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
March 31, 1997
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)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On March 31, 1997, First Merchants Acceptance Corporation (the
"Registrant")effected a securitization of approximately $106.1 million of
its motor vehicle installment contract receivables (the "Receivables")
pursuant to an S-3 Registration Statement. In connection with the
securitization, First Merchants Auto Receivables Corporation II, a
bankruptcy-remote special purpose wholly owned subsidiary of the Registrant
(the "Seller"), acquired the Receivables from Registrant with approximately
$97.6 million of the proceeds received from its sale of notes issued by
First Merchants Auto Trust 1997-1 (the "Trust")pursuant to a Sale and
Servicing Agreement dated as of March 1, 1997 among the Registrant, Seller,
the Trust and Harris Trust and Savings Bank, as Indenture Trustee and Backup
Servicer. The Trust was formed pursuant to an Amended and Restated Trust
Agreement dated as of March 1, 1997. The Trust acquired the Receivables
together with certain related property from Seller and issued to the Seller
$68,000,000 aggregate principal amount of Floating Rate Asset Backed Notes,
Class A-1 (the "Class A-1 Notes"); $29,595,000 aggregate principal amount of
6.75% Asset Backed Notes, Class A-2 (the "Class A-2 Notes"), (The Class A-1 and
Class A-2 Notes together the "Notes"); and $8,486,690.83 aggregate principal
amount of 6.75% Asset Backed Certificates (the "Certificates"), (The Notes and
Certificates together the "Securities") all pursuant to an Indenture dated
as of March 1, 1997 (the "Indenture") between the Trust and Harris Trust
and Savings Bank, as Indenture Trustee. The Notes and Certificates were
issued pursuant to the Sale and Servicing Agreement and evidence an
undivided ownership interest in 92% and 8% of the Trust, respectively. The
Notes were sold to institutional investors and the Certificates will be
retained by Seller and are subordinated to the Notes. The assets of the
Trust include the Receivables and the related security interests in the
underlying motor vehicles. The obligations of the Trust to pay principal
and interest under the Notes and Certificates are non-recourse to the
Registrant. However, regular payments of principal and interest on the
Notes and Certificates have been guaranteed by Financial Security Assurance
Inc.
Principal and interest on the Securities generally will be paid on the fifteenth
day of each month (or if such fifteenth day is not a business day, the next
succeeding business day), commencing April 15, 1997; however, no principal
payments will be made to holders of the Class A-2 Notes until the Class A-1
Notes have been paid in full. The Class A-1 Notes Final Scheduled
Distribution Date will be August 15, 2000 and the Class A-2 Final
Scheduled Distribution Date will be December 17, 2001.
The Class A-1 Notes bear interest at a per annum rate equal to LIBOR for
the applicable period plus 0.13% subject to a maximum per annum rate of
11%.
The Class A-2 Notes will be subject to redemption in whole, but not in
part, on any Distribution Date on which the Registrant exercises its option
to purchase the Receivables, which it may do when the outstanding principal
balance of the Receivables has been reduced to 10% or less of their initial
aggregate balance at the time of transfer to the Trust.
The Registrant used the estimated net proceeds from the sale of the
Receivables to the Seller for general corporate purposes, including, but
not limited to, the purchase of additional motor vehicle retail installment
contracts from dealers, repayment of indebtedness and general working
capital purposes.
<PAGE>
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 1: Amended and Restated Trust Agreement, dated as of March 1, 1997,
between First Merchants Automobile Receivable Corporation II, as Dep[ositor
and Chase Manhattan Bank Delaware as Owner Trustee.
Exhibit 2: Sale and Servicing Agreement dated as of March 1, 1997 among
First Merchants Auto Trust 1997-1, as Issuer, First Merchants Auto
Receivable Corporation II, as Seller, and First Merchants Acceptance
Corporation, as Servicer, and Harris Trust and Savings Bank, as Indenture
Trustee and Backup Servicer.
Exhibit 3: Receivables Purchase Agreement, dated as of March 1, 1997
between First Merchants Acceptance Corporation and First
Merchants Auto Receivables Corporation II.
Exhibit 4: Indenture dated as of March 1, 1997 between First Merchants
Acceptance Auto Trust 1997-1 and Harris Trust and Savings Bank, as
Indenture Trustee.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
FIRST MERCHANTS ACCEPTANCE
CORPORATION
Mitchell C. Kahn
President and Chief Executive Officer
Dated: March 31, 1997
<PAGE>
EXHIBIT INDEX
Sequentially-
Exhibit Numbered
No. Description Page
1 Amended and Restated Trust Agreement, dated as of March 1, 1997,
between First Merchants Automobile Receivable Corporation II, as Depositor
and Chase Manhattan Bank Delaware as Owner Trustee.
