositor, dated
the Closing Date and satisfactory in form and substance to the
Initial Purchaser and Counsel for the Initial Purchaser regarding
substantive consolidation.
j. The Initial Purchaser shall have received an opinion from
Bruce Stern, Esquire, General Counsel for FSA, dated the Closing
Date and satisfactory in form and substance to the Initial
Purchaser and Counsel for the Initial Purchaser, addressed to the
Initial Purchaser and the Depositor.
k. The Initial Purchaser shall have received a certificate
dated the Closing Date of any of the Chairman of the Board, the
President, the Executive Vice President, any Vice President, the
Treasurer, any Assistant Treasurer, the principal financial
officer or the principal accounting officer of the Depositor in
which such officer shall state that, to the best of his or her
knowledge after reasonable investigation:
i. the representations and warranties of the Depositor
contained in this Agreement and the Basic Documents are true
and correct; the Depositor has complied with all agreements
and satisfied all conditions on its part to be performed or
satisfied under such agreements at or prior to the Closing
Date; and
ii. since the date of the Final Memorandum, no material
adverse change, or any development involving a prospective
material adverse change, in or affecting particularly the
business or properties of the Depositor has occurred.
The Initial Purchaser shall have received a certificate
dated the Closing Date of any of the Chairman of the Board,
the President, the Executive Vice President, any Vice
President, the Treasurer, any Assistant Treasurer, the
principal financial officer or the principal accounting
officer of First Merchants in which such officer shall state
that, to the best of his or her knowledge after reasonable
investigation:
iii. the representations and warranties of First Merchants
contained in this Agreement and the Basic Documents are true
and correct; First Merchants has complied with all
agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at or prior to
the Closing Date; and
iv. since the date of the most recent financial
information included in the Final Memorandum, no material
adverse change, or any development involving a prospective
material adverse change, in or affecting particularly the
business or properties of First Merchants has occurred.
l. The Initial Purchaser shall have received a fully executed
Insurance Agreement by and among the Depositor, First Merchants
and Financial Security Assurance Inc., dated as of June 1, 1996
(the "Insurance Agreement"), and all representations and
warranties thereunder or made pursuant thereto shall be true and
correct, and the Depositor shall have performed its obligations
thereunder.
m. The Policy relating to the Class A Certificates shall have
been duly executed and issued at or prior to the Closing Date and
shall conform in all material respects to the description thereof
in the Final Memorandum.
n. The Initial Purchaser shall have received evidence
satisfactory to it that, on or before the Closing Date, UCC-1
financing statements have been or are being filed in the office of
the Secretary of State of the State of Illinois and the County
Clerk of Lake County, Illinois reflecting the sale of the
Receivables by First Merchants to the Depositor and of the
Receivables and other Trust Property by the Depositor to the
Trustee for the benefit of the Certificateholders.
o. At the Execution Time and at the Closing Date, Deloitte &
Touche llp shall have furnished to the Initial Purchaser a letter
or letters, dated respectively as of the Execution Time and as of
the Closing Date, substantially in the forms of the drafts to
which the Initial Purchaser has previously agreed and otherwise in
form and substance satisfactory to the Initial Purchaser and to
Counsel for the Initial Purchaser.
p. Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Final Memorandum, there
shall not have been any change or any development involving a
prospective change in or affecting the business or properties of
First Merchants or the Depositor the effect of which is, in the
judgment of the Initial Purchaser, so material and adverse as to
make it impractical or inadvisable to market the Class A
Certificates as contemplated by the Final Memorandum.
q. The Class A Certificates shall have been rated "Aaa" by
Moody's and "AAA" by S&P.
r. Subsequent to the Execution Time, there shall not have been
any decrease in the rating of any of the Depositor's or First
Merchants' debt securities by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule
436(g) under the Securities Act) or any notice given of any
intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of
the possible change.
s. On or prior to the Closing Date, the Class A Certificates
sold in reliance on Rule 144A shall have been accepted for
settlement through the facilities of DTC.
t. Prior to the Closing Date, the Depositor shall have
furnished to the Initial Purchaser such further information,
certificates and documents as the Initial Purchaser may reasonably
request.
If any of the conditions specified in this Section 8 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in
form and substance to the Initial Purchaser and Counsel for the Initial
Purchaser, this Agreement and all obligations of the Initial Purchaser
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Initial Purchaser. Notice of such cancellation shall be given to the
Depositor in writing or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 8 will be
delivered at the office of Counsel for the Initial Purchaser, at One World
Trade Center, New York, New York, on the Closing Date.
8. Reimbursement of Expenses. If the sale of the Class A
Certificates provided for herein is not consummated because any
condition to the obligation of the Initial Purchaser set forth in
Section 8 hereof is not satisfied, because of any refusal, inability or
failure on the part of the Depositor to perform any agreement herein or
to comply with any provision hereof other than by reason of a default by
the Initial Purchaser in payment for the Class A Certificates on the
Closing Date, the Depositor will reimburse the Initial Purchaser upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by it in
connection with the proposed purchase and sale of the Class A
Certificates.
9. Indemnification and Contribution. (a) The Depositor and First
Merchants, jointly and severally, agree to indemnify and hold harmless
the Initial Purchaser, the directors, officers, employees and agents of
the Initial Purchaser and each person who controls the Initial Purchaser
within the meaning of either the Securities Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Memorandum, the Final
Memorandum or any information provided by the Depositor or First
Merchants to any holder or prospective purchaser of Class A Certificates
pursuant to Section 6(h) or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Depositor and First Merchants will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission
made in the Preliminary Memorandum or the Final Memorandum, or in any
amendment thereof or supplement thereto, in reliance upon and in
conformity with written information furnished to the Depositor by the
Initial Purchaser specifically for inclusion therein. This indemnity
agreement will be in addition to any liability that the Depositor or
First Merchants may otherwise have.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Depositor and First Merchants, their directors, their officers and each person
who controls the Depositor or First Merchants within the meaning of either the
Securities Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Depositor and First Merchants to the Initial Purchaser, but
only with reference to written information relating to the Initial Purchaser
furnished to the Depositor by the Initial Purchaser specifically for inclusion
in the Preliminary Memorandum or the Final Memorandum (or in any amendment or
supplement thereto). This indemnity agreement will be in addition to any
liability that the Initial Purchaser may otherwise have. The Depositor and
First Merchants acknowledge that the statements set forth in the first
sentence of the next to the last paragraph and in the last paragraph of the
cover page and under the heading "Plan of Distribution" in the Preliminary
Memorandum and the Final Memorandum constitute the only information furnished
in writing by or on behalf of the Initial Purchaser for inclusion in the
Preliminary Memorandum or the Final Memorandum (or in any amendment or
supplement thereto).
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 10, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party
shall not thereafter be responsible for the fees and expenses of any separate
counsel retained by the indemnified party or parties except as set forth
below); provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees,
costs and expenses of such separate counsel if (i) the use of counsel chosen
by the indemnifying party to represent the indemnified party would present
such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties that are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 10 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Depositor, First Merchants and the
Initial Purchaser agree to contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Depositor, First Merchants and the Initial Purchaser may be subject
in such proportion as is appropriate to reflect the relative benefits received
by the Depositor and First Merchants on the one hand and by the Initial
Purchaser on the other from the offering of the Class A Certificates;
provided, however, that in no case shall the Initial Purchaser be responsible
for any amount in excess of the purchase discount or commission applicable to
the Class A Certificates purchased by the Initial Purchaser hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for
any reason, the Depositor, First Merchants and the Initial Purchaser shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Depositor and First
Merchants on the one hand and of the Initial Purchaser on the other in
connection with the statements or omissions that resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Depositor and First Merchants shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses), and benefits received
by the Initial Purchaser shall be deemed to be equal to the total purchase
discounts and commissions received by the Initial Purchaser from the Depositor
in connection with the purchase of the Class A Certificates hereunder.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Depositor and
First Merchants on the one hand or the Initial Purchaser on the other. The
Depositor, First Merchants and the Initial Purchaser agree that it would not
be just and equitable if contribution were determined by pro rata allocation
or any other method of allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 10, each person who controls
the Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of the Initial
Purchaser shall have the same rights to contribution as the Initial Purchaser,
and each person who controls the Depositor or First Merchants within the
meaning of either the Securities Act or the Exchange Act and each officer and
director of the Depositor or First Merchants shall have the same rights to
contribution as the Depositor or First Merchants, subject in each case to the
applicable terms and conditions of this paragraph (d).
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Initial Purchaser, by notice given to the
Depositor prior to delivery of and payment for the Class A Certificates,
if prior to such time (i) (A) trading in securities of First Merchants
on the Nasdaq Stock Market's National Market shall have been suspended
or limited or minimum prices therefor shall have been established on
such exchange or (B) trading in securities generally on the New York
Stock Exchange or the Nasdaq Stock Market's National Market shall have
been suspended or limited or minimum prices shall have been established
on either such exchange, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is
such as to make it, in the judgment of the Initial Purchaser,
impracticable or inadvisable to proceed with the offering or delivery of
the Class A Certificates as contemplated by the Final Memorandum.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other
statements of the Depositor and First Merchants and their respective
officers and of the Initial Purchaser set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Initial Purchaser or the
Depositor or any of the officers, directors or controlling persons
referred to in Section 10 hereof, and will survive delivery of and
payment for the Class A Certificates. The provisions of Sections 9 and
10 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Initial Purchaser, will
be mailed, delivered or telegraphed and confirmed to it, at Salomon
Brothers Inc, Seven World Trade Center, New York, New York 10048; or,
if sent to the Depositor, will be mailed, delivered or telegraphed and
confirmed to it at First Merchants Auto Receivables Corporation II, 570
Lake Cook Road, Suite 126B, Deerfield, Illinois 60015, Attention:
President; or if sent to First Merchants, will be mailed, delivered or
telegraphed and confirmed to it at First Merchants Acceptance
Corporation, 570 Lake Cook Road, Suite 126, Deerfield, Illinois 60015,
Attention: Treasurer.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 10
hereof, and, except as expressly set forth in Section 6(h) hereof, no
other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
15. Business Day. For purposes of this Agreement, "business day"
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
day on which national banking associations in the cities of Chicago,
Illinois or New York, New York are authorized or obligated by law,
executive order or regulation to close.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all
such Counterparts will together constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding
agreement among the Depositor, First Merchants and the Initial Purchaser.
Very truly yours,
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II
By:
Name: Brian P. Hake
Title: Treasurer
FIRST MERCHANTS ACCEPTANCE CORPORATION
By:
Name: Brian P. Hake
Title: Treasurer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
By:
Name: William E. Grady
Title: Vice President
<PAGE>
EXECUTION COPY
RECEIVABLES PURCHASE AGREEMENT
between
FIRST MERCHANTS ACCEPTANCE CORPORATION,
as Seller,
and
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
as Purchaser
Dated as of June 1, 1996
TABLE OF CONTENTS
ARTICLE I Certain Definitions. . . . . . . . . . . . . . . . . . . . . .
ARTICLE II Conveyance of Receivables . . . . . . . . . . . . . . . .
SECTION 2.01. Conveyance of Receivables. . . . . . . . . . . . . .
SECTION 2.02. The Closing. . . . . . . . . . . . . . . . . . . . .
ARTICLE III Representations and Warranties. . . . . . . . . . . . . .
Section 3.01. Representations and Warranties of the Purchaser. . .
Section 3.02. Representations and Warranties of Seller . . . . . .
ARTICLE IV Conditions. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.01. Conditions to Obligation of the Purchaser. . . . . .
SECTION 4.02. Conditions to Obligation of the Seller . . . . . . .
ARTICLE V Covenants of the Seller. . . . . . . . . . . . . . . . . . . .
SECTION 5.01. Protection of Right, Title and Interest. . . . . . .
SECTION 5.02. Other Liens or Interests . . . . . . . . . . . . . .
SECTION 5.03. Costs and Expenses . . . . . . . . . . . . . . . . .
SECTION 5.04. Indemnification. . . . . . . . . . . . . . . . . . .
ARTICLE VI Miscellaneous Provisions. . . . . . . . . . . . . . . . .
SECTION 6.01. Obligations of Seller. . . . . . . . . . . . . . . .
SECTION 6.02. Repurchase Events. . . . . . . . . . . . . . . . . .
SECTION 6.03. Purchaser Assignment of Repurchased Receivables. . .
SECTION 6.04. Transfer to the Trust. . . . . . . . . . . . . . . .
SECTION 6.05. Amendment. . . . . . . . . . . . . . . . . . . . . .
SECTION 6.06. Waivers. . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.07. Notices. . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.08. Costs and Expenses . . . . . . . . . . . . . . . . .
SECTION 6.09. Representations of the Seller and the Purchaser. . .
SECTION 6.10. Confidential Information . . . . . . . . . . . . . .
SECTION 6.11. Headings and Cross-References. . . . . . . . . . . .
SECTION 6.12. Governing Law. . . . . . . . . . . . . . . . . . . .
SECTION 6.13. Counterparts . . . . . . . . . . . . . . . . . . . .
EXHIBIT A Form of Assignment . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE I Schedule of Receivables . . . . . . . . . . . . . . . . .
SCHEDULE II Location of Receivable Files. . . . . . . . . . . . . .
<PAGE>
RECEIVABLES PURCHASE AGREEMENT dated as of June 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 purchase hereunder, to
convey all of its right, title and interest in and to such contracts to First
Merchants Grantor Trust 1996-2 (the "Trust") pursuant to a Pooling and Servicing
Agreement dated as of June 1, 1996 (the "Pooling and Servicing Agreement"), by
and among First Merchant Auto Receivables Corporation II, as depositor, First
Merchants Acceptance Corporation, as servicer, and Harris Trust and Savings
Bank, as trustee 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 XVII
Certain Definitions
Terms not defined in this Agreement shall have the meanings assigned thereto
in the Pooling and Servicing Agreement. As used in this Agreement, the follow-
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.
"Pooling and Servicing Agreement" shall mean the Pooling and Servicing
Agreement dated as of June 1, 1996, among First Merchants Auto Receivables
Corporation II, as Depositor, First Merchants Acceptance Corporation, as
Servicer,and Harris Trust and Savings Bank, as Trustee and Backup Servicer.
"Purchaser" shall mean First Merchants Auto Receivables Corporation II, a
Delaware corporation, its successors and assigns.
"Receivable" shall mean any Contract listed on Schedule I hereto (which
Schedule may be in the form of microfiche).
"Repurchase Event" shall have the meaning specified in Section 6.02
"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.
ARTICLE XVIII
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables. In consideration of the
Purchaser's delivery to or upon the order of the Seller on the Closing Date of
$87,426,309.12, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Purchaser, without recourse (subject to the obligations
herein):
(a) all right, title and interest of the Seller in and to the Receivables
and all payments received with respect thereto on or after the Cutoff Date;
(b) all right, title and interest of the Seller in and to the security
interests in the related Financed Vehicles and any accessions thereto granted by
Obligors pursuant to the Receivables and any other interest of the Seller in
such Financed Vehicles;
(c) all right, title and interest of the Seller in and to any Net
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 collateralprotection insurance policy;
(d) all right, title and interest of the Seller in and to any property that
shall have secured a Receivable and that shall have been acquired by or on
behalf of the Seller;
(e) all right, title and interest of the Seller in and to all documents and
other items contained in the Receivable Files; and
(f) the proceeds of any and all of the foregoing.
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 Sellershall 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 Pooling and Servicing Agreement and Section 6.04 hereof, the Purchaser
may sell, transfer and reassign
to the Trust (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 Pooling and Servicing Agreement.
SECTION 2.02. The Closing. The sale and purchase of the Receivables shall
take place at a closing at the offices of Brown & Wood, One World Trade Center,
New York, New York 10048 on the Closing Date, simultaneously with the closing
under the Pooling and Servicing Agreement.
ARTICLE XIX
Representations and Warranties
Section 3.01. Representations and Warranties of the Purchaser. The
Purchaser hereby represents and warrants to the Seller as of the date hereof and
as of the Closing 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 to the Purchaser as of the date hereof and as of
the Closing 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. 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, on which the Purchaser relies in accepting the
Receivables and in transferring the Receivables to the Trust. Such
representations and warranties speak as of the execution and delivery of this
Agreement, but shall survive the sale, transfer and assignment of the
Receivables
to the Purchaser and the subsequent sale, transfer and assignment of the
Receivables by the Purchaser to the Trust pursuant to the Pooling and Servicing
Agreement.
(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 Trust, (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 first and 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
Closing 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. As of the Cutoff Date, no Obligor had been
identified on the records of the Seller as being the subject of a current
bankruptcy proceeding.
(6) Schedule of Receivables. The information set forth in Schedule I 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 Closing 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 Trust in accordance with the terms of the Pooling and
Servicing Agreement.
(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 Cutoff Date.
(9) No Adverse Selection. No selection procedures believed by the Seller
to be adverse to the 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 Pooling and Servicing Agreement.
(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 Trustee pursuant to the Pooling 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 to Fourth Amended and Restated Loan and
Security Agreement dated as of June 26, 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 June 14, 2001.
(21) Certain Characteristics of the Receivables. As of the Cutoff
Date, (A) each Receivable had an original maturity of not more than 60
months; (B) no Receivable was more than 31 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 XX
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 Closing 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 Closing Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on or
prior
to the Closing Date, indicate in its computer files that receivables created in
connection with the Receivables have been sold to the Purchaser pursuant to this
Agreement and deliver to the Purchaser the Schedule of 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 Closing Date.
(1) The Assignment. On the Closing 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 Closing 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 Closing Date.
(3) Other Documents. Such other documents as the Purchaser may
reasonably request.
(d) Other Transactions. The transactions contemplated by the Pooling and
Servicing Agreement to be consummated on the Closing 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 Closing
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 Closing Date.
(b) Receivables Purchase Price. On the Closing Date, the Purchaser shall
have delivered to the Seller the purchase price specified in Section 2.01.
ARTICLE XXI
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
Purchaser and the Trust in and to the Receivables and the other assets of the
Trust to bepromptly 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
and of the Trust under the Pooling and Servicing Agreement in and to the
Receivables and the other property of the Trust. The Seller shall deliver to
the Purchaser file stampedies 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 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 and the Trust's interest in the Receivables and
in the other property of the Trust.
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 Trust pursuant to the Pooling and Servicing 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 Trust's right, title and interest in and to
the Receivables.
SECTION 5.04. Indemnification. The Seller shall indemnify the Purchaser,
the Trust 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 XXII
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 Trustee, the
Certificateholders, 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 Receivables
hereunder ("Repurchase Events"), at the Purchase Amount, from the Purchaser or
from the Trust, as applicable. The repurchase obligation of the Seller shall
constitute the sole remedy available to the Purchaser, the Trustee, the
Trust, 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 Trust. The Seller acknowledges and agrees
that (a) the Purchaser will, pursuant to the Pooling and Servicing Agreement,
transfer and assign the Receivables and assign its rights under this
Agreement to the Trust and (b) 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 Trust, 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 Pooling and Servicing Agreement, the
prior written consent of the Security Insurer but without the consent of 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 Certificateholders;
provided that such amendment shall not, as evidenced by an Opinion of
Counsel, materially and adversely affect the interest of any
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 Certificates evidencing at least a majority of
the Certificate Balance and, so long as the Security Insurer is the
Controlling Party under the Pooling 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
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 Certificateholders or (ii) reduce the
aforesaid percentage of the Certificates that is required to consent to any
such amendment, without the consent of the Holders of all the outstanding
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; (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; (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 Pooling 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.
<PAGE>
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: Brian P. Hake
Title: Treasurer
FIRST MERCHANTS AUTO
RECEIVABLES CORPORATION II
By:
Name: Brian P. Hake
Title: Treasurer
<PAGE>
EXHIBIT A
Form of Assignment
ASSIGNMENT
For value received, in accordance with the Receivables Purchase Agreement
dated as of June 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 all payments
received with respect thereto on or after the Cutoff Date; (ii) the security
interests in the Financed Vehicles and any accessions thereto granted by the
Obligors pursuant to the Receivables and any other interest of the Seller in
the Receivables; (iii) any Net Liquidation Proceeds and any other proceeds
from claims on any physical damage, credit life or disability insurance
policies covering the 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 that shall have been
acquired by or on behalf of the Seller; (vi) all documents and other items
contained in the related Receivable Files; and (vii) 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 Purchaser of any obligation of the
undersigned to the Obligors, insurers or any other person in connection with
the 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 June 1, 1996.
FIRST MERCHANTS ACCEPTANCE CORPORATION,
By:
Name:
Title:
SCHEDULE I
Schedule of Receivables
SCHEDULE II
Location of Receivable Files
<PAGE>
EXECUTION COPY
POOLING AND SERVICING AGREEMENT
among
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
as Depositor,
FIRST MERCHANTS ACCEPTANCE CORPORATION,
as Servicer,
and
HARRIS TRUST AND SAVINGS BANK,
as Trustee and Backup Servicer
Dated as of June 1, 1996
FIRST MERCHANTS GRANTOR TRUST 1996-2
6.85% Asset Backed Certificates, Class A
6.85% Asset Backed Certificates, Class B
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . .
Section 1.02. Other Definitional Provisions . . . . . . . . . . . .
ARTICLE II Creation of the Trust; Conveyance of Receivables . . . . . . .
Section 2.01. Creation of Trust . . . . . . . . . . . . . . . . . .
Section 2.02. Conveyance of Receivables . . . . . . . . . . . . . .
Section 2.03. Acceptance by Trustee . . . . . . . . . . . . . . . .
ARTICLE III The Receivables . . . . . . . . . . . . . . . . . . . . .
Section 3.01. Representations and Warranties of First Merchants . .
Section 3.02. Representations and Warranties of the Depositor . . .
Section 3.03. Repurchase upon Breach. . . . . . . . . . . . . . . .
Section 3.04. Custody of Receivable Files . . . . . . . . . . . . .
Section 3.05. Duties of Servicer as Custodian . . . . . . . . . . .
Section 3.06. Instructions; Authority to Act. . . . . . . . . . . .
Section 3.07. Custodian's Indemnification . . . . . . . . . . . . .