2 Sale and Servicing Agreement dated as of March 1, 1997 among First
Merchants Auto Trust 1997-1, as Issuer, First Merchants Auto Receivable
Corporation II, as Seller, and First Merchants Acceptance Corporation, as
Servicer, and Harris Trust and Savings Bank, as Indenture Trustee,
Collateral Agent and Backup Servicer.
3 Receivables Purchase Agreement, dated as of March 1, 1997 between First
Merchants Acceptance Corporation and First Merchants Auto Receivables
Corporation II
4 Indenture dated as of March 1, 1997 between First Merchants Acceptance
Auto Trust 1997-1 and Harris Trust and Savings Bank, as Indenture Trustee.
<PAGE>
AMENDED AND RESTATED
TRUST AGREEMENT
between
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
as Depositor,
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
Dated as of March 1, 1997
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01.
Capitalized Terms . . . . . . . . . . . . . . . . . 1
SECTION 1.02.
Other Definitional Provisions . . . . . . . . . . . 3
ARTICLE II
Organization
SECTION 2.01.
Name. . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02.
Office. . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03.
Purposes and Powers . . . . . . . . . . . . . . . . 4
SECTION 2.04.
Appointment of Owner Trustee. . . . . . . . . . . . 4
SECTION 2.05.
Initial Capital Contribution of Owner Trust Estate. 4
SECTION 2.06.
Declaration of Trust. . . . . . . . . . . . . . . . 5
SECTION 2.07.
Liability of the Owners . . . . . . . . . . . . . . 5
SECTION 2.08.
Title to Trust Property . . . . . . . . . . . . . . 5
SECTION 2.09.
Situs of Trust. . . . . . . . . . . . . . . . . . . 5
SECTION 2.10.
Representations and Warranties of the Depositor . . 5
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.01.
Initial Ownership . . . . . . . . . . . . . . . . . 6
SECTION 3.02.
The Trust Certificates. . . . . . . . . . . . . . . 6
SECTION 3.03.
Authentication of Trust Certificates. . . . . . . . 6
SECTION 3.04.
Registration of Transfer and Exchange of Trust Certificates 7
SECTION 3.05.
Mutilated, Destroyed, Lost or Stolen Trust Certificates 8
SECTION 3.06.
Persons Deemed Owners . . . . . . . . . . . . . . . 8
SECTION 3.07.
Access to List of Certificateholders' Names and Addresses 9
SECTION 3.08.
Maintenance of Office or Agency . . . . . . . . . . 9
SECTION 3.09.
Appointment of Paying Agent . . . . . . . . . . . . 9
SECTION 3.10.
[Reserved]. . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01.
Prior Notice with Respect to Certain Matters. . . . 10
SECTION 4.02.
Action by Owners with Respect to Certain Matters. . 10
SECTION 4.03.
Action by Owners with Respect to Bankruptcy . . . . 10
SECTION 4.04.
Restrictions on Owners' Power . . . . . . . . . . . 11
SECTION 4.05.
Majority Control. . . . . . . . . . . . . . . . . . 11
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01.
Establishment of Trust Account. . . . . . . . . . . 11
SECTION 5.02.
Application of Trust Funds. . . . . . . . . . . . . 11
SECTION 5.03.
Method of Payment . . . . . . . . . . . . . . . . . 12
SECTION 5.04.
No Segregation of Moneys; No Interest.. . . . . . . 12
SECTION 5.05.
Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others. . . . . . . . . . . 12
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.01.
General Authority . . . . . . . . . . . . . . . . . 12
SECTION 6.02.
General Duties. . . . . . . . . . . . . . . . . . . 13
SECTION 6.03.
Action upon Instruction . . . . . . . . . . . . . . 13
SECTION 6.04.
No Duties Except as Specified in this Agreement or in
Instructions . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.05.
No Action Except Under Specified Documents or Instructions 14
SECTION 6.06.
Restrictions. . . . . . . . . . . . . . . . . . . . 14
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.01.
Acceptance of Trusts and Duties . . . . . . . . . . 14
SECTION 7.02.
Furnishing of Documents . . . . . . . . . . . . . . 15
SECTION 7.03.
Representations and Warranties. . . . . . . . . . . 15
SECTION 7.04.
Reliance; Advice of Counsel . . . . . . . . . . . . 15
SECTION 7.05.
Not Acting in Individual Capacity . . . . . . . . . 16
SECTION 7.06.
Owner Trustee Not Liable for Trust Certificates or for
Receivables. . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.07.
Owner Trustee May Own Trust Certificates and Notes. 16
SECTION 7.08.
Pennsylvania Motor Vehicle Sales Finance Act Licenses 16
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01.
Owner Trustee's Fees and Expenses . . . . . . . . . 17
SECTION 8.02.
Indemnification . . . . . . . . . . . . . . . . . . 17
SECTION 8.03.