Section 3.08. Effective Period and Termination. . . . . . . . . . .
ARTICLE IV Administration and Servicing of Receivables . . . . . . . . . .
Section 4.01. Duties of the Servicer. . . . . . . . . . . . . . . .
Section 4.02. Collection of Receivable Payments; Modifications of
Receivables. . . . . . . . . . . . . . . . . . . . .
Section 4.03. Realization Upon Receivables. . . . . . . . . . . . .
Section 4.04. Physical Damage Insurance . . . . . . . . . . . . . .
Section 4.05. Maintenance of Security Interests in Vehicles . . . .
Section 4.06. Covenants of the Servicer . . . . . . . . . . . . . .
Section 4.07. Purchase of Receivables Upon Breach of Covenant . . .
Section 4.08. Servicing Fee; Payment of Expenses. . . . . . . . . .
Section 4.09. Servicer's Certificate. . . . . . . . . . . . . . . .
Section 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event . . . . . . . . . . . . . . . . . .
Section 4.11. Annual Independent Accountants' Report. . . . . . . .
Section 4.12. Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . .
Section 4.13. Monthly Tape. . . . . . . . . . . . . . . . . . . . .
Section 4.14. Retention and Termination of Servicer . . . . . . . .
ARTICLE V Accounts; Application of Funds . . . . . . . . . . . . . . .
Section 5.01. Local Post Office Boxes . . . . . . . . . . . . . . .
Section 5.02. Accounts. . . . . . . . . . . . . . . . . . . . . . .
Section 5.03. Application of Collections. . . . . . . . . . . . . .
Section 5.04. Application of Payaheads. . . . . . . . . . . . . . .
Section 5.05. Advances. . . . . . . . . . . . . . . . . . . . . . .
Section 5.06. Purchase Amounts. . . . . . . . . . . . . . . . . . .
Section 5.07. Transfers from the Spread Account . . . . . . . . . .
Section 5.08. Distributions.. . . . . . . . . . . . . . . . . . . .
Section 5.09. Claims Upon the Policy; Policy Payments Account . . .
Section 5.10. Notices to the Security Insurer . . . . . . . . . . .
Section 5.11. Rights in Respect of Insolvency Proceedings . . . . .
Section 5.12. Effect of Payments by the Security Insurer; Subrogation
Section 5.13. Statements to Certificateholders. . . . . . . . . . .
Section 5.14. Accounting and Tax Returns. . . . . . . . . . . . . .
ARTICLE VI The Certificates . . . . . . . . . . . . . . . . . . . . . . .
Section 6.01. The Certificates. . . . . . . . . . . . . . . . . . .
Section 6.02. Authentication of Certificates. . . . . . . . . . . .
Section 6.03. Registration of Transfer and Exchange . . . . . . . .
Section 6.04. Certain Transfer Restrictions . . . . . . . . . . . .
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates . .
Section 6.06. Persons Deemed Owners . . . . . . . . . . . . . . . .
Section 6.07. Access to List of Certificateholders' Names and
Addresses ...........................................
Section 6.08. Maintenance of Office or Agency . . . . . . . . . . .
Section 6.09. Book-Entry Certificates . . . . . . . . . . . . . . .
Section 6.10. Notices to Clearing Agency. . . . . . . . . . . . . .
ARTICLE VII The Depositor . . . . . . . . . . . . . . . . . . . . . .
Section 7.01. Depositor's Representations . . . . . . . . . . . . .
Section 7.02. Corporate Existence . . . . . . . . . . . . . . . . .
Section 7.03. Liabilities of Depositor. . . . . . . . . . . . . . .
Section 7.04. Merger or Consolidation of, or Assumption of the
Obligations of, the Depositor . . . . . . . . . . . . . .
Section 7.05. Limitation on Liability of Depositor and Others . . .
ARTICLE VIII The Servicer . . . . . . . . . . . . . . . . . . . . . . .
Section 8.01. Representations of Servicer . . . . . . . . . . . . .
Section 8.02. Liability of Servicer; Indemnities. . . . . . . . . .
Section 8.03. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Backup Servicer . . . . .
Section 8.04. Limitation on Liability of Servicer, Backup Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 8.05. Appointment of Subservicer. . . . . . . . . . . . . .
Section 8.06. Servicer and Backup Servicer Not to Resign. . . . . .
ARTICLE IX Servicer Termination Events . . . . . . . . . . . . . . . . . .
Section 9.01. Servicer Termination Events . . . . . . . . . . . . .
Section 9.02. Consequences of a Servicer Termination Event. . . . .
Section 9.03. Appointment of Successor. . . . . . . . . . . . . . .
Section 9.04. Notification to Rating Agencies . . . . . . . . . . .
Section 9.05. Waiver of Past Defaults . . . . . . . . . . . . . . .
Section 9.06. Repayment of Advances . . . . . . . . . . . . . . . .
ARTICLE X The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 10.01. Duties of Trustee . . . . . . . . . . . . . . . . . .
Section 10.02. Certain Matters Affecting Trustee . . . . . . . . . .
Section 10.03. Trustee Not Liable for Certificates or Receivables. .
Section 10.04. Trustee May Own Certificates. . . . . . . . . . . . .
Section 10.05. Trustee's Fees and Expenses . . . . . . . . . . . . .
Section 10.06. Eligibility Requirements for Trustee. . . . . . . . .
Section 10.07. Resignation or Removal of Trustee . . . . . . . . . .
Section 10.08. Successor Trustee . . . . . . . . . . . . . . . . . .
Section 10.09. Merger or Consolidation of Trustee. . . . . . . . . .
Section 10.10. Appointment of Co-Trustee or Separate Trustee . . . .
Section 10.11. Representations and Warranties of Trustee . . . . . .
ARTICLE XI Termination . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 11.01. Termination of the Trust. . . . . . . . . . . . . . .
Section 11.02. Optional Purchase of All Receivables. . . . . . . . .
ARTICLE XII Miscellaneous Provisions . . . . . . . . . . . . . . . . .
Section 12.01. Amendment . . . . . . . . . . . . . . . . . . . . . .
Section 12.02. Protection of Title to Trust. . . . . . . . . . . . .
Section 12.03. Separate Counterparts . . . . . . . . . . . . . . . .
Section 12.04. Limitation on Rights of Certificateholders. . . . . .
Section 12.05. Governing Law . . . . . . . . . . . . . . . . . . . .
Section 12.06. Notices . . . . . . . . . . . . . . . . . . . . . . .
Section 12.07. Severability of Provisions. . . . . . . . . . . . . .
Section 12.08. Assignment. . . . . . . . . . . . . . . . . . . . . .
Section 12.09. Third-Party Beneficiaries . . . . . . . . . . . . . .
Section 12.10. Certificates Nonassessable and Fully Paid . . . . . .
Section 12.11. Limitations on Rights of Others . . . . . . . . . . .
Section 12.12. Headings. . . . . . . . . . . . . . . . . . . . . . .
SCHEDULE I Schedule of Receivables . . . . . . . . . . . . . . . . . . . .
SCHEDULE II Location of Receivables Files. . . . . . . . . . . . . .
Schedule III Locations of Local Post Office Boxes . . . . . . . . . .
Schedule IV Locations of Local Collection Accounts . . . . . . . . .
EXHIBIT A Form of Class A Certificate . . . . . . . . . . . . . . . . . .
EXHIBIT B Form of Class B Certificate . . . . . . . . . . . . . . . . . .
EXHIBIT C Form of Depository Agreement . . . . . . . . . . . . . . . .
EXHIBIT D Representations and Warranties of First Merchants . . . . . .
EXHIBIT E Form of Servicer's Certificate. . . . . . . . . . . . . . . . .
EXHIBIT F Form of Transferor's Letter . . . . . . . . . . . . . . . . . .
EXHIBIT G Form of Policy. . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
POOLING AND SERVICING AGREEMENT dated as of June 1, 1996, among
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, a Delaware corporation, as
depositor (the "Depositor"), FIRST MERCHANTS ACCEPTANCE CORPORATION, a
Delaware corporation, as servicer (the "Servicer"), and HARRIS TRUST AND
SAVINGS BANK, an Illinois banking corporation, as trustee and backup servicer
(in its capacity as trustee, the "Trustee"; and in its capacity as backup
servicer, the "Backup Servicer").
RECITALS
WHEREAS the Depositor has purchased a portfolio of receivables arising in
connection with motor vehicle retail installment sale contracts acquired by
First Merchants Acceptance Corporation from retail motor vehicle dealers in
the ordinary course of its business;
WHEREAS the Depositor wishes to sell and assign such receivables to the Trust
(as defined herein); and
WHEREAS First Merchants Acceptance Corporation is willing to service such
receivables, and Harris Trust and Savings Bank is willing to act as Backup
Servicer with respect to such receivables and as Trustee of the Trust;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE XXIII
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:
"Account Property" means the Collection Account, the Local Collection
Accounts, the Local Post Office Boxes and all amounts and investments from
time to time deposited or transferred to or held in any of them for or on
behalf of the Trust, including any cash, checks, money orders, deposit
accounts, Physical Property, book-entry securities, or uncertificated
securities, and all proceeds of the foregoing.
"Advance" shall have the meaning specified in Section 5.05.
"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.
"Agreement" means this Pooling and Servicing Agreement.
"Amount Financed" means, with respect to any Receivable, the amount advanced
under the related Contract toward the purchase price of the Financed Vehicle and
any related costs, including amounts advanced in respect of accessories,
insurance premiums, service and warranty contracts, and other items
customarily financed as part of retail automobile installment sale contracts
or promissory notes, but excluding any amount allocable to any premium for
force-placed physical damage insurance covering the Financed Vehicle.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges stated in the related Contract or, if such stated annual rate of
finance charge is reduced (i) as a result of an insolvency proceeding involving
the Obligor or (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of
1940, such reduced rate.
"Available Funds" means, with respect to any Determination Date or
Distribution Date, (i) all amounts received during the related Collection
Period (other than Payaheads received from Obligors during such Collection
Period and other than amounts that are transferred to the Collection Account
during such Collection Period in respect of the immediately preceding
Collection Period, as described in clauses (ii), (iii) and (iv) below), from
whatever source, on or in respect of the Receivables, including any Net
Liquidation Proceeds and insurance proceeds, (ii) all Advances made by the
Servicer during or with respect to such Collection Period, (iii) any amounts
transferred from the Payahead Account to the Collection Account as all or
part of a Scheduled Payment during or with respect to such Collection Period,
(iv) all amounts transferred to the Collection Account in respect of Purchase
Amounts for such Collection Period (v) any Recoveries for such Collection
Period and (vi) Investment Income for such Collection Period.
"Average Pool Balance" means, with respect to any Collection Period, the
average of the Pool Balance at the beginning of business on the first day of
such Collection Period and at the close of business on the last day of such
Collection Period.
"Backup Servicer" means Harris Trust and Savings Bank or its successor in
interest pursuant to Section 8.03(b) or such other Person as shall have been
appointed as Backup Servicer pursuant to Section 9.03(b).
"Basic Documents" means the Receivables Purchase Agreement, this
Agreement and the Spread Account Agreement.
"Benefit Plan" shall have the meaning specified in Section 6.04(b).
"Book-Entry Certificates" means beneficial interests in Class A
Certificates, ownership and transfers of which shall be registered through
book entries by a Clearing Agency as described in Section 6.09.
"Business Day" means any day other than a Saturday, a Sunday, a legal
holiday or any other day on which commercial banking institutions in The City
of New York, Chicago, Illinois or the city in which the Corporate Trust
Office is located are authorized or obligated by law, executive order or
governmental decree to be closed.
"Certificate" means either a Class A Certificate or a Class B Certificate.
"Certificate Balance" means the aggregate of the Class A Certificate
Balance and the Class B Certificate Balance.
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency or on the books of a Person
maintaining an account with the Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of the Clearing Agency).
"Certificate Pool Factor" means, with respect to each class of
Certificates as of the close of business on the last day of each Collection
Period, a seven-digit decimal figure equal to the outstanding principal
amount of such class of Certificates (after giving effect to any reduction
thereof to be made on the immediately following Distribution Date) divided
by the original outstanding principal amount of such class of Certificates.
The Certificate Pool Factor for each class of Certificates will be 1.0000000
as of the Closing Date and will decline thereafter to reflect reductions in
the outstanding principal amount of such class of Certificates.
"Certificate Register" and "Certificate Registrar" mean the register
maintained and the registrar appointed pursuant to Section 6.03.
"Certificateholder" or "Holder" means a Person in whose name a
Certificate is registered in the Certificate Register.
"Class A Certificate" means a 6.85% Asset Backed Certificate, Class A,
evidencing a beneficial interest in the Trust, substantially in the form of
Exhibit A.
"Class A Certificate Balance" means, initially, $90,413,079.89, and, as
of any date of determination thereafter, such initial Class A Certificate
Balance reduced by all amounts previously distributed to Holders of the Class
A Certificates and allocable to principal.
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the sum of the Class A Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Class A Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that Holders of the Class A
Certificates actually received on such preceding Distribution Date.
"Class A Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A Monthly Interest Distributable
Amount and the Class A Interest Carryover Shortfall.
"Class A Monthly Interest Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the product of (i) one-twelfth, (ii) the
Pass-Through Rate and (iii) the Class A Certificate Balance on the preceding
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date) after giving effect to any amounts distributed to Holders of
the Class A Certificates on such preceding Distribution Date and allocable to
principal.
"Class A Monthly Principal Distributable Amount" means, with respect to any
Distribution Date, the Class A Percentage of the Principal Distribution Amount.
"Class A Percentage" means 93%.
"Class A Principal Carryover Shortfall" means the amount, if any, as of the
close of business on any Distribution Date, by which (i) the Class A Monthly
Principal Distributable Amount plus any outstanding Class A Principal Carryover
Shortfall from the preceding Distribution Date exceeds (ii) the amount actually
distributed to Holders of the Class A Certificates and allocable to principal on
such date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A Monthly Principal Distributable
Amount for such Distribution Date and the Class A Principal Carryover
Shortfall as of the close of the preceding Distribution Date; provided,
however, that the Class A Principal Distributable Amount shall not exceed the
Class A Certificate Balance. In addition, on the Final Scheduled
Distribution Date, the principal required to be included in the Class A
Principal Distributable Amount shall include the lesser of (a) the Class A
Percentage of any principal due and remaining unpaid on each Receivable in
the Trust as of the Final Scheduled Maturity Date and (b) the amount that is
necessary (after giving effect to the other amounts to be distributed to
Holders of the Class A Certificates on such Distribution Date and allocable to
principal) to reduce the Class A Certificate Balance to zero.
"Class B Certificate" means a 6.85% Asset Backed Certificate, Class B,
evidencing a beneficial interest in the Trust, substantially in the form of
Exhibit B.
"Class B Certificate Balance" means, initially, $6,805,285.58, and, as of
any date of determination thereafter, will equal the amount by which the Pool
Balance exceeds the Class A Certificate Balance.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the sum of the Class B Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Class B Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that Holders of the Class B
Certificates actually received on such preceding Distribution Date.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class B Monthly Interest Distributable
Amount and the Class B Interest Carryover Shortfall.
"Class B Monthly Interest Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the product of (i) one-twelfth, (ii) the
Pass-Through Rate and (iii) the Class B Certificate Balance on the preceding
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date) after giving effect to all distributions and losses realized on
such Distribution Date.
"Class B Monthly Principal Distributable Amount" means, with respect to any
Distribution Date, the Class B Percentage of the Principal Distribution Amount.
"Class B Percentage" means 7%.
"Class B Principal Carryover Shortfall" means the amount, if any, as of the
close of business on any Distribution Date, by which (i) the Class B Monthly
Principal Distributable Amount plus any outstanding Class B Principal Carryover
Shortfall from the preceding Distribution Date exceeds (ii) the amount actually
distributed to Holders of the Class B Certificates and allocable to principal on
such date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class B Monthly Principal Distributable
Amount for such Distribution Date and the Class B Principal Carryover
Shortfall as of the close of the preceding Distribution Date; provided,
however, that the Class B Principal Distributable Amount shall not exceed the
Class B Certificate Balance. In addition, on the Final Scheduled
Distribution Date, the principal required to be included in the Class B
Principal Distributable Amount shall include the lesser of (a) the Class B
Percentage of any principal due and remaining unpaid on each
Receivable in the Trust as of the Final Scheduled Maturity Date and (b) the
amount that is necessary (after giving effect to the other amounts to be
distributed to Holders of the Class B Certificates on such Distribution Date
and allocable to principal) to reduce the Class B Certificate Balance to zero.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
"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 June 26, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral Agent" means Harris Trust and Savings Bank as collateral
agent under the Spread Account Agreement and any successor Collateral Agent
thereunder.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.02(b)(i).
"Collection Period" means a calendar month. As used herein, the "related
Collection Period" with respect to any Distribution Date or Determination Date
means the calendar month immediately preceding the calendar month in which such
Distribution Date or Determination Date, as applicable, occurs.
"Contract" means a motor vehicle retail installment sale contract between a
Dealer and one or more Obligors.
"Controlling Party" means (i) as long as the Policy is in effect and no
Security Insurer Default has occurred and is continuing, the Security Insurer
and (ii) if a Security Insurer Default has occurred and is continuing or the
Policy is otherwise no longer in effect, the Trustee for the benefit of the
Certificateholders.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be administered, which at the
time of execution of this agreement is located at Harris Trust and Savings Bank,
311 West Monroe Street, 12th Floor, Chicago, Illinois 60606 (facsimile no.
:(312)461-3525), Attention: Indenture Trust Administration, or at such other
address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Servicer, the Collateral Agent, and
the Security Insurer, or the principal corporate trust office of any
successor Trustee (of which address such successor Trustee shall notify the
Certificateholders, the Depositor, the Servicer, the Collateral Agent, and
the Security Insurer).
"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 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 Depositor, upon the terms and subject to the conditions
set forth in the Spread Account Agreement, in consideration of the pledge by
the Depositor 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 Trustee of all amounts required
pursuant to clauses (1) through (9) of Section 5.08.
"Cutoff Date" means June 1, 1996.
"Dealer" means a dealer that sold a Financed Vehicle to an Obligor and
sold and assigned the related Receivable 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.
"Default Rate" means, with respect to any Collection Period, the product,
expressed as a percentage, of (i) twelve and (ii) a fraction, the numerator of
which equals the sum of (A) the aggregate Principal Balance of all Receivables
that became Defaulted Receivables during such Collection Period and (B) the
aggregate Principal Balance of all Receivables that became Purchased Receivables
during such Collection Period and that were delinquent 31 days or more under the
related Contract, and the denominator of which equals the Average Pool
Balance for such Collection Period.
"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.
"Definitive Certificates" shall have the meaning specified in Section 6.09.
"Delinquency Ratio" means, with respect to each Collection Period, the
quotient, expressed as a percentage, of (i) the aggregate Principal Balance
of all Receivables with respect to which one or more payments are 31 or more
days past due as of the last day of such Collection Period and (ii) the Pool
Balance with respect to the Determination Date following such Collection Period.
"Delivery" when used with respect to 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 Trustee or its nominee or
custodian by physical delivery to the Trustee or its nominee or custodian
endorsed to, or registered in the name of, the 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
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 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 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 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 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 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 Account Property to the Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof; (b) with respect to any securities issued by the
U.S. Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that are book-entry securities 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 Account Property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a financial intermediary that 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 Trustee or its nominee or
custodian of the purchase by the 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 securities held through the
Federal Reserve System pursuant to federal book-entry regulations as
belonging to the Trustee or its nominee or custodian and indicating that such
custodian holds such Account Property solely as agent for the 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 Account Property to the 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 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 a financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the Trustee or
its nominee or custodian of such uncertificated security, and the making by
such financial intermediary of entries on its books and records identifying
such uncertificated certificates as belonging to the Trustee or its nominee
or custodian.
"Depositor" means First Merchants Auto Receivables Corporation II, a
Delaware corporation, or its successors in interest to the extent permitted
hereunder.
"Depository Agreement" means the agreement dated June 26, 1996, between the
Trustee and The Depository Trust Company, as the initial Clearing Agency,
substantially in the form of Exhibit C.
"Determination Date" means, with respect to each Distribution Date, the
earlier of (i) the 14th day of the calendar month in which such Distribution
Date occurs (or if such 14th day is not a Business Day, the next succeeding
Business Day) and (ii) the 4th Business Day preceding such Distribution Date.
"Distribution Date" means, with respect to each Collection Period, the
fifteenth day of the following calendar month or, if such fifteenth day is
not a Business Day, the next succeeding Business Day, commencing on July 15,
1996.
"Eligible Deposit Account" means a segregated trust account that is
maintained with a depository institution or trust company (a) the long-term
unsecured debt obligations of which are rated "AA" or higher by Standard &
Poor's and "Aa2" or higher by Moody's or (b) the commercial paper or other
short-term unsecured debt obligations of which are rated "A-1+" by Standard &
Poor's and "P-1" by Moody's or (c) that has been specifically approved by the
Controlling Party.
"Eligible Investments" means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence: (a) (i) direct obligations of, and obligations fully
guaranteed as to the full and timely payment by, the United States or any
agency or instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States and (ii) direct
obligations of, and obligations guaranteed as to the full and timely payment
by, the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation, but only if, at the time of investment, such
obligations are assigned the highest credit rating by each Rating Agency
(which in the case of Standard & Poor's shall be AAA or A-1+); (b) demand
deposits, time deposits, certificates of deposit or demand notes of, or
bankers' acceptances issued by, any depository institution or trust company
incorporated under the laws of the United States of America or any State (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
thereof (other than such obligations the rating of which is based on the
credit of a Person other than such depository institution or trust company)
shall have a credit rating from each of the Rating Agencies in the highest
investment category granted thereby (which in the case of Standard & Poor's
shall be A-1+); (c) repurchase obligations with respect to any obligation
described in clause (a) above, entered into with a depository institution or
trust company (acting as principal) described in clause (b) above; (d)
securities bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any State whose long-term
unsecured debt obligations are assigned the highest credit rating by each
Rating Agency at the time of such investment or contractual commitment
providing for such investment (which in the case of Standard & Poor's shall be
AAA);
(e) 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 (which in the case of Standard &
Poor's shall be A-1+);
(f) investments in money market funds (including funds for which the
Trustee or any of its Affiliates is investment manager or advisor) having a
rating from each of the Rating Agencies in the highest investment category
granted thereby (which in the case of Standard & Poor's shall be AAAm-g or
AAAm); or (g) any other investment with respect to which the Depositor 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 of the Class A 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 Policy.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Final Scheduled Distribution Date" means November 15, 2001.