Payments to the Owner Trustee . . . . . . . . . . . 17
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01.
Termination of Trust Agreement. . . . . . . . . . . 17
SECTION 9.02.
[Reserved]. . . . . . . . . . . . . . . . . . . . . 18
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01.
Eligibility Requirements for Owner Trustee. . . . . 19
SECTION 10.02.
Resignation or Removal of Owner Trustee . . . . . . 19
SECTION 10.03.
Successor Owner Trustee . . . . . . . . . . . . . . 19
SECTION 10.04.
Merger or Consolidation of Owner Trustee. . . . . . 20
SECTION 10.05.
Appointment of Co-Trustee or Separate Trustee . . . 20
ARTICLE XI
Miscellaneous
SECTION 11.01.
Supplements and Amendments. . . . . . . . . . . . . 21
SECTION 11.02.
No Legal Title to Owner Trust Estate in Owners. . . 22
SECTION 11.03.
Limitations on Rights of Others . . . . . . . . . . 22
SECTION 11.04.
Notices . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.05.
Severability. . . . . . . . . . . . . . . . . . . . 22
SECTION 11.06.
Separate Counterparts . . . . . . . . . . . . . . . 23
SECTION 11.07.
Successors and Assigns. . . . . . . . . . . . . . . 23
SECTION 11.08.
Covenants of the Depositor. . . . . . . . . . . . . 23
SECTION 11.09.
No Petition . . . . . . . . . . . . . . . . . . . . 23
SECTION 11.10.
No Recourse . . . . . . . . . . . . . . . . . . . . 23
SECTION 11.11.
Headings. . . . . . . . . . . . . . . . . . . . . . 23
SECTION 11.12.
GOVERNING LAW . . . . . . . . . . . . . . . . . . . 23
AMENDED AND RESTATED TRUST AGREEMENT dated as of March 1, 1997, between FIRST
MERCHANTS AUTO RECEIVABLES CORPORATION II, a Delaware corporation, as
depositor (the "Depositor"), and CHASE MANHATTAN BANK DELAWARE, a Delaware
banking corporation, as owner trustee (the "Owner Trustee").
WHEREAS, the Depositor and the Owner Trustee entered into a Trust Agreement
dated as of March 10, 1997 (the "Trust Agreement");
WHEREAS, the Trust Agreement is being amended and restated as of March 1,
1997;
NOW, THEREFORE, the Depositor and the Owner Trustee hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01.
Capitalized Terms. For all purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Administration Agreement" shall mean the Administration Agreement dated as
of March 1, 1997, among the Trust, the Indenture Trustee and First Merchants
Acceptance Corporation, as Administrator.
"Agreement" shall mean this Amended and Restated Trust Agreement, as the
same may be amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such term in Section
11.13.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code &3801 et seq., as the same may be amended from time to
time.
"Certificate Balance" shall mean the Initial Certificate Balance reduced by
all amounts allocable to principal previously distributed to
Certificateholders.
"Certificate Distribution Account" shall have the meaning assigned to such
term in Section 5.01.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the register
mentioned in and the registrar appointed pursuant to Section 3.04.
"Certificateholder" or "Holder" shall mean a Person in whose name a Trust
Certificate is registered.
"Class A-1 Notes" shall mean the Floating Rate Asset Backed Notes, Class A-1
issued pursuant to the Indenture.
"Class A-2 Notes" shall mean the 6.75% Asset Backed Notes, Class A-2 issued
pursuant to the Indenture.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at 1201 Market
Street, Wilmington, Delaware 19801, or at such other address in the State of
Delaware as the Owner Trustee may designate by notice to the Owners and the
Depositor, or the principal corporate trust office of any successor Owner
Trustee at the address in the State of Delaware designated by such successor
Owner Trustee by notice to the Owners and the Depositor.
"Demand Note" shall mean the Demand Note dated May 21, 1996 from First
Merchants Acceptance Corporation to the Depositor.
"Depositor" shall mean First Merchants Auto Receivables Corporation II in
its capacity as depositor hereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Expenses" shall have the meaning assigned to such term in Section 8.02.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.
"Indenture" shall mean the Indenture dated as of March 1, 1997 between the
Trust and Harris Trust and Savings Bank, as Indenture Trustee.
"Initial Certificate Balance" shall mean $8,486,690.83.
"Note Depository Agreement" shall mean the agreement dated March 27, 1997
among the Trust, the Indenture Trustee, the Administrator and The Depository
Trust Company, as the initial Clearing Agency, relating to the Class A-1
Notes and the Class A-2 Notes, as the same may be amended and supplemented
from time to time.
"Owner" shall mean each Holder of a Trust Certificate.