"Final Scheduled Maturity Date" means June 14, 2001.
"Financed Vehicle" means an automobile, light-duty truck, van or minivan,
together with all accessions thereto, securing an Obligor's indebtedness under a
Receivable.
"First Merchants" means First Merchants Acceptance Corporation, a Delaware
corporation, and its successors.
"Fiscal Agent" shall have the meaning specified in the Policy.
"FMARC II" means First Merchants Auto Receivables Corporation II, a Delaware
corporation, and its successors.
"Guaranteed Distribution" means, with respect to each Distribution Date, an
amount equal to the Class A Interest Distributable Amount plus the Class A
Principal Distributable Amount.
"Initial Pool Balance" means $97,218,365.47.
"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 June 1, 1996, among the Security Insurer, First Merchants and the
Depositor. "Insurance Agreement Event of Default" means any Event of Default,
as defined in the Insurance Agreement.
"Investment Income" means, with respect to any Distribution Date, the
investment earnings (net of related losses and investment expenses) for the
related Collection Period on amounts on deposit in the Collection Account or
the Spread Account, as applicable.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and other
liens that attach to a Receivable by operation of law as a result of any act
or omission by the related Obligor.
"Liquidated Receivable" means any Receivable 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.
"Local Collection Accounts" shall have the meaning provided in Section
5.02(a).
"Local Collection Account Agreement" means the letter agreement dated as
of June 1, 1996, among the Trustee, First Merchants, the Security Insurer,
First Merchants Auto Receivables Corporation, FMARC II and First Merchants
Grantor Trust 1996-2, as amended, supplemented or otherwise modified from
time to time.
"Local Post Office Box" shall have the meaning specified in Section 5.01(a).
"Master 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.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Net Liquidation Losses" means, with respect to any Collection Period,
(i) the aggregate Principal Balance of all Receivables that became Liquidated
Receivables during such Collection Period plus interest due and unpaid
thereon under the related Contracts, minus (ii) Net Liquidation Proceeds
received during such Collection Period with respect to such Liquidated
Receivables and any Receivables that became Liquidated Receivables during
previous Collection Periods.
"Net Liquidation Proceeds" means, with respect to any Liquidated
Receivable, all amounts realized on or with respect to such Liquidated
Receivable, net of (i) reasonable expenses incurred by the Servicer in
connection with the collection of the Receivable and the repossession and
disposition of the Financed Vehicle and (ii) amounts that are required by law
to be refunded to the Obligor on such Receivable.
"Net Loss Rate" means, with respect to any Collection Period, the product,
expressed as a percentage, of (i) Net Liquidation Losses for such Collection
Period and (ii) twelve divided by the Average Pool Balance.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person or Persons who are primarily or
secondarily obligated to make payments under the Receivable.
"Officer's Certificate" means a certificate signed by the chairman of the
board, the president, any executive vice president or any vice president of
the Depositor or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who may
(except in the case of Opinions of Counsel delivered pursuant to Section
12.02(i)) be an employee of or counsel to the Depositor or the Servicer,
which counsel shall be acceptable to the Trustee and, if the Security Insurer
is an addressee of such opinion, the Security Insurer, and which opinion
shall be in form and substance acceptable to the Trustee and, if the Security
Insurer is an addressee of such opinion, the Security Insurer.
"Outstanding Advances" means the sum, as of the close of business on the
last day of a Collection Period, of all unreimbursed Advances, reduced as
provided in Section 5.05.
"Pass-Through Rate" means 6.85% per annum, computed on the basis of a
360-day year consisting of twelve 30-day months.
"Payahead" means that portion of any payment received during a Collection
Period from or on behalf of an Obligor on a Precomputed Receivable that
exceeds the Scheduled Payment but is less than the amount required to prepay
such Receivable in full.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 5.02(d).
"Person" means any legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Physical Property" shall have the meaning assigned to such term in the
definition of "Delivery" above.
"Policy" means the financial guaranty insurance policy issued by the
Security Insurer with respect to the Class A Certificates, including any
endorsements thereto, in the form of Exhibit G.
"Policy Payments Account" shall have the meaning specified in Section
5.09(b).
"Pool Balance" means, with respect to each Determination Date, the aggregate
Principal Balance of the Receivables (excluding 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 collections for such
Collection Period.
"Portfolio Performance Test" means, with respect to any Distribution
Date, the calculations performed by the Servicer on the related Determination
Date to determine whether (i) the arithmetic average of the Delinquency
Ratios for the three immediately preceding Collection Periods equals or
exceeds 6%, (ii) the arithmetic average of the Default Rates for the three
immediately preceding Collection Periods equals or exceeds 20% or (iii) the
arithmetic average of the Net Loss Rates for the three immediately preceding
Collection Periods equals or exceeds 10%; provided, however, that, so long as
no Security Insurer Default shall have occurred and be continuing, (a) the
percentages set forth in clauses (i), (ii) and (iii) above may be modified or
amended by the Depositor and the Trustee with the consent of the Security
Insurer but without the consent of the Certificateholders and (b) the
Security Insurer may, with notice to the Rating Agencies but without the
consent of any Certificateholder, waive the requirement that the Portfolio
Performance Tests be met with respect to any Distribution Date. If, on any
Determination Date, any such arithmetic average as set forth in clause
(i), (ii) or (iii) above equals or exceeds the applicable percentage set
forth in such respective clauses (as such as such percentage may be modified
or amended from time to time hereunder), the Portfolio Performance Test for
such Distribution Date shall not have been met.
"Precomputed Receivable" means any Receivable which, (i) under the terms
of the related Contract, provides that the portion of each Scheduled Payment
allocable to earned interest (which may be referred to in the related
Contract as an add-on finance charge) and to the Amount Financed will be
determined according to the sum of periodic balances or the sum of monthly
balances or any equivalent method or (ii) is an actuarial receivable.
"Principal Balance" means, with respect to any 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 (excluding Payaheads retained in the Payahead Account,
but including Payaheads that have been applied to Scheduled Payments)
received on or prior to such day with respect to such 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.
"Principal Distribution Amount" means, with respect to any Distribution
Date, the sum of the following amounts for the preceding Collection Period:
(a) that portion of all payments (other than Recoveries) by or on behalf of
Obligors on Receivables allocable to principal, including full and (with
respect to Simple Interest Receivables only) partial prepayments and
including, with respect to Precomputed Receivables, amounts required to be
withdrawn from the Payahead Account and transferred to the Collection Account
(but excluding amounts deposited into the Payahead Account during such
Collection Period); (b) the Principal Balance of all Receivables that became
Liquidated Receivables during such Collection Period; (c) the Principal
Balance of all Receivables that became Purchased Receivables during such
Collection Period; and (d) any Cram Down Losses incurred during such
Collection Period.
"Purchase Amount" means the amount, as of the close of business on the
last day of a Collection Period, required to prepay a Receivable in full
under the terms thereof, including interest to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Depositor or First
Merchants pursuant to Section 3.03 or the Servicer pursuant to Section 4.07.
"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 Depositor, notice
of which designation shall be given to the 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 Depositor, the Servicer, the Trustee
and the Security Insurer in writing that such action will not result in a
reduction or withdrawal of the then current ratings of the Class A
Certificates and, if applicable, will not result in an increased capital
charge to the Security Insurer.
"Receivable" means any Contract transferred to the Trust on the Closing
Date and listed on Schedule I.
"Receivable File" means the documents, electronic entries, instruments and
writings with respect to a Receivable specified in Section 3.04.
"Receivables Purchase Agreement" means the purchase agreement dated as of
June 1, 1996, between First Merchants and the Depositor.
"Record Date" means, with respect to each Distribution Date, the close of
business on the day immediately preceding such Distribution Date.
"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.
"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.
"Scheduled Payment" means, with respect to each 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, "Scheduled Payment" shall refer to the Obligor's
scheduled monthly payment obligation as so modified.
"Securities Act" means the Securities Act of 1933, as amended.
"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 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 creditor 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.
"Servicer" means First Merchants Acceptance Corporation, a Delaware
Corporation, and each successor Servicer pursuant to Section 4.14,
8.03(a) or 9.03(a).
"Servicer Termination Event" means any event specified in Section 9.01.
"Servicer's Certificate" means the certificate required to be delivered
by the Servicer pursuant to Section 4.09, substantially in the form attached
hereto as Exhibit E.
"Servicer's 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 a Receivable with respect to which the
portion of each payment allocable to interest or to principal under the related
Contract 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
supplemented by the Series 1996-1 Supplement to Master Spread Account
Agreement dated as of March 1, 1996, as amended by the Amendment to the
Master Spread Account Agreement dated as of May 1,1996, as further
supplemented by the Series 1996-A Supplement to the Master Spread Account
Agreement dated as of May 1, 1996 and the Series 1996-2 Supplement to the
Master Spread Account Agreement dated as of June 1, 1996, each among the parties
to the Master Spread Account Agreement, as the same may be further
supplemented or amended from time to time.
"Spread Account Required Amount" means with respect to any Distribution
Date, the greater of (i)(A) with respect to each related Determination Date
on which all of the Portfolio Performance Tests are met, 5% of the Pool
Balance as of the end of business on the last day of the related Collection
Period, (B) with respect to any related Determination Date on which a
Portfolio Performance Test is not met or was not met on either of the two
immediately preceding Determination Dates, 11% of the Pool Balance as of the
close of business on the last day of the related Collection Period and (C)
with respect to any related Determination Date following the occurrence of an
Insurance Agreement Event of Default, an amount equal to (x) the amount on
deposit in the Spread Account on such Determination Date plus (y) any
Available Funds remaining in the Collection Account after the distribution by
the Trustee on the related Distribution Date of all amounts required pursuant to
clauses (1) through (6) of Section 5.08 minus (z) any amounts distributed to
Holders of the Class A Certificates or the Security Insurer from the Spread
Account on such related Distribution Date and (ii) the lesser of (A) 1.5% of the
Initial Pool Balance and (B) the Class A Certificate Balance on such
Distribution Date (after giving effect to distributions on such date);
provided, however, that in no event shall the Spread Account Required Amount
be less than $100,000.
"Standard & Poor's" means Standard & Poor's Ratings Service, A Division
of The McGraw-Hill Company, or its successor.
"State" means any one of the 50 States of the United States of America or
the District of Columbia.
"Trust" means the trust created by this Agreement.
"Trustee" means Harris Trust and Savings Bank, an Illinois banking
corporation, its successors in interest and any successor Trustee hereunder.
"Trustee Officer" means any officer within the Corporate Trust Office of the
Trustee, including any vice president, any assistant vice president, any senior
trust officer, any trust officer or any other officer of the 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.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
Section 1.02. Other Definitional Provisions. (a) All terms defined in
this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto or thereto unless
otherwise defined therein.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined herein or
in any such certificate or other document, and accounting terms partly
defined herein or in any such certificate or other document to the extent not
defined, shall have the respective meanings given to them under United States
generally accepted accounting principles. To the extent that the definitions
of accounting terms herein or in any such certificate or other document are
inconsistent with the meanings of such terms under United States generally
accepted accounting principles, the definitions contained herein or in any
such certificate or other document shall control.
(c) The words "hereof", "herein", "hereunder" and words of similar
import when used herein shall refer to this Agreement as a whole and not to
any particular provision hereof; Article, Section, Schedule and Exhibit
references contained herein are references to Articles, Sections, Schedules
and Exhibits herein; and the term "including" shall mean "including without
limitation".
(d) 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 the feminine and neuter genders of such terms.
(e) 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 XXIV
Creation of the Trust; Conveyance of Receivables
Section 2.01. Creation of Trust. (a) Upon the execution of this
Agreement by the parties hereto, there is hereby created a separate trust,
which shall be known as First Merchants Grantor Trust 1996-2 (the "Trust").
The Trust shall be administered pursuant to the provisions of this Agreement.
(b) It is the intention of the Trustee and the Certificateholders, and the
Trustee and the Certificateholders agree, that the Trust will be treated as a
grantor trust for federal income tax purposes, and all transactions contemplated
by this Agreement will be reported, to the extent applicable, on all applicable
tax returns consistently with such treatment. The provisions of this Agreement
shall be construed, and the affairs of the Trust shall be conducted, so as to
achieve treatment of the Trust as a grantor trust for federal income tax
purposes.
Section 2.02. Conveyance of Receivables. In consideration of the
Trustee's delivery on the Closing Date to or upon the order of the Depositor
of Class A Certificates in an initial aggregate principal amount of
$90,413,079.89 and Class B Certificates in an initial aggregate principal
amount of $6,805,285.58, the Depositor does hereby sell, transfer, assign,
set over, and otherwise convey to the Trustee in trust for the benefit of the
Certificateholders, without recourse (subject to the obligations set forth
herein):
(a) all right, title and interest of the Depositor in and to the
Receivables and all payments received with respect thereto on and after the
Cutoff Date;
(b) all right, title and interest of the Depositor in and to the security
interests in the related 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) all right, title and interest of the Depositor in and to any Net
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) all right, title and interest of the Depositor in and to any property
that shall have secured a Receivable and that shall have been acquired by
or on behalf of the Depositor, the Servicer or the Trustee;
(e) all right, title and interest of the Depositor in and to all
documents and other items contained in the Receivable Files;
(f) all of the Depositor's rights (but not its obligations) under the
Receivables Purchase Agreement;
(g) all right, title and interest of the Depositor in and to the Account
Property; and
(h) the proceeds of any and all of the foregoing.
In addition, on or prior to the Closing Date, the Depositor shall cause the
Security Insurer to deliver the Policy to the Trustee for the benefit of the
Holders of the Class A Certificates.
Although the Depositor and the Trustee agree that the transfer of assets
to the Trust pursuant to this Agreement is intended to be a sale of such
assets to the Trust, rather than the granting of a security interest to
secure a borrowing, and that such assets shall not be property of the
Depositor, in the event such transfer is deemed not to be a sale and to be of
a mere security interest to secure a borrowing, the Depositor shall be deemed
to have granted to the Trustee for the benefit of the Trust a perfected first
priority security interest in all such assets, and this Agreement shall
constitute a security interest under applicable law.
Section 2.03. Acceptance by Trustee. The Trustee hereby acknowledges the
sale, transfer and assignment by the Depositor pursuant to this Article II and
declares that the Trustee holds and will hold the Receivables and the other
assets of the Trust in trust, upon the terms herein set forth, for the use
and benefit of all present and future Certificateholders and, to the extent
provided herein, the Security Insurer.
ARTICLE XXV
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 D hereto under the Receivables Purchase Agreement and has consented
to the assignment by the Depositor to the Trust of the Depositor'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, but
shall survive the sale, transfer and assignment of the Receivables to the
Trust. Pursuant to Section 2.02 of this Agreement, the Depositor has sold,
assigned, transferred and conveyed to the Trust, as part of the assets of the
Trust, its rights under the Receivables Purchase Agreement, including the
representations and warranties of First Merchants therein as set forth in
Exhibit D, upon which the Trustee relies in accepting the Receivables and
delivering the Certificates and the Security Insurer relies in issuing the
Policy, together with all rights of the Depositor 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
Trustee or any custodian.
(b) First Merchants hereby agrees that the Trustee shall have the right, on
behalf of the Trust and the Certificateholders, to enforce any and all rights
under the Receivables Purchase Agreement assigned to the Trust 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 D, directly against First Merchants as though the Trustee, as trustee of
the Trust, were a party to the Receivables Purchase Agreement, and the Trustee
shall not be obligated to exercise any such rights indirectly through the
Depositor.
Section 3.02. Representations and Warranties of the Depositor. The
Depositor makes the following representations and warranties as to the
Receivables on which the Trustee relies in accepting the Receivables and
delivering the Certificates and the Security Insurer relies in issuing the
Policy. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Receivables by the Depositor to the Trust.
(a) Title. It is the intention of the Depositor that (i) the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Depositor to the Trust, 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 Depositor under any
bankruptcy law. No Receivable has been sold, transferred, assigned or
pledged by the Depositor to any Person other than the Trust. Immediately
prior to the transfer and assignment herein contemplated, the Depositor 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 Trust 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. Prior to delivery of the Receivables to First Merchants, as custodian,
the Receivables will be stamped to reflect the sale and assignment of the
Receivables to the Trust.
(b) All Filings Made. All filings (including UCC filings) necessary in
any jurisdiction to give the Trust a first perfected ownership interest in the
Receivables shall have been made.
Section 3.03. Repurchase upon Breach. The Depositor 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 Depositor'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 Depositor or
the Servicer, the Depositor shall be obligated and, if necessary, the
Depositor or the Trustee 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 c
consideration of the repurchase of any such Receivable, the Depositor or
First Merchants, as the case may be, shall remit the Purchase Amount to the
Collection Account, in the manner specified in Section 5.06; provided,
however, that the obligation of the Depositor to repurchase any Receivable
arising solely as a result of a breach of First Merchants' representations a
and warranties under Section 3.02 of the Receivables Purchase Agreement is
subject to the receipt by the Depositor of the Purchase Amount from First
Merchants. The sole remedy of the Trustee 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 Depositor or First Merchants, as the case may be, to repurchase
Receivables pursuant to this Section, subject to the conditions contained
herein, or to enforce First Merchants' obligation to the Depositor 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 Trustee hereby
revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act as the agent of the Trustee as custodian of the following
documents or instruments, which are hereby constructively delivered to the
Trustee with respect to the Receivables:
(a) the fully executed original of the Receivable (together with any
agreements modifying the 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 Depositor shall keep on file in accordance with its
customary procedures evidencing the security interest of the Depositor in
the Financed Vehicle; and (d) any and all other documents that the
Servicer or the Depositor shall keep on file in accordance with its
customary procedures relating to a Receivable, 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 on behalf of the
Trustee for the benefit of all present and future Certificateholders 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 Trustee 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 Trustee to verify the accuracy of the Servicer's record keeping.
The Servicer shall promptly report to the 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 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 II to this
Agreement or at such other office as shall be specified to the Trustee by
written notice not later than 90 days after any change in location. The
Servicer shall make available to the Trustee or its 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 Trustee shall
instruct.
(c) Release of Documents. Upon instruction from the Trustee, the
Servicer shall release any Receivable File to the Trustee, the Trustee's
agent or the Trustee's designee, as the case may be, at such place or places
as the Trustee may designate, as soon as practicable, and upon the release
and delivery of any such document in accordance with the instructions of the
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
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 Trustee Officer.
Section 3.07. Custodian's Indemnification. The Servicer, as custodian,
shall indemnify the Trustee and its 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 Trustee or any of its 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 Trustee or any such officer, director, employee or agent
of the Trustee for any portion of any such amount resulting from the willful
misfeasance, bad faith or negligence of the Trustee or any such officer,
director, employee or agent of the Trustee.
Indemnification under this Section shall survive the resignation or
removal of the Trustee or the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Custodian 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 Custodian, 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 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 4.14 or Section 9.02, the appointment of such Servicer as custodian
may be terminated by the Security Insurer, the Trustee or by the Holders of
Certificates evidencing not less than 25% of the Certificate Balance, in the
same manner as the Security Insurer, the Trustee or such Holders may
terminate the rights and obligations of the Servicer under Section 9.02. The
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 9.02. 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 Trustee or the Trustee's
agent at such place or places as the Trustee may reasonably designate.
ARTICLE XXVI
Administration and Servicing of Receivables
Section 4.01. Duties of the Servicer. The Servicer, for the benefit of the
Trust, 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 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
by the Trustee to execute and deliver, on behalf of the Trustee, 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
Trustee, 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 Trustee 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 Trustee to
execute and deliver in the Trustee's name any notices, demands, claims,
complaints, responses, affidavits, or other documents or instruments in
connection with any such proceeding. The Trustee shall furnish the Servicer
with any powers of attorney and other documents which the Servicer may
reasonably request and which the Servicer deems necessary or appropriate and
shall take any other steps which the Servicer may deem necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
Section 4.02. Collection of 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 Scheduled Payment is due or (ii) reamortize the 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 Scheduled Payment on a Receivable be
extended beyond the last day of the Collection Period related to the Final
Scheduled Distribution 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. (a) 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 a 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 repairn 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.
(b) If the Servicer elects to commence a legal proceeding to enforce any
rights with respect to a Receivable, the Trustee shall thereupon be deemed to
have automatically assigned such Receivable to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it
is held that the Servicer may not enforce any such right with respect to a
Receivable, on the grounds that it is not a real party in interest or a
Person entitled to enforce such right, the Trustee, at the Servicer's
expense, shall take such steps as the Servicer deems necessary to enforce
such right, including bringing suit in its name.
Section 4.04. Physical Damage Insurance. The Servicer shall require, in
accordance with its customary servicing policies and procedures, that each
Obligor obtain and maintain physical loss and damage insurance coverage
covering the Financed Vehicle.
Section 4.05. Maintenance of Security Interests in Vehicles. (a)
Consistent with the policies and procedures required by this Agreement,
the Servicer shall take such steps on behalf of the Trust 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 reperfect such security interest on behalf of the
Trust 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 Trust 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 Trust, 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 Trust.
(b) The Depositor, the 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 Trust, including by amending the title documents of the Financed
Vehicles. The Depositor 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 Depositor or any other entity
incurred in connection with any such action shall be reimbursed to the
Servicer, the Depositor or such other party by the Controlling Party.
Section 4.06. Covenants of the Servicer. By its execution and delivery of
this Agreement, the Servicer hereby covenants as follows (on which covenants the
Trustee relies in accepting the Receivables and delivering the Certificates
and on which the Security Insurer relies in issuing the Policy):
(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 Depositor as a debtor, and any Person other
than the Depositor or the Trust 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 of Covenant. Upon
discovery by any of the Servicer, the Depositor or the Trustee of a breach of
any of the covenants set forth in Section 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 Section 4.05(a) or 4.06
that materially and adversely affects the interests of the Trust 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 Trust 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 5.06. For purposes of
this Section, the Purchase Amount shall, whenever applicable, consist in part
of a release by the Servicer of all rights of reimbursement of Outstanding
Advances with respect to the related Receivable. 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 Trustee.
Section 4.08. Servicing Fee; Payment of Expenses. 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 Trustee). The Servicer shall be liable for the fees
and expenses of the Backup Servicer.
Section 4.09. Servicer's Certificate. No later than 10:00 a.m. New
York City time on each Determination Date, the Servicer shall deliver to the
Trustee, the Backup Servicer, the Security Insurer and each Rating Agency, a
Servicer's Certificate executed by a Responsible Officer of the Servicer
containing among other things, all information necessary to enable the Trustee
to make payments on the Certificates and to perform its related obligations
pursuant to this Agreement. Receivables purchased by the Servicer, the
Depositor or First Merchants during the related Collection Period and each
Receivable that became a Liquidated Receivable or was paid in full during the
related Collection Period shall be identified by account number in the
Servicer's Certificate.
Section 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event. (a) The Servicer shall deliver to the 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 shall deliver to the 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 9.01(a).
The Depositor or the Servicer shall deliver to the Trustee, the Backup Servicer,
the Security Insurer, the Servicer or the Depositor (as applicable), 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 any other clause of
Section 9.01.
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 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 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
Depositor 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 Trustee, the
Backup Servicer, the Certificateholders and the Security Insurer reasonable
access to the documentation regarding the Receivables. In each case, such
access shall be afforded without charge, but only upon reasonable request and
during normal business hours. Nothing in this Section shall derogate from
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 as provided in this Section 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 Trustee and the Backup Servicer a
computer tape and a diskette (or any other form of electronic transmission
acceptable to the Trustee and the Backup Servicer) in a format acceptable to
the 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 collections
as provided herein. The Backup Servicer shall use such tape or diskette (or
other electronic transmission acceptable to the Trustee and the Backup
Servicer) to verify the Servicer's Certificate delivered by the Servicer, and
the Backup Servicer shall certify to the Trustee that it has verified the
Servicer's Certificate in accordance with this Section 4.13 and shall notify
the Servicer and the 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 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 September 30, 1996, which term
shall be extendible by the Security Insurer (or the Trustee, if there is an
existing Security Insurer Default or if the Policy is no longer in effect)
for successive quarterly terms ending on each successive December 31,
March 31, June 30 and September 30 (or pursuant to revocable written standing
instructions delivered from time to time to the Servicer and the Trustee, for
any specified number of terms), until the Class A Certificates are paid in
full. 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 or the 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 Trustee, the Security Insurer and the Backup
Servicer.
ARTICLE XXVII
Accounts; Application of Funds
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 roman numeral) that such payments relate to Receivables owned by
the Trust) 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 the Seller 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 Trustee.
Section 5.02. Accounts. (a) The Servicer has established various
accounts in the name of the 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 Trust, 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 pursuant to the
Local Collection Account Agreement 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
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 Trust.
The Servicer shall deposit all amounts received by it, and shall cause
the 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 by the Servicer or in the
Local Collection Accounts, as applicable.
(ii) Funds on deposit in the Collection Account shall be invested by
the 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 Investment Income received
during each Collection Period with respect to Eligible Investments on
deposit in the Collection Account shall be included in the interest
portion of Available Funds for such Collection Period and distributed
by the Trustee on the related Distribution Date pursuant to Section 5.08.
Except as otherwise permitted by the Rating Agencies, funds on
deposit in the Collection Account shall be invested in Eligible
Investments that will mature not later than the Business Day immediately
preceding the next Distribution Date. Funds deposited in the Collection
Account on a day immediately preceding a Distribution Date upon the
maturity of an Eligible Investment are not required to be invested
overnight.
(iii) The 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 Trustee's failure to make payments on such Eligible Investments
issued by the Trustee, in its commercial capacity as principal obligor
and not as Trustee, in accordance with their terms.
(c) (i) The Trustee, for the benefit of the Certificateholders and, to the
extent provided herein, the Security Insurer, shall possess all right,
title and interest in and to all funds received on or in respect of the
Receivables from time to time in the Local Post Office Boxes, the Local
Collection Accounts and the Collection Account 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 Collection Account shall be under the sole dominion and
control of the Trustee for the benefit of the Certificateholders, subject
to the Local Collection Account Agreement. If, at any time, a Local
Collection Account or the Collection Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall
establish, within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent), a new Local
Collection Account or Collection Account, as applicable, as an Eligible
Deposit Account and shall transfer all amounts from the account that is
no longer an Eligible Deposit Account to the new Local Collection Account
or Collection Account.
(ii) With respect to the Account Property, the Trustee agrees, by its
acceptance hereof, that:
(A) any Account Property that is held in deposit accounts shall be
held solely in 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 Trustee, and the
Trustee shall have sole signature authority with respect thereto;
(B) any Account Property that constitutes Physical Property shall be
delivered to the Trustee in accordance with paragraph (a) of the
definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Trustee or a financial intermediary (as such
term is defined in Section 8-313(4) of the UCC) acting solely for the
Trustee;
(C) any 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 Trustee, pending maturity or
disposition, through continued book-entry registration of such Account
Property as described in such paragraph; and
(D) any 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 Trustee in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the Trustee, pending
maturity or disposition, through continued registration of the Trustee's
(or its nominee's) ownership of such security.
(d) The Servicer shall establish and maintain with the Trustee an Eligible
Deposit Account (the "Payahead Account"). The Payahead Account shall not be
property of the Trust. The Servicer shall, or shall cause the Trustee to,
transfer all Payaheads from the Collection Account to the Payahead Account on or
prior to the date on which Payaheads are transferred to the Collection Account
pursuant to Section 5.04.
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, first, to
reduce Outstanding Advances to the extent described in Section 5.05, with any
excess amounts being applied to interest and principal in accordance with the
Simple Interest Method. In the case of Precomputed Receivables (other than
Purchased Receivables), payments by or on behalf of the Obligor shall be
applied, first, to the Scheduled Payment, with any excess amounts being
either (i) applied to prepay the Receivable in full or (ii) if such excess
amount is not sufficient to prepay the Receivable in full, transferred to the
Payahead Account as a payahead.
Section 5.04. Application of Payaheads. Within two Business Days following
each Determination Date, the Trustee shall cause to be transferred from the
Payahead Account to the Collection Account, in immediately available funds, the
aggregate Payaheads from previous Collection Periods applicable as all or
part of any Scheduled Payment on a Precomputed Receivable due during the related
Collection Period, in the amounts set forth in the Servicer's Certificate for
such Distribution Date.
Section 5.05. Advances. On or prior to the Business Day preceding each
Distribution Date, the Servicer shall deposit into the Collection Account an
amount equal to the amount of interest due on the Simple Interest Receivables at
their respective APR's for the related Collection Period (assuming the Simple
Interest Receivables were paid on their respective due dates) minus the
amount of interest actually received on the Simple Interest Receivables
during the related Collection Period (such amount, an "Advance"); provided,
however, that in no event shall the aggregate amount of Advances made by the
Servicer on any Distribution Date exceed 0.5% of the Pool Balance as of the
first day of the related Collection Period. If the calculation described in
the preceding sentence results in a negative number, an amount equal to the
absolute value of such negative number shall be paid to the Servicer to the
extent and as reimbursement of any Outstanding Advances. In addition, in the
event that a Simple Interest Receivable becomes a Liquidated Receivable, all
Net Liquidation Proceeds attributable to accrued and unpaid interest thereon
(but not including interest for the then current Collection Period) shall be
paid to the Servicer to the extent and as reimbursement of any Outstanding
Advances. The Servicer shall not make any advance with respect to principal
of Simple Interest Receivables or of interest or principal with respect to
Precomputed Receivables. Any Advances payable by the Servicer with respect
to a Collection Period may be paid net of any amounts due to the Servicer
from the Trust assets with respect to such Collection Period.
Section 5.06. Purchase Amounts. The Servicer and the Depositor 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 5.07. Transfers from the Spread Account. The 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 Trustee is required to make on the upcoming Distribution Date pursuant to
clauses (1) through (6) of Section 5.08. In the event that the Trustee
determines that such a shortfall exists, the 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 Trustee for
deposit in the Collection Account. Upon receipt of any such funds, the
Trustee shall immediately deposit such amounts into the Collection
Account for distribution on the Distribution Date pursuant to Section 5.08.
Section 5.08. Distributions. On each Distribution Date, the Trustee shall
apply all Available Funds, plus all amounts transferred to the Collection
Account from the Spread Account, plus any amounts deposited thereto from the
Policy Payment Account pursuant to Section 5.09, to make required payments and
distributions on such date pursuant to clauses (1) through (10) below, in the
order and priority indicated:
(1) To the Servicer, as reimbursement of Outstanding Advances, from
moneys on deposit in the Collection Account in respect of (A) that
portion of payments made by or on behalf of Obligors on or in respect of
Simple Interest Receivables during the related Collection Period and
allocable to interest (but excluding Advances), (B) the interest portion
of any Receivable that became a Purchased Receivable during or with
respect to the related Collection Period and with respect to which the
Servicer has made an unreimbursed Advance (except to the extent the
related Purchase Amount consists of a waiver of the right to
reimbursement for an Advance made in respect of such Receivable pursuant to
Section 4.07) and (C) the interest portion of the Net Liquidation
Proceeds of any Receivable that became a Liquidated Receivable during the
related Collection Period and with respect to which the Servicer has made
an unreimbursed Advance.
(2) To the Servicer, from that portion of the Available Funds allocable
to interest (but excluding any Advances), 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.
(3) To the Trustee, from that portion of the Available Funds allocable to
interest (but excluding any Advances) and remaining after distribution
by the Trustee of the amounts required pursuant to clauses (1) and (2)
above, any accrued and unpaid fees and expenses due pursuant to Section
10.05, but only to the extent not previously paid by the Servicer.
Shortfalls in any such amounts due to the 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.
(4) To Holders of the Class A Certificates, the Class A Interest
Distributable Amount. The Class A Interest Distributable Amount shall
be paid from the Class A Percentage of that portion of the Available
Funds allocable to interest remaining after distribution by the Trustee
of the amounts required pursuant to clauses (1), (2) and (3) above and,
if such amount is less than the Class A Interest Distributable Amount,
from the following sources in the following order of priority: (A) from
the Class B Percentage of that portion of the Available Funds allocable
to interest remaining after distribution by the Trustee of the amounts
required pursuant to clauses (1), (2) and (3) above; (B) from the Class B
Percentage of that portion of the Available Funds allocable to principal;
(C) from amounts, if any, available in the Spread Account and (D) from
amounts payable under the Policy.
(5) To Holders of the Class A Certificates, the Class A Principal
Distributable Amount. The Class A Principal Distributable Amount shall
be paid from the Class A Percentage of that portion of the Available
Funds allocable to principal and, to the extent any shortfall exists in
the Class A Principal Distributable Amount after the application of such
amounts, from the following sources in the following order of priority:
(A) from the Class B Percentage of that portion of the Available Funds
allocable to principal; (B) from that portion of the Available Funds
allocable to interest remaining in the Collection Account after the
distribution by the Trustee of the amounts required pursuant to clauses
(1) through (4) above, (C) from amounts, if any, available in the
Spread Account and (D) from amounts payable under the Policy.
(6) To the Security Insurer, from that portion of the Available Funds
allocable to interest (but excluding any Advances) remaining after
distribution by the Trustee of the amounts required pursuant to clauses
(1) through (5) above, any amounts due to the Security Insurer under the
Insurance Agreement. Shortfalls in any amounts due to the Security
Insurer pursuant to this clause (6) 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 Spread Account Agreement.
(7) To the Collateral Agent, from any Available Funds remaining after
distribution by the Trustee of the amounts required pursuant to clauses (1)
through (6) above, for deposit to the Spread Account, an amount equal to the
discrepancy, if any, between the amount then on deposit in the Spread
Account and the Spread Account Required Amount.
(8) To Holders of the Class B Certificates, from that portion of the
Available Funds allocable to interest and remaining after distribution by
the Trustee of the amounts due on such Distribution Date pursuant to
clauses (1) through (7) above, the Class B Interest Distributable Amount.
Shortfalls in the Class B Interest Distributable Amount on any
Distribution Date shall be paid using amounts, if any, in the Spread
Account in excess of the Spread Account Required Amount after the
distribution from the Spread Account on such Distribution Date of all
amounts required pursuant to priorities FIRST through FOURTH of Section
3.03(b) of the Master Spread Account Agreement.
(9) To Holders of the Class B Certificates, from any Available Funds
remaining after distribution by the Trustee of the amounts required
pursuant to clauses (1) through (8) above, the Class B Principal
Distributable Amount. Shortfalls in the Class B Principal Distributable
Amount on any Distribution Date shall be paid using amounts, if any, in
the Spread Account in excess of the Spread Account Required Amount after
the distribution from the Spread Account on such Distribution Date of all
amounts required pursuant to priorities FIRST through FOURTH of Section
3.03(b) of the Master Spread Account Agreement.
(10) To the Collateral Agent, any Available Funds remaining after
distribution by the Trustee of the amounts required pursuant to clauses (1)
through (9) above, to pay the Credit Enhancement Fee to the Depositor
pursuant to the terms and subject to the conditions set forth in the
Spread Account Agreement.
The Depositor, as initial Holder of the Class B Certificates, hereby
irrevocably directs and authorizes the Trustee, for as long as no Security
Insurer Default shall have occurred and be continuing, to pay any amounts
otherwise distributable to the Depositor pursuant to clauses (8) and (9)
above to the Collateral Agent for deposit to the Spread Account, to be
applied by the Collateral Agent pursuant to the Spread Account Agreement.
Section 5.09. Claims Upon the Policy; Policy Payments Account. (a)
If on the third Business Day prior to a Distribution Date, the Available
Funds 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 Payahead Account and the Spread Account and after giving
effect to distribution by the Trustee of amounts required pursuant to clauses
(1) through (3) of Section 5.08) are insufficient to pay the Guaranteed
Distribution on the related Distribution Date, then the Trustee shall give
notice to the Security Insurer by telephone or telecopy of the amount of such
deficiency. Such notice shall be confirmed in writing in the form set forth
as Exhibit A to the Endorsement of the 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 Policy 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 Policy.
(b) The Trustee shall establish a separate special purpose trust
account for the benefit of Holders of the Class A Certificates and the
Security Insurer, referred to herein as the "Policy Payments Account", over
which the Trustee shall have exclusive control and sole right of withdrawal.
The Trustee shall deposit any amount paid under the Policy in the Policy
Payments Account and distribute such amount only to pay to Holders of the
Class A Certificates the Guaranteed Distributions for which a claim has been
made, and such amount may not be applied to satisfy any costs, expenses or
liabilities of the Servicer or the Trustee. Amounts paid under the Policy
shall be transferred to the Collection Account in accordance with the next
succeeding paragraph and disbursed by the Trustee to Holders of Class A
Certificates in accordance with Section 5.08. 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 Distribution with other
funds available to make such payment. However, the amount of any payment of
principal of or interest on the Class A Certificates to be paid from funds
transferred from the Policy Payments Account shall be noted as provided in
paragraph (c) below in the Note Register and in the statement to be furnished to
Holders of the Class A Certificates pursuant to Section 5.13. Funds held in the
Policy Payments Account shall not be invested by the Trustee.
On any Distribution Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Trustee as a
result of any claim under the Policy, to the extent required to make the
Guaranteed Distribution on such Distribution Date, shall be withdrawn from
the Policy Payments Account and deposited in the Collection Account and
applied by the Trustee, together with the other funds to be distributed from
the Collection Account pursuant to Section 5.08, directly to the payment in
full of the Guaranteed Distribution due with respect to the Class A
Certificates. Any funds remaining in the Policy Payments Account 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 Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Class A Certificate from moneys
received under the Policy. 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 Trustee.
Section 5.10. 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 Holders of the Class A Certificates at any time when the
Security Insurer is the Controlling Party shall also be sent to the Security
Insurer.
Section 5.11. Rights in Respect of Insolvency Proceedings. (a) In the
event that the Trustee has received a certified copy of a final,
nonappealable order of the appropriate court that any Guaranteed Distribution
has been voided in whole or in part as a preference payment under applicable
bankruptcy or insolvency law, the Trustee shall (i) deliver to the Security
Insurer a certified copy of such court order, an irrevocable assignment to
the Security Insurer of the Holders' rights with respect to any such
recovered payment and an instrument appointing the Security Insurer as agent
of the Holders with respect to any such recovered payments and (ii) notify
the Holders by mail that, in the event that any Guaranteed Distribution
distributed to a Holder is so recovered, such Holder will be entitled to
payment of such recovered amounts pursuant to the Policy.
(b) The Trustee shall promptly notify the Security Insurer of either of
the following as to which a Trustee Officer has actual knowledge: (i) the
commencement of any proceeding by or against the Depositor 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 Class A
Certificates. Each Holder, by its purchase of a Class A Certificate, and the
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
5.12, the Security Insurer shall be subrogated to, and each Holder of a Class
A Certificate and the Trustee hereby delegate and assign, to the fullest
extent permitted by law, the rights of the Trustee and such Holder 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) The Trustee shall furnish to the Security Insurer its records
evidencing the distributions of principal of and interest on the Class A
Certificates that have been made by the Trustee and subsequently recovered
from Holders and the dates on which such payments were made. Section 5.12.
Effect of Payments by the Security Insurer; Subrogation. (a) Anything herein
to the contrary notwithstanding, any distribution of principal of or interest
on the Class A Certificates that is made with moneys received pursuant to the
terms of the Policy shall not be considered a distribution by the Trustee,
shall not discharge the Trust assets in respect of such distribution and
shall not result in the distribution of or the provision for the distribution
of principal of or interest on the Class A Certificates hereunder. The
Trustee acknowledges that, without the need for any further action on the
part of the Security Insurer, the Trustee or the Registrar, (i) to the
extent the Security Insurer makes payments, directly or indirectly, on
account of principal of or interest on the Class A Certificates to the
Holders thereof, the Security Insurer will be fully subrogated to the rights
of such Holders 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 Holder of Class A Certificates and (ii) the Security Insurer
shall be paid principal and interest in its capacity as a Holder of Class A
Certificates 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 Holders of the Class A Certificates have received all Guaranteed
Distributions due to them under this Agreement.
(b) Without limiting the rights or interests of the Holders of Class A
Certificates as otherwise set forth herein and subject to Article X, so long
as no Security Insurer Default exists, the 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 Class A Certificates or under this Agreement in respect of the
Class A Certificates, 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 5.13. Statements to Certificateholders. On each Distribution Date,
the Trustee shall provide to each Holder of record of a Certificate as of the
most recent Record Date a copy of the statement provided by the Servicer to
the Trustee on the related Determination Date, which shall be substantially
in the form of Exhibit E.
Section 5.14. Accounting and Tax Returns. The 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 (or on such other basis or
method as may be required by the Code and applicable Treasury Regulations),
(b) file or cause to be filed, for each of its taxable years, an Internal
Revenue Service Form 1041 and any other federal and state income tax returns
and information statements required to be filed by a grantor trust, and (c)
deliver to each Holder an Internal Revenue Service Schedule K-1 (Form 1041)
or any successor schedule and supplemental or other information, if any,
required or permitted by law to enable each Holder to prepare its federal and
state income tax returns.
ARTICLE XXVIII
The Certificates
Section 6.01. The Certificates. The Class A Certificates and the Class B
Certificates shall be substantially in the form of Exhibit A and Exhibit B,
respectively. The Certificates shall be issued in fully registered form in
minimum denominations of $250,000 and integral multiples of $1,000 in excess
thereof, except that one Class A Certificate and one Class B Certificate may be
issued in a denomination representing the remainder of the Class A Certificate
Balance or Class B Certificate Balance, as applicable. The Certificates
shall be executed on behalf of the Trust by manual or facsimile signature of
an authorized officer of the Trustee. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall be
validly issued and entitled to the benefit of this Agreement, notwithstanding
the fact that such individuals or any of them have ceased to be so authorized
prior to the authentication and delivery of such Certificates or did not hold
such offices at the date of authentication and delivery of such Certificates.
Section 6.02. Authentication of Certificates. Concurrently with the
conveyance of the Receivables to the Trust, the Trustee shall cause the
Certificates to be executed on behalf of the Trust by an authorized Trust
officer, and authenticated and delivered to or upon the written order of the
Depositor, without further corporate action by the Depositor, in authorized
denominations. No Certificate shall entitle its Holder to any benefit under
this Agreement or be valid for any purpose unless there shall appear on such
Certificate a certificate of authentication, executed by the Trustee by
manual signature. Such authentication shall constitute conclusive evidence
that such Certificate shall have been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
Section 6.03. Registration of Transfer and Exchange. (a) The Trustee shall
cause to be kept a register (the "Certificate Register") in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and the registration of transfers of
Certificates. The Trustee shall be the initial "Certificate Registrar" for
the purpose of registering Certificates and transfers of Certificates as
herein provided. Upon the resignation of any Certificate Registrar, the
Trustee shall promptly appoint a successor or, if it elects not to make such
an appointment, assume the duties of Certificate Registrar.
If a Person other than the Trustee is appointed as Certificate Registrar,
the Trustee shall give prompt written notice of the appointment of such
Certificate Registrar and of the location, and any change in the location, of
the Certificate Register, and the Trustee shall have the right to inspect the
Certificate Register at all reasonable times, to obtain copies thereof and to
rely conclusively upon a certificate executed on behalf of the Certificate
Registrar by an authorized officer thereof as to the names and addresses of
the Certificateholders and the principal amounts and number of the Certificates.
Upon surrender for registration of transfer of any Certificate at the
office or agency of the Trustee to be maintained as provided in Section 6.08,
the Trustee shall execute, authenticate and deliver to the designated
transferee or transferees, one or more new Certificates in any authorized
denominations of a like aggregate principal amount.
At the option of the Holder, Certificates may be exchanged for other
Certificates in any authorized denominations of a like aggregate principal
amount. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, authenticate and deliver to the Holder the
Certificates that the Certificateholder making the exchange is entitled to
receive.
All Certificates issued upon any registration of transfer or exchange of
Certificates shall be the valid obligations of the Trust, evidencing the same
interest in the Trust and entitled to the same benefits under this Agreement as
the Certificates surrendered upon such registration of transfer or exchange.
(b) Every Certificate 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 Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located or having a correspondent located in The City of New York or the city
in which the Corporate Trust Office is located or by a member firm of a
national securities exchange, and such other documents as the Trustee may
require.
(c) No service charge shall be made to a Holder for any registration of
transfer or exchange of Certificates, but the Trustee 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
Certificates.
Section 6.04. Certain Transfer Restrictions. (a) The Certificates have not
been and will not be registered under the Securities Act and will not be
listed on any exchange. No transfer of a Certificate shall be made unless
(i) such transfer is made pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws or (ii) (A)
such transfer is exempt from the registration requirements under the
Securities Act and such state securities laws and (B) the Certificate
Registrar either (x) is notified by such transferee that such Certificate
shall be registered in the name of the Clearing Agency or its nominee and
shall be held by such transferee in book-entry form through the Clearing
Agency or (y) receives written certification from such Holder and such
Holder's prospective transferee, substantially in the form of Exhibit F,
setting forth the basis of the exemption from such registration requirements.
The Depositor and the Servicer hereby agree to provide to any Holder of a
Certificate and any prospective transferee designated by any such Holder
information regarding the Certificates and the Receivables and such other
information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A.
(b) No transfer of a Class B Certificate shall be made or registered
unless the Trustee shall have received a representation from the transferee
of such Class B Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan, trust or account (each a "Benefit Plan") subject to
the fiduciary responsibility provisions of ERISA or Section 4975 of the Code
or a Person acting on behalf of any such Benefit Plan or using assets of a
Benefit Plan to acquire Class B Certificates. Any proposed transfer of a
Class B Certificate to or on behalf of a Benefit Plan subject to ERISA or the
Code without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee shall be void and of no effect. The Trustee shall
be under no liability to any Person for any registration of transfer of any
Class B Certificate that is in fact not permitted by this Section 6.04(b) or
for making any payments due on such Class B Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of this Agreement so long as such transfer is registered by the
Trustee in accordance with the foregoing requirements. The Trustee shall be
entitled, but not obligated, to recover from any Holder of a Class B
Certificate that was in fact a Benefit Plan subject to Section 406 of ERISA
or Section 4975 of the Code, or a Person acting on behalf of any such Benefit
Plan at the time it became a Holder or that subsequently became such a
Benefit Plan or Person acting on behalf of such a Benefit Plan, all payments
made on such Class B Certificate at and after either such time. Any payments
so recovered by the Trustee shall be paid and delivered by the Trustee to the
last preceding Holder of such Certificate that is not, and was not at the
time it held such Certificate, a Benefit Plan or Person acting on behalf of a
Benefit Plan.
(c) No transfer of a Class B Certificate or any interest therein shall
be made unless prior to such transfer the Holder of such Class B Certificate
delivers to the Depositor and the Trustee either a ruling of the Internal
Revenue Service or an Opinion of Counsel to the effect that the proposed
transfer will not result in the arrangement contemplated by this Agreement
being treated as an association taxable as a corporation under either the
Code or the tax laws of the State of New York.
(d) The Trustee shall cause each Class A Certificate and Class B
Certificate to contain a legend setting forth the applicable restrictions on
transfer set forth herein and referring prospective purchasers of the
Certificates to this Section 6.04 with respect to such restrictions.
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated 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 Certificate and (b) there shall be
delivered to the Certificate Registrar and the 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 Certificate has been acquired by a bona fide
purchaser, the Trustee on behalf of the Trust shall execute, and the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and denomination. In connection with the issuance of any new
Certificate under this Section, the Trustee and 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 Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership of a beneficial interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 6.06. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate is registered in
the Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.08 and for all other purposes
whatsoever, and neither the Trustee nor the Certificate Registrar shall be
bound by any notice to the contrary.
Section 6.07. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar shall furnish or cause to be furnished to the
Trustee and the Servicer, within 15 days after receipt by the Certificate
Registrar of a request therefor from the Trustee or the Servicer, as
applicable, in writing, a list, in such form as the Trustee or Servicer may
reasonably require, of the names and addresses of the Certificateholders as
of the most recent Record Date. If three or more Certificateholders, or one
or more Holders of Certificates evidencing not less than 25% of the
Certificate Balance apply in writing to the 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 Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the 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 Holder, by receiving and holding a Certificate,
shall be deemed to have agreed to hold neither the Servicer nor the Trustee
accountable by reason of the disclosure of its name and address, regardless
of the source from which such information was derived.
Section 6.08. Maintenance of Office or Agency. The Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustee in respect of the Certificates and this Agreement may be served.
The Trustee initially designates its office located at Harris Trust and
Savings Bank, 77 Water Street, 4th Floor, New York, New York 10005, for such
purposes. The Trustee shall give prompt written notice to the Servicer and
the Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
Section 6.09. Book-Entry Certificates. Unless the Holder thereof requests
that Class A Certificates be delivered in definitive, fully registered form
("Definitive Certificates"), the Class A Certificates, upon original issuance,
will be issued in the form of one or more typewritten Certificates representing
Book-Entry Certificates, to be delivered to the Depository Trust Company, the
initial Clearing Agency, by or on behalf of the Trust. The Book-Entry
Certificates shall be registered initially on the Certificate Register in the
name of Cede & Co., the nominee of the initial Clearing Agency. With respect
to the Book-Entry Certificates:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Servicer, the Certificate Registrar and the
Trustee may deal with the Clearing Agency for all purposes (including the
making of distributions on the Book-Entry Certificates) as the sole
Holder of such Book-Entry Certificates and shall have no obligation to
the related 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 such
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 Depository Agreement. The initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Book-Entry 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
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 Book-Entry Certificates and has delivered such
instructions in writing to the Trustee.
Neither the Trustee nor the Certificate Registrar shall have any
responsibility to monitor or restrict the transfer of beneficial ownership in
any Certificate an interest in which is transferable through the facilities
of the Depository.
Section 6.10. Notices to Clearing Agency. Whenever a notice or other
communication to Holders of the Book-Entry Certificates is required under this
Agreement, the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of Certificates to the
Clearing Agency.
ARTICLE XXIX
The Depositor
Section 7.01. Depositor's Representations. The Depositor makes the
following representations with respect to itself on which the Trustee relies
in accepting the Receivables in trust and delivering the Certificates and the
Security Insurer relies in issuing the Policy. The representations speak as
of the execution and delivery of this Agreement and as of the Closing Date,
but shall survive the transfer and assignment of the Receivables to the Trust.
(a) Organization and Good Standing. 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) Due Qualification. 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 where the failure to do so would
materially and adversely affect the Depositor'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 Depositor 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 Depositor
has the corporate power, authority and legal right to acquire and own and to
sell, transfer and assign the Receivables to the Trust and has duly
authorized such sale, transfer and assignment to the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and the other Basic Documents to which the Depositor is a party
have been duly authorized by the Depositor by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement and the other Basic
Documents to which the Depositor is a party, when duly executed and delivered by
the other parties hereto and thereto, shall constitute legal, valid and binding
obligations of the Depositor, enforceable against the Depositor 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 Depositor, or any indenture,
agreement, mortgage, deed of trust, or other instrument to which the
Depositor 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, the other Basic Documents; or violate any law,
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.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Depositor's knowledge, threatened against the Depositor, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Depositor or its
properties: (1) asserting the invalidity of this Agreement or any other Basic
Document; (2) seeking to prevent the issuance of 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 Depositor 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 or the Certificates.
(g) Chief Executive Office. The chief executive office of the
Depositor is located at 570 Lake Cook Road, Suite 126B, Deerfield, Illinois
60015.
(h) No Consents. The Depositor 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 7.02. Corporate Existence. During the term of this Agreement, the
Depositor shall keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the State of Delaware 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 and the other Basic Documents and each other
instrument or agreement necessary or appropriate to the proper administration
of this Agreement and the other Basic Documents and the transactions
contemplated hereby or thereby.
Section 7.03. Liabilities of Depositor. The Depositor shall be liable
hereunder only to the extent of the obligations in this Agreement specifically
undertaken by the Depositor and the representations made by the Depositor.
Section 7.04. Merger or Consolidation of, or Assumption of the
Obligations of, the Depositor. The Depositor shall not merge or consolidate
with any other Person or permit any other Person to become the successor to
the Depositor's business without the prior written consent of the Security
Insurer. Any such successor corporation shall execute an agreement of
assumption of every obligation of the Depositor under this Agreement and the
other Basic Documents and, whether or not such assumption agreement is
executed, shall be the successor to the Depositor 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 Depositor shall provide
prompt notice of any merger, consolidation or succession pursuant to this
Section 7.04 to the Trustee, the Security Insurer, the Certificateholders and
the Rating Agencies. Notwithstanding the foregoing, the Depositor shall not
merge or consolidate with any other Person or permit any other Person to
become a successor to the Depositor's business unless (x) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 3.02 or 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,(y) the Depositor shall have delivered to the 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 7.04 and that all conditions precedent
provided for in this Agreement relating to such transaction have been
complied with and (z) the Depositor shall have delivered to the 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 7.05. Limitation on Liability of Depositor and Others. The
Depositor and any director, officer, employee or agent of the Depositor 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 under this Agreement. The Depositor shall be under no
obligation to appear in, prosecute or defend any legal action that shall not
be related to its obligations as Depositor of the Receivables under this
Agreement and that in its opinion may involve it in any expense or liability.
ARTICLE XXX
The Servicer
Section 8.01. Representations of Servicer. The Servicer makes the following
representations on which the Trustee relies in accepting the Receivables in
trust and executing and authenticating the Certificates and the Security
Insurer relies in issuing the Policy. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date, but
shall survive the transfer and assignment of the Receivables to the Trust.
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its incorporation or other organization, with power,
authority and legal right to own its properties and to conduct its business
as such properties are currently owned and such business is currently conducted;
(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 its property or the conduct of its business (including the servicing of
the Receivables as required by this Agreement) 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; and
(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: (1)
asserting the invalidity of this Agreement or any of the Basic Documents; (2)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement or any of the Basic
Documents; (3) 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 (4) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Trust or the Certificates.
(g) Information to Backup Servicer. The Servicer represents and
warrants to the Backup Servicer that the database and information prepared by
the Servicer and furnished to the Backup Servicer hereunder concerning the
Receivables is accurate and complete in all material respects.
Section 8.02. Liability of Servicer; Indemnities. (a) The Servicer
shall be liable hereunder only to the extent of the obligations in this
Agreement specifically undertaken by the Servicer and the representations
made by the Servicer.
(b) The Servicer shall defend, indemnify and hold harmless the Trustee,
the Backup Servicer, the Security Insurer, their respective officers, directors,
agents and employees, and the Certificateholders from and against any and all
costs, expenses, losses, damages, claims, and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation arising out of or
resulting from the use, ownership or operation by the Servicer or any Affiliate
thereof of any Financed Vehicle.
(c) The Servicer shall indemnify, defend and hold harmless the Trustee,
the Backup Servicer, the Security Insurer, their respective officers, directors,
agents and employees, and the Certificateholders 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
Certificates), and costs and expenses in defending against the same.
(d) The Servicer shall indemnify, defend and hold harmless the Trustee,
the Backup Servicer, the Security Insurer, their respective officers, directors,
agents and employees, and the Certificateholders 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 the Trustee, the Backup Servicer, the Security Insurer or the
Certificateholders by reason of a breach of this Agreement by the Servicer,
the negligence, misfeasance or bad faith of the Servicer in the performance
of its duties under this Agreement or by reason of the Servicer's reckless
disregard of its obligations and duties under this Agreement.
(e) 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 has made any indemnity payments pursuant to this Section and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay the amounts so collected to the Servicer, without interest.
Section 8.03. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Backup 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 corporation (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 8.03(a)
to the 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 (x) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 8.01 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, (y) the Servicer shall have delivered to the 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 8.03(a) and that all conditions precedent
provided for in this Agreement relating to such transaction have been
complied with and (z) the Servicer shall have delivered to the 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 Trust 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 8.04. 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 Trustee 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 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 Trustee, the
Depositor, the Security Insurer and the Holders of the Certificates shall
look only to the Servicer to perform such obligations. The Backup Servicer
and the 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 acting in the capacity of Backup Servicer or successor Servicer
and 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 8.05. 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 and the Trustee in writing that such appointment will not result in
a reduction or withdrawal of the then current rating of the Class A
Certificates 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 Trustee, the Security Insurer and the Holders of the
Certificates 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 Trustee, the Trust, the Backup Servicer,
the Security Insurer or the Holders of the Certificates shall have any
responsibility therefor.
Section 8.06. Servicer and Backup Servicer Not to Resign. Subject to the
provisions of Section 8.03, neither the Servicer nor the Backup Servicer shall
resign from the obligations and duties imposed on it by this Agreement as
Servicer or Backup Servicer, as applicable, except upon a determination that the
performance of its duties under this Agreement shall no longer be permissible
under applicable law or, in the case of the Backup Servicer only, if the Backup
Servicer resigns or is removed as Trustee (in which case the Backup Servicer may
resign as Backup Servicer subject to the same conditions applicable to the
Trustee pursuant to Section 10.07). 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 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 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 9.03. 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 XXXI
Servicer Termination Events
Section 9.01. 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 to 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 Trustee, the Depositor
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
Certificateholders (determined without regard to the availability of funds
under the Policy) 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 the Trustee or the Security Insurer (or, if a
Security Insurer Default shall have occurred and be continuing, Holders of
Certificates evidencing 25% of the Certificate Balance);
(d) the occurrence of an Insolvency Event with respect to the Servicer
or, so long as First Merchants is the Servicer, the Depositor;
(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
entity 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 9.02. 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 Trustee or Holders of
Certificates evidencing a majority of the Certificate Balance, by notice
given in writing to the Servicer (and to the Trustee and the Depositor if
given by the Security Insurer or such Holders), 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 Trustee 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 9.03. Appointment of Successor. (a) On and after the time the
Servicer receives a notice of termination pursuant to Section 9.02, upon
non-extension of the servicing term as referred to in Section 4.14, or upon the
resignation of the Servicer pursuant to Section 8.06, the Backup Servicer
(unless the Security Insurer shall have exercised its option pursuant to
Section 9.03(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 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
Depositor, the 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 9.02 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
Trustee, the Servicer, the Depositor, the Person then serving as Backup
Servicer, 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 Trustee or Holders of
Certificates evidencing a majority of the Certificate Balance 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 8.06, 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
9.02, the resignation of the Servicer pursuant to Section 8.06 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 9.02 or the
resignation of the Servicer pursuant to Section 8.06, 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) Any successor Servicer shall be entitled to receive the Servicing Fee.
Section 9.04. Notification to Rating Agencies. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article IX, the
Depositor shall give prompt written notice thereof to each Rating Agency and the
Trustee.
Section 9.05. Waiver of Past Defaults. The Security Insurer or (if the
Security Insurer is no longer the Controlling Party) Holders of Certificates
evidencing a majority of the Certificate Balance may, on behalf of the
Holders of all of the Certificates, waive any default by the Servicer in the
performance of its obligations hereunder and its consequences. 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 thereon.
Section 9.06. Repayment of Advances. The Servicer, if it resigns or is
removed pursuant to the terms of this Agreement, shall be entitled to receive
reimbursement for Outstanding Advances made by it pursuant to Sections 5.05.
ARTICLE XXXII
The Trustee
Section 10.01. Duties of Trustee. (a) The duties and obligations of the
Trustee shall be determined solely by the express provisions of this Agreement,
the Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In the absence of bad faith on its part, the 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 Trustee and
conforming to the requirements of this Agreement; provided, however, that the
Trustee shall examine such certificates and opinions to determine whether or not
they conform to the requirements of this Agreement.
(c) The Trustee shall take and maintain custody of the Schedule of
Receivables included as Schedule I to this Agreement and shall retain all
Servicer's Certificates identifying Receivables that become Purchased
Receivables or Liquidated Receivables.
(d) The Trustee shall not be liable for any action taken, suffered or
omitted to be taken in good faith in accordance with this Agreement or at the
direction of the Holders of Certificates evidencing not less than 25% of the
Certificate Balance relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee or the Trust, or
exercising any trust or power conferred upon the Trustee under this
Agreement, or for the acts or omissions of any successor Trustee.
(e) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent actions, its own negligent
failure to act or its own bad faith or willful misconduct; provided, however,
that the Trustee shall not be liable for any error of judgment made in good
faith by a Trustee Officer unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts.
(f) No provision of this Agreement shall require the 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 the Trustee shall have reasonable grounds to believe that
repayment of such funds or indemnity reasonably satisfactory to it against
such risk or liability is not reasonably assured to it.
(g) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or to impair the value of
any Receivable.
(h) The Trustee shall not be charged with knowledge of any failure by the
Servicer to comply with its obligations hereunder unless a Trustee Officer
obtains actual knowledge of such failure or receives written notice of such
failure from the Servicer or Holders of Certificates representing in the
aggregate not less than 25% of the Certificate Balance.
(i) None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement, except
during the times, if any, when the Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
Section 10.02. Certain Matters Affecting Trustee. Except as otherwise
provided in Section 10.01:
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in any such document.
(b) The Trustee may consult with counsel, and the written advice or
opinion of counsel with respect to legal matters or relating to this
Agreement or the Certificates shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or omitted
by it under this Agreement in good faith and in accordance with such advice
or opinion of such counsel.
(c) The 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 at the request, order or direction
of any of the Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
security or indemnity reasonably satisfactory to it against the costs,
expenses and liabilities that may be incurred therein or thereby.
(d) The Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith that it believes to be authorized or within its
rights or powers conferred upon it by this Agreement; provided, that such
conduct does not constitute willful misconduct, bad faith or negligence on
the part of the Trustee.
(e) The Trustee may execute any of the trusts or powers or perform any
duties hereunder either directly or by or through agents or attorneys or a
custodian and the Trustee shall not be responsible for any misconduct or
negligence of any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
Section 10.03. Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates) or of any Receivable or related document. The 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 or
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 efficacy of the Trust or its ability to generate the
payments to be distributed to Certificateholders under this Agreement,
including: the existence, condition and ownership of any Financed Vehicle;
the existence and enforceability of any insurance thereon; the existence
and contents of any Receivable or 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 or the
Servicer with any warranty or representation made under this Agreement or in
any related document or the accuracy of any such warranty or representation
before receipt of notice or other discovery of any breach thereof; or any
action of the Servicer taken in the name of the Trustee.
Section 10.04. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates and may
deal with the Depositor and the Servicer in banking transactions with the
same rights that it would have if it were not Trustee.
Section 10.05. Trustee's Fees and Expenses. The Servicer shall pay to the
Trustee, and the Trustee shall be entitled to receive as compensation for its
services hereunder, such fees as have been separately agreed upon before the
date hereof between the Servicer and the Trustee, and the Trustee shall be
entitled to reimbursement by the Servicer for its reasonable expenses under
this Agreement, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the
Trustee may employ in connection with the exercise and performance of its
rights and duties under this Agreement, except any such expenses and fees
that may arise from the Trustee's negligence, willful misfeasance or bad
faith or that are the responsibility of Certificateholders under this Agreement.
Section 10.06. Eligibility Requirements for Trustee. The Trustee shall at
all times be a corporation having an office in the same state as the location of
the Corporate Trust Office; organized and doing business under the laws of such
state or the United States of America; authorized under such laws 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) a rating of at least
Baa3 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. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 10.07.
Section 10.07. Resignation or Removal of Trustee. The Trustee may
resign at any time and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer and, if the Security Insurer is the
Controlling Party, the Security Insurer. Upon receiving such notice of
resignation, the Servicer or, if the Security Insurer is the Controlling
Party, the Security Insurer shall promptly appoint a successor Trustee, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of Section 10.06 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Servicer
or, if the Security Insurer is the Controlling Party, the Security Insurer
may remove the Trustee. If the Servicer or the Security Insurer shall remove
the Trustee under the authority of the immediately preceding sentence, the
Servicer or the Security Insurer, as applicable, shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Trustee so removed and one copy
to the successor Trustee, and shall pay all fees owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant
to Section 10.08. The Servicer shall provide notice of any resignation or
removal of the Trustee to each of the Rating Agencies.
Section 10.08. Successor Trustee. Any successor Trustee appointed pursuant
to Section 10.07 shall execute, acknowledge and deliver to the Servicer and
to its predecessor Trustee an instrument accepting its appointment as
successor Trustee under this Agreement, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
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 Trustee.
The predecessor Trustee shall deliver to the successor Trustee all documents,
statements and moneys held by it under this Agreement; and the Servicer and
the predecessor 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 Trustee all such rights, powers,
duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 10.06.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section, the Servicer shall mail notice thereof to all Certificateholders,
the Rating Agencies and the Security Insurer. If the Servicer shall fail to
mail such notice within 10 days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed
at the expense of the Servicer.
Section 10.09. Merger or Consolidation of Trustee. Any corporation into
which the 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 Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee shall be the successor of the Trustee hereunder, provided that such
corporation is eligible to serve as Trustee pursuant to Section 10.06,
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. The Trustee shall mail notice of any such merger or
consolidation to the Rating Agencies and the Security Insurer.
Section 10.10. 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 Trust or any Financed Vehicle may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved
by the Trustee to act as co-trustee, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person, in such capacity and for the benefit of the Certificateholders,
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 Servicer and the Trustee may consider necessary or desirable.
If the Servicer shall not have joined in any such appointment within 15 days
after the receipt by it of a request to do so, the 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 Trustee pursuant to Section 10.06 and no notice of the appointment
of any co-trustee or separate trustee shall be required pursuant to Section
10.08.
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
any such separate trustee or co-trustee shall be conferred upon and
exercised or performed by the 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 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
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 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 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 Servicer and the 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 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
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 Trustee. Each such instrument shall be filed
with the Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the 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 Trustee, to the extent permitted by law, without the
appointment of a new or successor co-trustee or separate trustee.
Section 10.11. Representations and Warranties of Trustee. The Trustee
makes the following representations and warranties, on which the Depositor and
Certificateholders shall be deemed to rely:
(a) The Trustee is an Illinois banking corporation, validly existing and
in good standing under the laws of the State of Illinois.
(b) The Trustee has full corporate power, authority and legal right to
execute and deliver, and to perform its obligations under, this Agreement
and each Basic Document to which it is a party, and has taken all
necessary action to authorize the execution and delivery of, and the
performance of its obligations under, this Agreement and each Basic
Document to which it is a party.
(c) This Agreement and each Basic Document to which it is a party have
been duly executed and delivered by the Trustee and shall constitute legal,
valid and binding obligations of the Trustee, subject to applicable
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).
(d) The execution, delivery and performance by the Trustee of this
Agreement and each Basic Document to which the Trustee is a party (i)
shall not violate any provision of any law governing the banking and
trust powers of the Trustee or, to the best of the Trustee's knowledge,
any order, writ, judgment or decree of any court, arbitrator or
governmental authority applicable to the Trustee or any of its assets,
(ii) shall not violate any provision of the corporate charter or bylaws
of the Trustee and (iii) shall not violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of any Lien on any properties
included in the Trust pursuant to the provisions of, any mortgage,
indenture, contract, agreement or other undertaking to which the Trustee
is a party, which violation, default or Lien could reasonably be expected
to materially and adversely affect the Trustee's performance or ability
to perform its duties under this Agreement or any Basic Document to which
it is a party or the transactions contemplated in this Agreement or any
such Basic Document.
(e) The execution, delivery and performance by the Trustee of this
Agreement and each Basic Document to which the Trustee is a party shall not
require the authorization, consent, approval of, or the giving of notice
to, or the filing or registration with, or the taking of any other action
in respect of, any governmental authority or agency regulating the
banking and corporate trust activities of the Trustee.
ARTICLE XXXIII
Termination
Section 11.01. Termination of the Trust. (a) The respective obligations
and responsibilities of the Depositor, the Servicer, the Backup Servicer and the
Trustee hereunder and the Trust created hereby shall terminate upon the
earlier to occur of (1) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement and the disposition of
all property held as part of the Trust and (2) the time provided in Section
11.02; provided, however, that in no event shall the trust created by this
Agreement continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the Court of St. James, living on the date of this
Agreement. The Servicer shall promptly notify the Trustee and the Rating
Agencies of any prospective termination pursuant to this Section.
(b) Except as provided in Section 11.01(a), neither the Depositor nor any
Certificateholder or Certificate Owner shall be entitled to revoke or terminate
the Trust.
(c) Notice of any termination of the Trust shall be given by the
Servicer to the Trustee and the Security Insurer as soon as practicable after
the Servicer has received notice thereof.
(d) Notice of any termination of the Trust, specifying the
Distribution Date upon which Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation of the Certificates, shall be given by the Trustee by letter to
Certificateholders mailed within five Business Days of receipt of notice of
such termination from the Servicer given pursuant to Section 11.01(c),
stating (1) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of the Certificates
at the office of the Trustee therein designated, (2) the amount of such final
payment and (3) that the Record Date otherwise applicable to such
Distribution Date will not be applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Certificate
Registrar (if other than the Trustee) at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.08.
In the event that all of the Certificateholders shall not have
surrendered their Certificates for cancellation within six months after the
date specified in the above mentioned written notice, the Trustee shall give
a second written notice to the remaining Certificateholders requesting that
such Certificateholders surrender their Certificates for cancellation and
receive the final distribution with respect thereto. If within one year
after such second notice all of the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their 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 Trustee to the Depositor.
Section 11.02. Optional Purchase of All Receivables. On each Determination
Date as of which the Pool Balance is equal to or less than 10% of the Initial
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 the Policy or if such purchase would result in a claim on the
Policy 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 5.06 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.
ARTICLE XXXIV
Miscellaneous Provisions
Section 12.01. Amendment. This Agreement may be amended by the Depositor,
the Servicer, the Backup Servicer and the Trustee, with the prior written
consent of the Security Insurer (so long as the Security Insurer is the
Controlling Party) but without the consent of 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 provision in, this Agreement or of modifying in any manner
the rights of the Certificateholders; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Trustee,
adversely affect in any material respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Backup Servicer and the Trustee with the prior written consent of
the Security Insurer (so long as the Security Insurer is the Controlling Party)
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
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 the Receivables or distributions that
are required to be made on any Certificate or (b) reduce the aforesaid
percentage of the Certificate Balance required to consent to any such
amendment without the consent of the Holders of all Certificates then
outstanding.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders 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) and of
evidencing the authorization of any action by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the 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 12.02(i). The Trustee may,
but shall not be obligated to, enter into any such amendment that affects the
Trustee's own rights, duties or immunities under this Agreement or otherwise.
Section 12.02. Protection of Title to Trust. (a) The Depositor and 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 Certificateholders and the Trustee in the Receivables and
in the proceeds thereof. The Depositor and the Servicer shall deliver (or
cause to be delivered) to the 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 Depositor 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 the
Depositor or the Servicer, as the case may be, shall have given the Trustee at
least five days' prior written notice of such change and shall have promptly
filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Depositor and the Servicer shall have an obligation to give the
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 its principal executive
office and each office from which it shall service Receivables 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 (1) 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 (2)
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 transfer of the Receivables under this Agreement, the
Servicer's master computer records (including any back-up archives) that
refer to any Receivable shall indicate clearly the interest of the Trust in
such Receivable and that such Receivable is owned by the Trust. Indication
of the Trust's ownership of a Receivables shall be deleted from or modified
on the Servicer's computer systems when, and only when, such Receivable shall
have been paid in full or repurchased.
(f) If at any time the Depositor 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 print-outs (including any restored from back-up
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
Trust.
(g) The Servicer shall permit the Trustee and its agents to inspect,
audit and make copies of and abstracts from the Servicer's records regarding
any Receivable at any time during normal business hours upon reasonable notice.
(h) Upon request, the Servicer shall furnish to the 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 Schedule I hereto 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 Trustee, promptly after the
execution and delivery of this Agreement and of each amendment hereto, 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
Trust 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 is necessary to preserve and protect such interest.
Section 12.03. 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 12.04. Limitation on Rights of Certificateholders. (a) The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, or entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, or otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except as
provided in Section 10.01(d) or 12.01) or in any manner otherwise to control
the operation and management of the Trust or the obligations of the parties
to this Agreement; nor shall any provision in this Agreement or contained in
the Certificates be construed to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken pursuant to any provision of this Agreement.
(c) No Certificateholder shall have any right to institute any suit,
action or proceeding in equity or at law upon or under or with respect to
this Agreement unless: (1) such Holder previously shall have given to the
Trustee written notice of a continuing Servicer Termination Event; (2) the
Holders of Certificates evidencing not less than 25% of the Certificate
Balance shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee under this Agreement
and shall have offered the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby; (3) the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute
any such action, suit or proceeding; and (4) during such 60-day period
no request or waiver inconsistent with such written request shall have been
given to the Trustee by Holders representing a majority of the Certificate
Balance. It is understood and intended that no one or more
Certificateholders shall have any right in any manner whatever by virtue of,
or by availing of, any provisions of this Agreement to affect, disturb or
prejudice the rights of any other Certificateholder, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner provided in this Agreement.
Section 12.05. 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 UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.06. Notices. All demands, notices and communications upon or to
the Depositor, the Servicer, the Backup Servicer, the Trustee, the Security
Insurer 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
Depositor, 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 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 Security Insurer, to Financial Security Assurance Inc., 350 Park Avenue,
New York, New York 10022, Attention: Surveillance Department; (e) in the case
of Moody's, to Moody's Investors Service, Inc., ABS Monitoring Department, 99
Church Street, New York, New York 10007; and (f) in the case of Standard &
Poor's, to Standard & Poor's Ratings Service, 25 Broadway - 15th Floor,
New York, New York 10004, Attention: Asset Backed Surveillance Department.
Any notice required or permitted to be mailed to a Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder 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 shall receive such notice.
Section 12.07. Severability of Provisions. 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 of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
Section 12.08. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.04 and 8.03 and as
provided in the provisions of this Agreement concerning the resignation of
the Servicer and the Backup Servicer, this Agreement may not be assigned by
the Depositor, the Servicer or the Backup Servicer without the prior written
consent of the Trustee and the Security Insurer.
Section 12.09. Third-Party Beneficiaries. The Security Insurer and its
successors and assigns shall be third-party beneficiaries of the provisions of
this Agreement, and shall be entitled to rely upon and directly to enforce the
provisions of this Agreement so long as the Security Insurer is the Controlling
Party. Nothing in this Agreement, express or implied, shall give to any Person,
other than the parties hereto, the Security Insurer and their successors
hereunder and the Certificateholders any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 12.10. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the
Trust. The interests represented by the Certificates shall be nonassessable
for any losses or expenses of the Trust or for any reason whatsoever.
Section 12.11. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Depositor, the Servicer, the Backup
Servicer, the Trustee, the Security Insurer and the Certificateholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give any other Person any legal or equitable right, remedy or claim in
respect of the Trust or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 12.12. 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.
IN WITNESS WHEREOF, the Depositor, the Servicer, the Backup Servicer and the
Trustee have caused this Pooling and Servicing Agreement to be duly executed by
their respective officers as of the day and year first above written.
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
as Depositor
By:
Name: Brian P. Hake
Title: Treasurer
FIRST MERCHANTS ACCEPTANCE CORPORATION,
as Servicer
By:
Name: Brian P. Hake
Title: Treasurer
HARRIS TRUST AND SAVINGS BANK,
as Trustee and Backup Servicer
By:
Name:
Title:
<PAGE>
SCHEDULE I
Schedule of Receivables
<PAGE>
SCHEDULE II
Location of Receivables Files
FIRST MERCHANTS ACCEPTANCE CORPORATION
FMAC#
SUPREME #
NAME
ADDRESS
PHONE NUMBER
101
3277
Chicago
Suite 302, 17 W240 22nd Street
Oakbrook Terrace, Illinois 60181
(708) 279-0045
Fax: (708) 278-0094
102
3278
Pensacola
Bldg. #1, Suite 1, Office Park North
6425 North Pensacola Blvd.
Pensacola, Florida 32205
(904) 478-9250
Fax: (904) 479-1907
103
3279
Knoxville
Suite 204, 9041 Executive Park Drive
Knoxville, Tennessee 37923
(615) 693-0741
Fax: (615) 531-1472
104
3280
Nashville
Suite 825, 545 Mariott Drive
Nashville, Tennessee 37214
(815) 885-5540
Fax: (815) 5547-885
105
3281
Memphis
Suite 2524, 5100 Poplar Avenue
Memphis, Tennessee 38137
(901) 685-9200
Fax: (901) 685-9233
106
3282
Louisville
Suite 710, 1930 Bishop Lane
Louisville, Kentucky 40218
(502) 456-9300
Fax: (502) 456-9413
107
3283
Orlando
Suite 440, 6355 MetroWest Blvd.
Orlando, Florida 32835
(407) 298-4800
Fax: (407) 298-3600
109
3285
Charlotte
Suite 205, 8510 McAlpine Park Drive
Charlotte, North Carolina 28211
(704) 365-4330
Fax: (704) 365-4342
110
3286
Columbia
Suite 200, 100 Executive Center Drive
Columbia, South Carolina 29210
(803) 731-0093
Fax: (803) 731-9886
111
3287
Tampa
Suite 334, 8950 Princess Palm Avenue
Tampa, Florida 33619
(813) 623-8888
Fax: (813) 620-3223
112
3288
Virginia Beach
Suite 210, 440 Viking Drive
Virginia Beach, Virginia 23452
(804) 498-8800
Fax: (804) 498-0551
113
3289
Durham
South Park Office Center
Suite 201, 3518 Westgate Drive
Durham, North Carolina 27707
(919) 493-5099
Fax: (919) 493-3725
114
3290
Roanoke
Suite 350, 3959 Electric Road
Roanoke, Virginia 24018
(703) 774-7300
Fax: (703) 989-0095
115
3291
Tri-Cities
Suite 530, 100 Fifth Street
Bristol, Tennessee 37620
(615) 764-3003
Fax: (615) 764-1855
116
3292
Birmingham
Suite 400, Two Chase Corporate Center
Birmingham, Alabama 35244
(205) 985-4001
Fax: (205) 985-4009
117
3293
Jacksonville
Suite 303, 8130 Baymeadows Way West
Jacksonville, Florida 32256
(904) 448-5980
Fax: (904) 448-2490
118
3294
Denver
Suite 106, 5990 Greenwood Plaza Blvd.
Greenwood Village, Colorado 80111
(303) 770-8340
Fax: (303) 770-8408
119
3296
San Antonio
Suite 1002, 1777 N.E. Loop 410
San Antonio, Texas 79217
(210) 805-9207
Fax: (210) 805-9453
120
3297
Greensboro
Suite 423, 706 Green Valley Road
Greensboro, North Carolina 27408
(910) 370-1060
Fax: (910) 272-0708
121
3298
Greenville
Suite 124, 535 North Pleasantburg Drive
Greenville, South Carolina 29607
(803) 233-1225
Fax: (803) 233-1445
122
8760
St. Petersburg
Suite 111, 8455 Koger Blvd.
St. Petersburg, Florida 33702
(813) 578-8920
Fax: (813) 578-8924
123
8762
Kansas City
Suite 825, 4240 Blue Ridge Blvd.
Kansas City, Missouri 64133
(816) 353-7800
Fax: (816) 353-4415
124
8763
Charleston
Suite 215, 4055 Faber Place Drive
North Charleston, South Carolina 29405
(803) 554-9100
Fax: (803) 554-6040
125
8764
Atlanta
Suite 205, 2849 dPacas Ferry Road
Atlanta, Georgia 30339
(404) 437-1590
Fax: (404) 437-0489
126
8765
Cincinnati
Suite 180, 144 Merchant Street
Cincinnati, Ohio 45246
(513) 771-6020
Fax: (513) 771-8021
127
8766
Dallas
Suite 610, 2300 Valley View Lane
Irving, Texas 75062
(214) 257-2296
Fax: (214) 258-1927
128
8767
Cherry Hill
Suite 260, 2 Eves Drive
Marlton, New Jersey 08053
(609) 988-7772
Fax: (609) 988-7779
129
8768
Baltimore
Executive Plaza 1
Suite 406, 11350 McCormick Road
Hunt Valley, Maryland 21031
(410) 771-6441
Fax: (410) 771-6944
130
8769
Newport News
Suite 460, 1919 Commerce Drive
Hampton, Virginia 23886
(804) 826-1053
Fax: (804) 826-9644
131
8773
Phoenix
Suite 221, 8125 N. 23rd Avenue
Phoenix, Arizona 85021
(602) 864-7844
Fax: (602) 864-7848
132
8774
Jackson
Suite 112, 800 Woodlands Parkway
Ridgeland, Mississippi 39157
(601) 977-0810
Fax: (601) 977-0655
133
8776
Houston
Suite 150, 2 Northpoint Drive
Houston, Texas 77060
(713) 931-1700
Fax: (713) 931-1994
134
8777
Cleveland
Suite 304, 26777 Lorain Road
North Olmsted, Ohio 44070
(216) 716-9112
Fax: (216) 716-9208
135
8778
St.Louis
Suite 155, 11960 Westline Industrial
Drive
St. Louis, Missouri 63146
(314) 205-2554
Fax: (314) 205-2527
136
8779
Ft. Worth
Suite 626, 4100 International Plaza
Ft. Worth, Texas 78109
(817) 737-4770
Fax: (817) 737-4779
137
8780
Salt Lake City
Suite 975, 4 Triad Center
Salt Lake City, Utah 84180
(801) 322-4592
Fax: (801) 322-4693
138
8782
Sacramento
Suite 100, 2999 Douglas Blvd.
Roseville, California 95661
(916) 789-0399
Fax: (916) 789-0411
139
8783
Oklahoma City
Suite 875, 3030 Northwest Expressway
Oklahoma City, Oklahoma 73112
(405) 947-7194
Fax: (405) 947-7296
140
8784
Seattle
Suite 201, 18000 72nd Avenue South
Kent, Washington 98032
(206) 251-0582
Fax: (206) 251-0673
141
Fresno
Temporary Suite
Suite 310, 1318 East Shaw Avenue
Fresno, California 93710
(209) 221-0134
Fax: (209) 221-0883
142
Boston
Ground Floor, 300 Unicom Park Drive
Woburn, Massachusetts 01801
(617) 938-9600
Fax: (617) 938-9505
143
Indianapolis
Temporary Suite
Suite 101 A, 2601 Fortune Circle East
Indianapolis, Indiana 46241
(317) 241-4367
Fax: (317) 241-4577
500
8761
Asset
Disposition
Group "ADG"
Bldg. #1, Suite 1, Office Park North
6425 North Pensacola Blvd.
Pensacola, Florida 32505
(904) 479-2354
Fax: (904) 478-9962
501
8770
RASC-Nashville
Suite 825, 545 Mariott Drive
Nashville, Tennessee 37214
P.O. Box 291887
Nashville, Tennessee 37228
(800) 392-3622
Fax: (615) 885-2715
502
8771
RASC-Orlando
Suite 300, 6355 MetroWest Blvd.
Orlando, Florida 32835
P.O. Box 616807
Orlando, Florida 32861
(800) 558-3622
Fax: (407) 299-1748
503
8775
RASC-Charlotte
Suite 204 1/2, 8510 McAlpine Park Drive
Charlotte, North Carolina 28211
(704) 385-4699
Fax: (704) 385-3471
504
878
RASC-Denver
Suite 106, 5990 Greenwood Plaza Blvd.
Greenwood Village, Colorado 80111
(303) 850-7856
Fax: (303) 770-8408
Schedule III
Locations of Local Post Office Boxes
PO Box 618035
Orlando, FL 32861
PO Box 292165
Nashville, TN 37214
PO Box 10209
Charlotte, NC 28212
PO Box 460640
Aurora, CO 80046
<PAGE>
Schedule IV
Locations of Local Collection Accounts
First Union Bank of North Carolina
1607 Sardis Road North
Charlotte, NC 28270
A/C # 2 000000 735 988
First American Bank
2409 Lebanon Road
Nashville, TN 37214
A/C # 100 197 099 2
Colorado National Bank
99 South Monaco Parkway
Denver, CO 80224
A/C # 1943 122 833 29
SunTrust Bank
Kirkman-Conroy Branch
4582 Kirkman Road
Orlando, FL 32811
A/C # 07 037 03 055 302
EXHIBIT A
Form Of Class A Certificate
THIS CLASS A CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE IN THE UNITED
STATES OR ANY FOREIGN SECURITIES LAWS. BY ITS ACCEPTANCE OF THIS
CLASS A CERTIFICATE, THE HOLDER HEREOF (A) IS DEEMED TO REPRESENT
TO THE DEPOSITOR AND THE TRUSTEE (i) THAT IT IS AN INSTITUTIONAL
INVESTOR THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)
(1), (2), (3) OR (7) OF REGULATION D PROMULGATED UNDER THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") AND THAT IT IS ACQUIRING
THIS CLASS A CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH
OTHERS ALSO ARE INSTITUTIONAL ACCREDITED INVESTORS, UNLESS THE HOLDER
IS A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE SECURITIES ACT)
ACTING IN ITS FIDUCIARY CAPACITY) FOR INVESTMENT AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, THE PUBLIC
DISTRIBUTION HEREOF OR (iii) THAT IT IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT AND IS
ACQUIRING THIS CLASS A CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT
FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS CLASS A CERTIFICATE MAY
BE MADE BY ANY PERSON UNLESS EITHER (i) SUCH SALE, PLEDGE OR OTHER
TRANSFER IS MADE TO THE DEPOSITOR, (ii) SUCH SALE, PLEDGE OR OTHER
TRANSFER IS MADE TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT
EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED IN THE
POOLING AND SERVICING AGREEMENT, TO THE EFFECT THAT IT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACTING FOR ITS OWN ACCOUNT (AND
NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR
OTHERS (WHICH OTHERS ALSO ARE INSTITUTIONAL ACCREDITED INVESTORS,
UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY),
(iii) SO LONG AS THIS CLASS A CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, SUCH SALE, PLEDGE
OR OTHER TRANSFER IS MADE TO A PERSON WHOM THE TRANSFEROR
REASONABLY BELIEVES AFTER DUE INQUIRY IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) ACTING FOR ITS OWN ACCOUNT (AND
NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR
OTHERS (WHICH OTHERS ALSO ARE QUALIFIED INSTITUTIONAL BUYERS) TO
WHOM NOTICE IS GIVEN THAT THE SALE, PLEDGE OR TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, OR (iv) SUCH SALE, PLEDGE OR OTHER
TRANSFER IS OTHERWISE MADE IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN WHICH CASE (A)
THE TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR AND THE
PROSPECTIVE TRANSFEREE CERTIFY TO THE TRUSTEE AND THE DEPOSITOR IN
WRITING THE FACTS SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION SHALL
BE IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
DEPOSITOR, AND (B) THE TRUSTEE SHALL REQUIRE A WRITTEN OPINION OF
COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR OR
THE TRUSTEE) SATISFACTORY TO THE DEPOSITOR AND THE TRUSTEE TO THE
EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT. NO
SALE, PLEDGE OR OTHER TRANSFER MAY BE MADE TO ANY ONE PERSON FOR
CLASS A CERTIFICATES WITH A FACE AMOUNT OF LESS THAN $250,000 AND,
IN THE CASE OF ANY PERSON ACTING ON BEHALF OF ONE OR MORE THIRD
PARTIES (OTHER THAN A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY), FOR CLASS
A CERTIFICATES WITH A FACE AMOUNT OF LESS THAN $250,000 FOR EACH
SUCH THIRD PARTY.
SECTION 6.04 OF THE POOLING AND SERVICING AGREEMENT CONTAINS FURTHER
RESTRICTIONS ON THE TRANSFER AND RESALE OF THIS CLASS A
CERTIFICATE. EACH TRANSFEREE OF THIS CLASS A CERTIFICATE, BY
ACCEPTANCE HEREOF OR OF AN INTEREST HEREIN, IS DEEMED TO HAVE ACCEPTED
THIS CLASS A CERTIFICATE SUBJECT TO THE FOREGOING RESTRICTIONS ON
TRANSFERABILITY.
EACH CERTIFICATEHOLDER OR CERTIFICATE OWNER, BY ITS ACCEPTANCE OF
THIS CLASS A CERTIFICATE (OR INTEREST HEREIN), COVENANTS AND AGREES
THAT SUCH CERTIFICATEHOLDER OR CERTIFICATE OWNER, AS THE CASE MAY
BE, SHALL NOT, PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY
AFTER THE TERMINATION OF THE POOLING AND SERVICING AGREEMENT,
ACQUIESCE, PETITION OR OTHERWISE INVOKE OR CAUSE THE DEPOSITOR TO
INVOKE THE PROCESS OF ANY COURT OR GOVERNMENTAL AUTHORITY FOR THE
PURPOSE OF COMMENCING OR SUSTAINING A CASE AGAINST THE DEPOSITOR
UNDER ANY FEDERAL OR STATE BANKRUPTCY, INSOLVENCY, REORGANIZATION
OR SIMILAR LAW, OR APPOINTING A RECEIVER, LIQUIDATOR, ASSIGNEE,
TRUSTEE, CUSTODIAN, SEQUESTRATOR, OR OTHER SIMILAR OFFICIAL OF THE
DEPOSITOR OR ANY SUBSTANTIAL PART OF ITS PROPERTY, OR ORDERING THE
WINDING UP OR LIQUIDATION OF THE AFFAIRS OF THE DEPOSITOR.
[UNLESS THIS CLASS A CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CLASS A 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.]
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CLASS A
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE
FACE HEREOF.
NUMBER R- $
CUSIP NO. 320818 AC1
FIRST MERCHANTS GRANTOR TRUST 1996-2
6.85% ASSET BACKED CERTIFICATE, CLASS A
evidencing a fractional undivided interest in the Trust (as defined below), the
property of which includes a pool of motor vehicle retail installment sale
contracts (the "Contracts") secured by new and used automobiles, light duty
trucks, vans and minivans.
(This Class A Certificate does not represent an interest in, or an obligation
of, First Merchants Acceptance Corporation, First Merchants Auto Receivables
Corporation II or any of their respective Affiliates, except to the extent
described below.)
THIS CERTIFIES THAT is the registered
owner of
DOLLARS nonassessable, fully-paid, fractional
undivided interest in First Merchants Grantor Trust 1996-2 (the "Trust") formed
pursuant to the Pooling and Servicing Agreement dated as of June 1, 1996 (the
"Pooling and Servicing Agreement"), among First Merchants Auto Receivables
Corporation II, a Delaware corporation, as depositor (the "Depositor"), First
Merchants Acceptance Corporation, a Delaware corporation, as servicer (the
"Servicer"), and Harris Trust and Savings Bank, an Illinois banking
corporation, as trustee (in such capacity, the "Trustee") and as backup
servicer (in such capacity, the "Backup Servicer"), 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 Pooling and Servicing Agreement.
This Certificate is one of a duly authorized series of Certificates,
designated as the 6.85% Asset Backed Certificates, Class A (the "Class A
Certificates"), all issued under the Pooling and Servicing Agreement,
to which Pooling and Servicing Agreement reference is hereby made for a
statement of the respective rights and obligations thereunder of the
Depositor, the Servicer, the Trustee, the Backup Servicer and the
Certificateholders. The Class A Certificates are subject to all the terms of
the Pooling and Servicing Agreement.
The property of the Trust includes (i) a pool of motor vehicle retail
installment sale contracts secured by new and used automobiles, light duty
trucks, vans and minivans (the "Receivables"); (ii) all moneys (including
accrued interest) received thereunder on or after June 1, 1996; (iii) all
amounts and property from time to time held in or credited to the Local Post
Office Boxes, the Local Collection Accounts and the Collection Account; (iv)
security interests in the Financed Vehicles and any accessions thereto; (v)
the right to receive payments from the Spread Account, to the extent and
under the circumstances set forth in the Pooling and Servicing Agreement and
the Spread Account Agreement; (vi) the right to receive all proceeds from claims
on physical damage, credit life and disability insurance policies covering the
Financed Vehicles or the Obligors, as the case may be; (vii) any property
that shall have secured a Receivable and that shall have been acquired by or
on behalf of the Depositor, the Servicer or the Trustee; (viii) all of the
Depositor's right to all documents contained in the Receivable Files; and
(ix) any and all proceeds of the foregoing. Holders of the Class A
Certificates also will have the benefit of a financial guaranty insurance
policy issued by Financial Security Assurance Inc.
Under the Pooling and Servicing Agreement, there will be distributed on the
fifteenth day of each month or, if such fifteenth day is not a Business Day,
the next succeeding Business Day (each, a "Distribution Date"), commencing on
July 15, 1996, to the Person in whose name this Class A Certificate is
registered at the close of business on the day immediately preceding such
Distribution Date (the "Record Date"), such Certificateholder's fractional
undivided interest in the amount to be distributed to Class A
Certificateholders on such Distribution Date.
It is the intent of the Depositor, the Servicer, the Trustee, the Backup
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 be treated as a grantor trust and the Certificates be treated as
interests in a grantor trust. The Depositor, the Servicer, the Trustee and
each Certificateholder or Certificate Owner, by its acceptance of a
Certificate or of a beneficial interest in a Certificate, as the case may be,
agree to treat, and to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as interests in a grantor trust.
Distributions on this Class A Certificate will be made as provided in the
Pooling and Servicing Agreement by the Trustee by wire transfer or check
mailed to the Person identified as the Holder of record thereof in the
Certificate Register, without the presentation or surrender of this Class A
Certificate or the making of any notation hereon, except that with respect to
Class A 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
Pooling and Servicing Agreement and notwithstanding the above, the final
distribution on this Class A Certificate will be made after due notice by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Class A Certificate at the office or agency maintained for
that purpose by the Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Class A
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 Trustee, by manual signature, this Class A
Certificate shall not entitle the Holder hereof to any benefit under the
Pooling and Servicing Agreement or be valid for any purpose.
THIS CLASS A CERTIFICATE 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.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Class A Certificate to be duly executed.
Date: FIRST MERCHANTS GRANTOR TRUST 1996-2
By: HARRIS TRUST AND SAVINGS BANK, not
in its individual capacity but solely as
Trustee
By:
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
Date: HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity but solely as Trustee
By:
Authorized Signatory
<PAGE>
[REVERSE OF CLASS A CERTIFICATE]
The Class A Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Backup Servicer, the Trustee or
any of their respective Affiliates, and no recourse may be had against such
parties or their assets except as expressly set forth or contemplated herein
or in the Pooling and Servicing Agreement. In addition, this Class A
Certificate is not guaranteed by the Depositor, the Servicer, the Trustee,
the Backup Servicer, or any governmental agency or instrumentality, and is
limited in right of payment to certain collections and recoveries with
respect to the Receivables, payments under the Policy and certain other
amounts, all as more specifically set forth herein and in the Pooling and
Servicing Agreement. A copy of the Pooling and Servicing 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 Pooling and Servicing Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Backup Servicer and the
Trustee and the rights of the Certificateholders at any time by the
Depositor, the Servicer, the Backup Servicer and the Trustee with the consent
of the Security Insurer and Holders of Certificates evidencing not less than
a majority of the Certificate Balance. Any such consent by the Holder of
this Class A Certificate shall be conclusive and binding on such Holder and
on all future Holders of this Certificate and of any Class A 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 Class A
Certificate. The Pooling and Servicing Agreement also permits the amendment
thereof, in certain limited circumstances, with the consent of the Security
Insurer but without the consent of the Holders of any of the Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, the transfer of this Class A Certificate is
registerable in the Certificate Register upon surrender of this Class A
Certificate for registration of transfer at the offices or agencies of the
Certificate Registrar maintained by the Trustee in the Borough of Manhattan,
The City of New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Class A 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
Pooling and Servicing Agreement is the Trustee.
Except as provided in the Pooling and Servicing Agreement, the Class A
Certificates are issuable only as registered certificates without coupons in
a minimum denomination of $250,000 and integral multiples of $1,000 in excess
thereof; provided that one Class A Certificate may be issued in such
denomination as is required to include any residual amount. As provided in
the Pooling and Servicing Agreement and subject to certain limitations
therein set forth, the Class A Certificates are exchangeable for new Class A
Certificates of authorized denominations evidencing the same aggregate
denomination as requested by the Holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but
the Trustee or the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge payable in connection
therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or the
Certificate Registrar may treat the Person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and none of
the Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Pooling and Servicing
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
Pooling and Servicing Agreement and the disposition of all property held by
the Trust. The Servicer of the Receivables may at its option purchase the
Trust property at a price specified in the Pooling and Servicing Agreement,
and such purchase of the Receivables and other property of the Trust will
effect early retirement of the Certificates; provided, however, that such
right of purchase is exercisable only after the Pool Balance is less than or
equal to 10% of the Initial Pool Balance.
<PAGE>
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 Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
, attorney, to transfer said Class A 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
as it appears on the face of the within Class A Certificate in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by a member firm of the New York Stock Exchange
or a commercial bank or trust company.<PAGE>
EXHIBIT B
Form Of Class B Certificate
THIS CLASS B CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE IN
THE UNITED STATES OR ANY FOREIGN SECURITIES LAWS. BY ITS ACCEPTANCE
OF THIS CLASS B CERTIFICATE THE HOLDER OF THIS CLASS B CERTIFICATE
(A) IS DEEMED TO REPRESENT TO THE DEPOSITOR AND THE TRUSTEE (i)
THAT IT IS THE DEPOSITOR, (ii) THAT IT IS AN INSTITUTIONAL INVESTOR
THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D PROMULGATED UNDER THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") AND THAT IT IS ACQUIRING
THIS CLASS B CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH
OTHERS ALSO ARE INSTITUTIONAL ACCREDITED INVESTORS, UNLESS THE HOLDER
IS A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE SECURITIES ACT)
ACTING IN ITS FIDUCIARY CAPACITY) FOR INVESTMENT AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, THE PUBLIC
DISTRIBUTION HEREOF OR (iii) THAT IT IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT AND IS
ACQUIRING THIS CLASS B CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT
FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS CLASS B CERTIFICATE MAY
BE MADE BY ANY PERSON UNLESS EITHER (i) SUCH SALE, PLEDGE OR OTHER
TRANSFER IS MADE TO THE DEPOSITOR, (ii) SUCH SALE, PLEDGE OR OTHER
TRANSFER IS MADE TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT
EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED IN THE
POOLING AND SERVICING AGREEMENT, TO THE EFFECT THAT IT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACTING FOR ITS OWN ACCOUNT (AND
NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR
OTHERS (WHICH OTHERS ALSO ARE INSTITUTIONAL ACCREDITED INVESTORS,
UNLESS THE HOLDER IS A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY), (iii) SO LONG AS
THIS CLASS B CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT, SUCH SALE, PLEDGE OR OTHER TRANSFER
IS MADE TO A PERSON WHOM THE TRANSFEROR REASONABLY BELIEVES AFTER
DUE INQUIRY IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A), ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT
OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS
ALSO ARE QUALIFIED INSTITUTIONAL BUYERS) TO WHOM NOTICE IS GIVEN
THAT THE SALE, PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, OR (iv) SUCH SALE, PLEDGE OR OTHER TRANSFER IS
OTHERWISE MADE IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, IN WHICH CASE (A) THE TRUSTEE
SHALL REQUIRE THAT BOTH THE PROSPECTIVE TRANSFEROR AND THE
PROSPECTIVE TRANSFEREE CERTIFY TO THE TRUSTEE AND THE DEPOSITOR IN
WRITING THE FACTS SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION
SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
DEPOSITOR, AND (B) THE TRUSTEE SHALL REQUIRE (x) A WRITTEN OPINION
OF COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR OR
THE TRUSTEE) SATISFACTORY TO THE DEPOSITOR AND THE TRUSTEE TO THE
EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT AND
(y) A WRITTEN OPINION OF COUNSEL OR A RULING OF THE INTERNAL REVENUE
SERVICE (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR OR THE
TRUSTEE), SATISFACTORY TO THE DEPOSITOR AND THE TRUSTEE, THAT SUCH
TRANSFER WILL NOT RESULT IN THE TRUST BEING TREATED AS AN
ASSOCIATION TAXABLE AS A CORPORATION UNDER EITHER THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR THE TAX LAWS OF
THE STATE OF NEW YORK. NO SALE, PLEDGE OR OTHER TRANSFER MAY BE
MADE TO ANY ONE PERSON OF CLASS B CERTIFICATES WITH A FACE AMOUNT
OF LESS THAN $250,000 AND, IN THE CASE OF ANY PERSON ACTING ON
BEHALF OF ONE OR MORE THIRD PARTIES (OTHER THAN A BANK (AS
DEFINED IN SECTION 3(a)(2) OF THE SECURITIES ACT) ACTING IN ITS
FIDUCIARY CAPACITY), FOR CLASS B CERTIFICATES WITH A FACE AMOUNT OF
LESS THAN $250,000 FOR EACH SUCH THIRD PARTY.
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO ANY
PERSON THAT IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE,
OR ANY GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA,
SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW THAT IS, TO A MATERIAL
EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE
(COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE ASSETS OF A
PLAN, EXCEPT AS PROVIDED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
SECTION 6.04 OF THE POOLING AND SERVICING AGREEMENT CONTAINS FURTHER
RESTRICTIONS ON THE TRANSFER AND RESALE OF THIS CLASS B
CERTIFICATE. EACH TRANSFEREE OF THIS CLASS B CERTIFICATE, BY
ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CLASS B
CERTIFICATE SUBJECT TO THE FOREGOING RESTRICTIONS ON TRANSFERABILITY.
EACH CERTIFICATEHOLDER OR CERTIFICATE OWNER, BY ITS ACCEPTANCE OF
THIS CLASS B CERTIFICATE (OR INTEREST HEREIN), COVENANTS AND AGREES
THAT SUCH CERTIFICATEHOLDER OR CERTIFICATE OWNER, AS THE CASE MAY
BE, SHALL NOT, PRIOR TO THE DATE THAT IS ONE YEAR AND ONE DAY
AFTER THE TERMINATION OF THE POOLING AND SERVICING AGREEMENT,
ACQUIESCE, PETITION OR OTHERWISE INVOKE OR CAUSE THE DEPOSITOR TO
INVOKE THE PROCESS OF ANY COURT OR GOVERNMENTAL AUTHORITY FOR THE
PURPOSE OF COMMENCING OR SUSTAINING A CASE AGAINST THE DEPOSITOR
UNDER ANY FEDERAL OR STATE BANKRUPTCY, INSOLVENCY, REORGANIZATION OR
SIMILAR LAW, OR APPOINTING A RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE,
CUSTODIAN, SEQUESTRATOR, OR OTHER SIMILAR OFFICIAL OF THE DEPOSITOR
OR ANY SUBSTANTIAL PART OF ITS PROPERTY, OR ORDERING THE WINDING
UP OR LIQUIDATION OF THE AFFAIRS OF THE DEPOSITOR.
DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CLASS B
CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS B
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE
FACE HEREOF.
NUMBER R- $
CUSIP NO. 320818 AD9
FIRST MERCHANTS GRANTOR TRUST 1996-2
6.85% ASSET BACKED CERTIFICATE, CLASS B
evidencing a fractional undivided interest in the Trust (as defined below), the
property of which includes a pool of motor vehicle retail installment sale
contracts secured by new and used automobiles, light duty trucks, vans and
minivans.
(This Class B Certificate does not represent an interest in, or an obligation of
,First Merchants Acceptance Corporation, First Merchants Auto Receivables
CorporationII or any of their respective Affiliates, except to the extent
described below.)
THIS CERTIFIES THAT is the registered owner of
DOLLARS nonassessable, fully-paid,
fractional undivided interest in First Merchants Grantor Trust 1996-2 (the
"Trust") formed pursuant to the Pooling and Servicing Agreement dated as of
June 1, 1996 (the "Pooling and Servicing Agreement"), among First Merchants
Auto Receivables Corporation II, a Delaware corporation, as depositor (the
"Depositor"), First Merchants Acceptance Corporation, a Delaware corporation,
as servicer (the "Servicer"), and Harris Trust and Savings Bank, an Illinois
banking corporation, as trustee (in such capacity, the "Trustee") and backup
servicer (in such capacity, the "Backup Servicer"), 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 Pooling and Servicing Agreement.
This Certificate is one of a duly authorized series of Certificates,
designated as the 6.85% Asset Backed Certificates, Class B (the "Class B
Certificates"), all issued under the Pooling and Servicing Agreement, to
which Pooling and Servicing Agreement reference is hereby made for a
statement of the respective rights and obligations thereunder of the
Depositor, the Servicer, the Trustee, the Backup Servicer and the
Certificateholders. The Class B Certificates are subject to all the terms of
the Pooling and Servicing Agreement.
The property of the Trust includes (i) a pool of motor vehicle retail
installment sale contracts secured by new and used automobiles, light duty
trucks, vans and minivans (the "Receivables"); (ii) all moneys received
thereunder on or after June 1, 1996; (iii) all amounts and property from time
to time held in or credited to the Local Post Office Boxes, the Local
Collection Accounts or the Collection Account; (iv) security interests in the
Financed Vehicles and any accessions thereto; (v) the right to receive
payments from the Spread Account, to the extent and under the circumstances
set forth in the Pooling and Servicing Agreement and the Spread Account
Agreement; (vi) the right to receive all proceeds from claims on physical
damage, credit life and disability insurance policies covering the Financed
Vehicles or the Obligors, as the case may be; (vii) any property that shall
have secured a Receivable and that shall have been acquired by or on behalf
of the Depositor, the Servicer or the Trustee; (viii) all of the Depositor's
right to all documents contained in the Receivable Files; and (ix) any and
all proceeds of the foregoing.
Under the Pooling and Servicing Agreement, there will be distributed on the
fifteenth day of each month or, if such fifteenth day is not a Business Day,
the next succeeding Business Day (each, a "Distribution Date"), commencing on
July 15, 1996, to the Person in whose name this Class B Certificate is
registered at the close of business on the day immediately preceding such
Distribution Date (the "Record Date"), such Certificateholder's fractional
undivided interest in the amount to be distributed to Class B
Certificateholders on such Distribution Date. No principal or interest will
be distributed to Holders of the Class B Certificates on any Distribution
Date unless the Holders of the Class A Certificates have received the full
Class A Interest Distributable Amount and Class A Principal Distributable Amount
for such date and an amount equal to the Spread Account Required Amount is on
deposit in the Spread Account. The Holder of this Class B Certificate
acknowledges and agrees that its right to receive distributions in respect of
this Certificate are subordinated to the rights of Holders of the Class A
Certificates to the extent described herein and as set forth in the Pooling
and Servicing Agreement.
It is the intent of the Depositor, the Servicer, the Trustee, the Backup
Servicer, and the Certificateholders that, for purposes of federal income,
state and local income and business tax and any other income taxes, the Trust
be treated as a grantor trust and the Certificates be treated as interests in
a grantor trust. The Depositor, the Servicer, the Trustee, the Backup
Servicer, and each Certificateholder or Certificate Owner, by its acceptance
of a Certificate or of a beneficial interest in a Certificate, as the case
may be, agree to treat, and to take no action inconsistent with the treatment
of, the Certificates for such tax purposes as interests in a grantor trust.
Distributions on this Class B Certificate will be made as provided in the
Pooling and Servicing Agreement by the Trustee by wire transfer or check
mailed to the Person identified as the Holder of Record hereof in the
Certificate Register, without the presentation or surrender of this Class B
Certificate or the making of any notation hereon. Except as otherwise
provided in the Pooling and Servicing Agreement and notwithstanding the
above, the final distribution on this Class B Certificate will be made after
due notice by the Trustee of the pendency of such distribution and only
upon presentation and surrender of this Class B Certificate at the office or
agency maintained for that purpose by the Trustee in the Borough of
Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Class B
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 Trustee, by manual signature, this Class B
Certificate shall not entitle the Holder hereof to any benefit under the
Pooling and Servicing Agreement or be valid for any purpose.
THIS CLASS B CERTIFICATE 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.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust and not in its
individual capacity, has caused this Class B Certificate to be duly executed.
FIRST MERCHANTS GRANTOR TRUST 1996-2
By: HARRIS TRUST AND SAVINGS BANK, not
in its individual capacity
but solely as Trustee
Date: By:
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Pooling and Servicing Agreement.
Date: HARRIS TRUST AND SAVINGS BANK, not in its
individual capacity but solely as Trustee
By:
Authorized Signatory
<PAGE>
[REVERSE OF CLASS B CERTIFICATE]
The Class B Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Trustee, the Backup Servicer,
or any of their respective Affiliates, and no recourse may be had against
such parties or their assets except as expressly set forth or contemplated
herein or in the Pooling and Servicing Agreement. In addition, this Class B
Certificate is not guaranteed by the Depositor, the Servicer, the Trustee,
the Backup Servicer, or any governmental agency or instrumentality, and is
limited in right of payment to certain collections and recoveries with
respect to the Receivables, payments under the Policy and certain other
amounts, all as more specifically set forth herein and in the Pooling and
Servicing Agreement. A copy of the Pooling and Servicing 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 Pooling and Servicing Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Servicer, the Trustee and the Backup
Servicer and the rights of the Certificateholders at any time by the
Depositor, the Servicer, the Trustee and the Backup Servicer with the consent
of Security Insurer and the Holders of Certificates evidencing not less than
a majority of the Certificate Balance. Any such consent by the Holder of
this Class B Certificate shall be conclusive and binding on such Holder and
on all future Holders of this Class B Certificate and of any Class B
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 Class
B Certificate. The Pooling and Servicing Agreement also permits the
amendment thereof, in certain limited circumstances, with the consent of the
Security Insurer but without the consent of the Holders of any of the
Certificates.
No registration of transfer of this Class B Certificate will be made
unless the Trustee first receives a representation letter, in the form
described in Section 6.04 of the Pooling and Servicing Agreement, stating
that the transferee is not a Benefit Plan and is not acting on behalf of a
Benefit Plan or using the assets of a Benefit Plan to effect such purchase.
Any transfer of this Class B Certificate that does not satisfy the
requirements set forth in Section 6.04 of the Pooling and Servicing
Agreement shall be void and of no effect.
Except as provided in the Pooling and Servicing Agreement, the Class B
Certificates are issuable only as registered certificates without coupons in
a minimum denomination of $250,000 and integral multiples of $1,000 in excess
thereof; provided that one Class B Certificate may be issued in such
denomination as is required to include any residual amount. As provided in
the Pooling and Servicing Agreement and subject to certain limitations
therein set forth and described in the preceding paragraph, Class B
Certificates are exchangeable for new Class B Certificates of authorized
denominations evidencing the same aggregate denomination as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the Trustee or the
Certificate Registrar may treat the Person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and none of
the Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Pooling and Servicing
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
Pooling and Servicing Agreement and the disposition of all property held by
the Trust. The Servicer of the Receivables may at its option purchase the
Trust property at a price specified in the Pooling and Servicing Agreement,
and such purchase of the Receivables and other property of the Trust will
effect early retirement of the Class B Certificates; provided, however, that
such right of purchase is exercisable only after the Pool Balance is less
than or equal to 10% of the Initial Pool Balance.<PAGE>
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 Class B Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
, attorney, to transfer said Class
B 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
as it appears on the face of the within Class B Certificate in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by a member firm of the New York Stock Exchange
or a commercial bank or trust company.<PAGE>
EXHIBIT C
Form Of Depository Agreement
Letter of Representations
[To be Completed by Issuer and Trustee]
[Name of Issuer]
[Name of Trustee]
(Date)
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
Re:
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Trustee will act
as trustee with respect to the Securities pursuant to a trust indenture dated
, 199
(the "Document"). (the "Underwriter") is
distributing the Securities through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its Rules with respect to the Securities,
Issuer and Trustee make the following representations to DTC:
1. Prior to closing on the Securities on ,
199 , there shall be deposited with DTC one Security certificate registered
in the name of DTC's nominee, Cede & Co., for each stated maturity of the
Securities in the face amounts set forth on Schedule I hereto, the total of
which represents 100% of the principal amount of such Securities. If,
however, the aggregate principal amount of any maturity exceeds $150 million,
one certificate will be issued with respect to each $150 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount. Each $150 million certificate shall bear the
following legend:
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to
Issuer or its agent for registration of transfer, exchange, or payment,
and any 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.
2. In the event of any solicitation of consents from or voting by
holders of the Securities, Issuer or Trustee shall establish a record date for
such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send notice of such
record date to DTC not less than 15 calendar days in advance of such record
date. Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-6896 or (212) 709-6897, and
receipt of such notices shall be confirmed by telephoning (212) 709-6870.
Notices to DTC pursuant to this Paragraph by mail or by any other means shall
be sent to DTC's Reorganization Department as indicated in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or Trustee shall
send a notice to DTC specifying: (a) the amount of the redemption or refunding;
(b) in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be mailed to Security holders or
published (the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or,
if possible, two business days before the Publication Date. Issuer or
Trustee shall forward such notice either in a separate secure transmission
for each CUSIP number or in a secure transmission for multiple CUSIP numbers
(if applicable) which includes a manifest or list of each CUSIP number
submitted in that transmission. (The party sending such notice shall have a
method to verify subsequently the use of such means and the timeliness of
such notice.) The Publication Date shall be not less than 30 days nor more
than 60 days prior to the redemption date or, in the case of an advance
refunding, the date that the proceeds are deposited in escrow. Notices to
DTC pursuant to this Paragraph by telecopy shall be sent to DTC's Call
Notification Department at (516) 227-4039 or (516) 227-4190. If the party
sending the notice does not receive a telecopy receipt from DTC confirming that
the notice has been received, such party shall telephone (516) 227-4070.
Notices to DTC pursuant to this Paragraph by mail or by any other means shall
be sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities, notice by
Issuer or Trustee to Security holders specifying the terms of the tender and the
Publication Date of such notice shall be sent to DTC by a secure means in the
manner set forth in the preceding Paragraph. Notices to DTC pursuant to this
Paragraph and notices of other corporate actions (including mandatory tenders,
exchanges, and capital changes) by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-1093 or (212) 709-1094, and receipt of
such notices shall be confirmed by telephoning (212) 709-6884. Notices to
DTC pursuant to the above by mail or by any other means shall be sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
5. All notices and payment advances sent to DTC shall contain the CUSIP
number of the Securities.
6. Trustee shall send DTC written notice with respect to the dollar
amount per $1,000 original face value (or other minimum authorized denomination
if less than $1,000 face value) payable on each payment date allocated as to the
interest and principal portions thereof preferably 5, but not less than 2,
business days prior to such payment date. Such notices, which shall also
contain the current pool factor and Trustee contact's name and telephone
number, shall be sent by telecopy to DTC's Dividend Department at
(212) 709-1723, or if by mail or by any other means to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
7. [Note: Issuer must represent one of the following, and cross out the
other:] [The interest accrual period is record date to record date.] [The
interest accrual period is payment date to payment date.]
8. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns in same-day funds on each payment date (or the
equivalent in accordance with existing arrangements between Issuer or
Trustee and DTC). Such payments shall be made payable to the order of Cede &
Co. Absent any other existing arrangements, such payments shall be addressed
as follows:
Manager; Cash Receipts
Dividend Department
The Depository Trust Company
7 Hanover Square; 24th Floor
New York, NY 10004-2695
9. [Note: Issuer must represent one of the following, and cross out the
other:]
Securities Eligible for DTC's Same-Day Funds Settlement ("SDFS")
System.
Other principal payments (redemption payments) shall be made in same-day
funds by Trustee in the manner set forth in the SDFS Paying Agent Operating
Procedures, a copy of which previously has been furnished to Trustee.
Securities Eligible for DTC's Next-Day Funds Settlement ("NDFS")
System.
Other principal payments (redemption payments) shall be made in next-day
funds by Trustee to Cede & Co., as nominee of DTC, or its registered assigns, on
each payment date. Such payments shall be made payable to the order of Cede &
Co., and shall be addressed as follows:
NDFS Redemptions Manager
Reorganization/Redemptions Department
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
10. DTC may direct Issuer or Trustee to use any other number or address
as the number or address to which notices or payments of interest or principal
may be sent.
11. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or Trustee's
invitation) necessitating a reduction in the aggregate principal amount of
Securities outstanding or an advance refunding of part of the Securities
outstanding, DTC, in its discretion: (a) may request Issuer or Trustee to issue
and authenticate a new Security certificate; or (b) may make an appropriate
notation on the Security certificate indicating the date and amount of such
reduction in principal except in the case of final maturity, in which case the
certificate will be presented to Issuer or Trustee prior to payment, if
required.
12. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trustee
shall notify DTC of the availability of certificates. In such event, Issuer or
Trustee shall issue, transfer, and exchange certificates in appropriate amounts,
as required by DTC and others.
13. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Trustee (at which time DTC will confirm with Issuer or Trustee the aggregate
principal amount of Securities outstanding). Under such circumstances, at DTC's
request Issuer and Trustee shall cooperate fully with DTC by taking appropriate
action to make available one or more separate certificates evidencing Securities
to any DTC Participant having Securities credited to its DTC accounts.
14. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.
15. Nothing herein shall be deemed to require Trustee to advance funds
on behalf of Issuer.
Notes:
A. If there is a Trustee (as defined
in this Letter of Representations),
Trustee as well as Issuer must sign
this Letter. If there is no Trustee,
in signing this Letter Issuer itself
undertakes to perform all of the
obligations set forth herein.
B. Schedule B contains statements
that DTC believes accurately describe
DTC, the method of effecting book-
entry transfers of securities distributed
through DTC, and certain related matters.<PAGE>
Very truly yours,
(Issuer)
By:
(Authorized Officer's Signature)
(Trustee)
By:
(Authorized Officer's Signature)<PAGE>
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:
cc: Underwriter
Underwriter's Counsel<PAGE>
SCHEDULE I
(Describe Issue)
CUSIP Principal Amount Maturity Date Interest Rate<PAGE>
SCHEDULE B
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC--bracketed material may be applicable only to certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will act as securities
depository for the securities (the "Securities"). The Securities will be issued
as fully-registered securities registered pin the name of Cede & Co. (DTC's
partnership nominee). One fully-registered Security certificate will be issued
for [each issue of the Securities, [each] in the aggregate principal amount of
such issue, and will be deposited with DTC. [If, however, the aggregate
principal amount of [any] issue exceeds $150 million, one certificate will be
issued with respect to each $150 million of principal amount and an additional
certificate will be issued with respect to any remaining principal amount of
such issue.]
2. DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in Securities,
except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Securities with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
[6. Redemption notices shall be sent to Cede & Co. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.]
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
Issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Securities are credited on the record date (identified in
a listing attached to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on payable date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Agent, or the Issuer,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility
of the Issuer or the Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to the [Tender/Remarketing]
Agent, and shall effect delivery of such Securities by causing the Direct
Participant to transfer the Participant's interest in the Securities, on DTC's
records, to the [Tender/Remarketing] Agent. The requirement for physical
delivery of Securities in connection with a demand for purchase or a mandatory
purchase will be deemed satisfied when the ownership rights in the Securities
are transferred by Direct Participants on DTC's records.]
10. DTC may discontinue providing its services as securities depository with
respect to the Securities at any time by giving reasonable notice to the Issuer
or the Agent. Under such circumstances, in the event that a successor
securities depository is not obtained, Security certificates are required to
be printed and delivered.
11. The Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuer believes to be reliable, but the
Issuer takes no responsibility for the accuracy thereof.
<PAGE>
REPRESENTATIONS FOR RULE 144A SECURITIES
to be included in DTC Letter of Representations
1. Issuer represents that at the time of initial registration in the name of
DTC's nominee, Cede & Co., the Securities were Legally or Contractually
Restricted Securities, eligible for transfer under Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"), and identified by a
CUSIP or CINS identification number that was different from any CUSIP or CINS
number assigned to any securities of the same class that were not Legally or
Contractually Restricted Securities. Issuer shall ensure that a CUSIP or CINS
identification number is obtained for all unrestricted securities of the same
class that is different from any CUSIP or CINS identification number assigned to
a Legally or Contractually Restricted Security of such class, and shall notify
DTC promptly in the event that it is unable to do so. Issuer represents that it
has agreed to comply with all applicable information requirements of Rule 144A.
2. Issuer represents that the Securities are [Note: Issuer must represent
one of the following, and may cross out the other]
[an issue of nonconvertible debt securities or nonconvertible preferred stock
which is rated in one of the top four categories by a nationally recognized
statistical rating organization ("Investment-Grade Securities").]
3. If the Securities are not Investment-Grade Securities, Issuers and Trustee
acknowledge that if such Securities cease to be included in an SRO Rule 144A
System during any period in which such Securities are Legally or Contractually
Restricted Securities, such Securities shall no longer be eligible for DTC's
services. Furthermore, DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving reasonable
notice to Issuer or Trustee. Under any of the aforementioned circumstances,
at DTC's request, Issuer and Trustee shall cooperate fully with DTC by taking
appropriate action to make available one or more separate certificates
evidencing Securities to any Participant having Securities credited to its
DTC accounts.
4. Issuer and Trustee acknowledge that so long as Cede & Co. is a record
owner of the Securities, Cede & Co. shall be entitled to all applicable voting
rights and to receive the full amount of all distributions payable with respect
thereto. Issuer and Trustee acknowledge that DTC shall treat any DTC
Participant ("Participant") having Securities credited to DTC accounts as
entitled to the full benefits of ownership of such Securities. Without
limiting the generality of the preceding sentence, Issuer and Trustee
acknowledge that DTC shall treat any Participant having Securities credited
to its DTC accounts as entitled to receive distributions (and voting rights,
if any) in respect of Securities, and to receive from DTC certificates
evidencing Securities. Issuer and Trustee recognize that DTC does not in any
way undertake to, and shall not have any responsibility to, monitor or
ascertain the compliance of any transactions in the Securities with any of
the provisions: (a) of Rule 144A: (b) of other exemptions from registration
under the Securities Act or of any other state or federal securities laws; or
(c) of the offering documents.
<PAGE>
EXHIBIT D
Representations and Warranties of First Merchants Acceptance Corporation
Under Section 3.02 of the Receivables Purchase Agreement
(a) 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 Trust, (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 first and 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.
(b) 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.
(c) 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
Closing Date of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(d) No Government Obligor. No Receivable is due from the United States
of America or any State or any agency, department, subdivision or
instrumentality thereof.
(e) Obligor Bankruptcy. As of the Cutoff Date, no Obligor had been
identified on the records of the Seller as being the subject of a current
bankruptcy proceeding.
(f) Schedule of Receivables. The information set forth in Schedule I
to this Agreement is true and correct in all material respects as of the
close of business on the Cutoff Date.
(g) Marking Records. By the Closing 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 Trust in accordance with the terms of the Pooling and Servicing
Agreement.
(h) 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 Cutoff Date.
(i) No Adverse Selection. No selection procedures believed by the
Seller to be adverse to the Certificateholders were utilized in selecting the
Receivables.
(j) Chattel Paper. The Receivables constitute chattel paper within the
meaning of the UCC as in effect in the State of Illinois.
(k) One Original. There is only one original executed copy of each
Receivable.
(l) 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.
(m) 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 Pooling and Servicing Agreement.
(n) 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 pursuant to
this Agreement (or by the Purchaser to the Trustee pursuant to the Pooling 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 to Fourth Amended and Restated Loan
and Security Agreement dated as of June 26, 1996, by and among the Seller and
such securedlenders), 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.
(o) 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.
(p) 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.
(q) 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.
(r) 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.
(s) 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.
(t) Final Scheduled Maturity Date. No Receivable has a final scheduled
payment date after June 14, 2001.
(u) Certain Characteristics of the Receivables. As of the Cutoff Date,
(A) each Receivable had an original maturity of not more than 60 months; (B)
no Receivable was more than 31 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.
<PAGE>
EXHIBIT E
Form of Servicer's Certificate
First Merchants Acceptance Corporation
Monthly Servicing Report
[Date]
First Merchants Grantor Trust 1996-2
$ 6.85% Asset Backed Certificates, Class A
$ 6.85% Asset Backed Certificates, Class B
Distribution Date:
I. Original Deal Parameter Inputs
(A) Initial Pool Balance
(B) Initial Class A Balance
(C) Initial Class B Balance
(D) 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 Balance
(C) Current Class B Balance
(D) Class A Certificate Factor
(E) Class B Certificate Factor
(F) Spread Account Balance
(G) Weighted Average Coupon of Remaining Portfolio (WAC)
(H) Weighted Average Remaining Term of Remaining Portfolio (WAM)
(I) 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 Class B Certificateholders
(D) Spread Account Release to Depositor
(E) 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
Contracts
Amount
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. Monthly Collections
(1) Class A Interest Distributable Amount
(2) Class A Principal Distributable Amount
(3) Class B Interest Distributable Amount
(4) Class B Principal Distributable Amount
(5) Total Principal Payments Received
(a) Principal Payments on Receivables (includes Partial and
Full Prepayments)
(b) Repurchased Receivables
(c) Cram Down Loss
(6) Interest Payments Received
B. Draw on Credit Enhancements
(1) Withdrawal from Spread Account
(2) Draw on the Insurance Policy
(3) Total Draw on Credit Enhancements
C. Available Funds
(1) Available Funds
(2) Available Funds allocable to interest
(3) Available Funds allocable to principal
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) Class A Principal Distributable Amount
(2) Class B Principal Distributable Amount
(3) Principal Distribution Amount
(a) Principal Payments on Receivables
(b) Repurchased Receivables
(c) Cram Down Loss
(4) Class A Interest Distributable Amount
(5) Class B Interest Distributable Amount
(6) Required Distributions
(a) Servicing Fee (Includes late fees collected)
(b) Fees Paid to Trustee and Collateral Agent
(c) Monthly Security Insurer's Premium
(d) Deposits into Spread Account
F. Pool Balances and Portfolio Information
Beginning
of Period
End
of Period
(1) Total Pool Balance
(2) Total Pool Factor
(3) Certificate Balance
(4) Remaining
Overcollateralization
Amount
(5) Weighted Average
Coupon
(6) Weighted Average
Remaining Maturity
(7) 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 Class B Certificateholders or Depositor
(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 Class A Certificateholders:
(2) Per $1,000 original principal amount:
K. (1) Amount of principal being paid to Class B Certificateholders:
(2) Per $1,000 original principal amount:
L. (1) Amount of interest being paid to Class A Certificateholders:
(2) Per $1,000 original principal amount:
M. (1) Amount of interest being paid to Class B Certificateholders:
(2) Per $1,000 original principal amount:
N. Pool Balance at the end of the related Collection Period:
O. Outstanding Class A Balance:
Class A Pool Factor:
P. Outstanding Class B Balance:
Class B 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:
<PAGE>
EXHIBIT F
Form of Transferor's Letter
First Merchants Auto Receivables Corporation II
570 Lake Cook Road
Suite 126A
Deerfield, Illinois 60015
First Merchants Acceptance Corporation
570 Lake Cook Road
Suite 126
Deerfield, Illinois 60015
Harris Trust and Savings Bank,
as Trustee of First Merchants Grantor Trust 1996-2
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Ladies and Gentlemen:
In connection with our proposed purchase of $ aggregate
principal amount of 6.85% Asset-Backed Certificates, Class A (the
"Certificates") of First Merchants Grantor Trust 1996-2 (the "Depositor"), we
confirm that:
(1) We understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may
not be sold except as permitted in the following sentence. We understand
and agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, (x) that such Certificates are being offered
only in a transaction not involving any public offering within the meaning
of the Securities Act and (y) that such Certificates may be resold, pledged
or transferred only (i) to the First Merchants Auto Receivables Corporation
II (the "Depositor"), (ii) to an institutional investor that is an
"accredited investor" as defined in Rule 501(a)(1),(2),(3) or (7) (an
"Institutional Accredited Investor") under the Securities Act (as indicated
by the box checked by the transferor on the Certificate of Transfer on the
reverse of the Certificate) acting for its own account (and not for the
account of others) or as a fiduciary or agent for others (which others also
are Institutional Accredited Investors unless the holder is a bank acting
in its fiduciary capacity) that executes a certificate substantially in the
form hereof, (iii) so long as such Certificate is eligible for resale
pursuant to Rule 144A under the Securities Act ("Rule 144A"), to a person
whom we reasonably believe after due inquiry is a "qualified institutional
buyer" as defined in Rule 144A, acting for its own account (and not for the
account of others) or as a fiduciary or agent for others (which others also
are "qualified institutional buyers") to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A or (iv) in
a sale, pledge or other transfer made in a transaction otherwise exempt from
the registration requirements of the Securities Act, in which case (A) the
Trustee shall require that both the prospective transferor and the
prospective transferee certify to the Trustee and the Depositor in writing
the facts surrounding such transfer, which certification shall be in form
and substance satisfactory to the Trustee and the Depositor and (B) the
Trustee shall require a written opinion of counsel (which will not be at the
expense of the Depositor or the Trustee) satisfactory to the Depositor and
the Trustee to the effect that such transfer will not violate the Securities
Act, in each case in accordance with any applicable securities laws of any
state of the United States. We will notify any purchaser of the Certificate
from us of the above resale restrictions, if then applicable. We further
understand that in connection with any transfer of the Certificates by us
that the Depositor and the Trustee may request, and if so requested we will
furnish, such certificates and other information as they may reasonably
require to confirm that any such transfer complies with the foregoing
restrictions. We understand that no sale, pledge or other transfer may be
made to any one person of Certificates with a face amount of less than
$250,000 and, in the case of any person acting on behalf of one or more
third parties (other than a bank (as defined in Section 3(a)((2) of the
Securities Act) acting in its fiduciary capacity), of Certificates with a
face amount of less than $250,000 for each such third party.
(2) [CHECK ONE]
(a) We are an institutional investor and an "accredited investor" (as
defined in Rule 501(a)(1),(2),(3) or (7) of Regulation D under the
Securities Act) acting for our own account (and not for the account of
others) or as a fiduciary or agent for others (which others also are
Institutional Accredited Investors unless we are a bank acting in its
fiduciary capacity). We have such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Certificates, and we and any
accounts for which we are acting are each able to bear the economic
risk of our or their investment for an indefinite period of time. We
are acquiring the Certificates for investment and not with a view to,
or for offer and sale in connection with, a public distribution.
(b) We are a "qualified institutional buyer" as defined under Rule
144A under the Securities Act and are acquiring the Certificates for
our own account (and not for the account of others) or as a fiduciary
or agent for others (which others also are "qualified institutional
buyers"). We are familiar with Rule 144A under the Securities Act and
are aware that the seller of the Certificates and other parties intend
to rely on the statements made herein and the exemption from the
registration requirements of the Securities Act provided by Rule 144A.
(3) We understand that the Depositor, Salomon Brothers Inc, as the
initial purchaser of the Certificates (the "Initial Purchaser"), and others
will rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements, and we agree that if any of the
acknowledgments, representations and warranties deemed to have been made by
us by our purchase of the Certificates, for our own account or for one or
more accounts as to each of which we exercise sole investment discretion,
are no longer accurate, we shall promptly notify the Depositor and the
Initial Purchaser.
<PAGE>
(4) You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
_________________________________
(Name of Purchaser)
By: ______________________________
Date: _____________________________
<PAGE>
EXHIBIT G
Form of Policy