"Owner Trust Estate" shall mean all right, title and interest of the Trust
in and to the property and rights assigned to the Trust pursuant to Article II
of the Sale and Servicing Agreement, all funds on deposit from time to time
in the Trust Accounts and the Certificate Distribution Account and all other
property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement and the
Administration Agreement.
"Owner Trustee" shall mean Chase Manhattan Bank Delaware, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Paying Agent" shall mean any paying agent or co-paying agent appointed
pursuant to Section 3.09 and shall initially be The Chase Manhattan Bank.
"Person" shall mean any individual, corporation, estate, partnership, joint
venture, association, joint stock company, limited liability company, trust
(including any beneficiary thereof), unincorporated organization, or
government or any agency or political subdivision thereof.
"Premium Letter" shall mean the letter agreement dated as of the Closing
Date among the Security Insurer, First Merchants Acceptance Corporation, the
Depositor and the Issuer.
"Record Date" shall mean, with respect to any Distribution Date, the last
day of the month preceding such Distribution Date.
"Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement
dated as of March 1, 1997, among the Trust, as issuer, the Depositor, as
seller, First Merchants Acceptance Corporation, as servicer, and Harris Trust
and Savings Bank, as indenture trustee and backup servicer, as the same may
be amended or supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Treasury Regulations" shall mean regulations, including proposed or
temporary Regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trust Certificate" shall mean a certificate evidencing the beneficial
interest of an Owner in the Trust, substantially in the form attached hereto
as Exhibit A.
SECTION 1.02.
Other Definitional Provisions. (a) Capitalized terms used and not
otherwise defined herein have the meanings assigned to them in the Sale and
Servicing Agreement or, if not defined therein, in the Indenture.
(b)
All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c)
As used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document
to the extent not defined, shall have the respective meanings given to them
under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d)
The words "hereof," "herein," "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" shall
mean "including without limitation".
(e)
The definitions contained in this Agreement are applicable to the singular
and plural forms of such terms and to the masculine, feminine and neuter
genders of such terms.
(f)
Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
Organization
SECTION 2.01.
Name. The Trust created hereby shall be known as "First Merchants Auto
Trust 1997-1," in which name the Owner Trustee may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the
Trust and sue and be sued.
SECTION 2.02.
Office. The office of the Trust shall be in care of the Owner Trustee at
the Corporate Trust Office or at such other address in Delaware as the Owner
Trustee may designate by written notice to the Owners and the Depositor.
SECTION 2.03.
Purposes and Powers. (a) The purpose of the Trust is to engage in the
following activities:
(i)
to issue the Notes pursuant to the Indenture and the Trust Certificates
pursuant to this Agreement and to sell the Notes and the Trust Certificates;
(ii)
with the proceeds of the sale of the Notes and the Trust Certificates, to
purchase the Receivables and to pay the organizational, start-up and
transactional expenses of the Trust;
(iii)
to assign, grant, transfer, pledge, mortgage and convey the Trust Estate
pursuant to the Indenture and to hold, manage and distribute to the Owners
pursuant to the terms of the Sale and Servicing Agreement any portion of the
Trust Estate released from the Lien of, and remitted to the Trust pursuant
to, the Indenture;
(iv)
to enter into and perform its obligations under the Basic Documents to which
it is to be a party;
(v)
to engage in those activities, including entering into agreements, that are
necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi)
subject to compliance with the Basic Documents, to engage in such other
activities as may be required in connection with conservation of the Owner
Trust Estate and the making of distributions to the Owners and the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Basic Documents.
SECTION 2.04.
Appointment of Owner Trustee. The Depositor hereby appoints the Owner
Trustee as trustee of the Trust effective as of the date hereof, to have all
the rights, powers and duties set forth herein.
SECTION 2.05.
Initial Capital Contribution of Owner Trust Estate. The Depositor hereby
sells, assigns, transfers, conveys and sets over to the Owner Trustee, as of
the date hereof, the sum of $1. The Owner Trustee hereby acknowledges
receipt in trust from the Depositor, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall
be deposited in the Certificate Distribution Account. The Depositor shall
pay organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
SECTION 2.06.
Declaration of Trust. The Owner Trustee hereby declares that it will hold
the Owner Trust Estate in trust upon and subject to the conditions set forth
herein for the use and benefit of the Owners, subject to the obligations of
the Trust under the Basic Documents. It is the intention of the parties
hereto that the Trust constitute a business trust under the Business Trust
Statute and that this Agreement constitute the governing instrument of such
business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, (i) so long as there is a single Owner,
the Trust shall be treated as a security arrangement, with the assets of the
Trust being the Receivables and other assets held by the Trust, the owner of
the Receivables being the sole Owner and the Notes being non-recourse debt of
the sole Owner and (ii) if there is more than one Owner, the Trust shall be
treated as a partnership for income and franchise tax purposes, with the
assets of the partnership being the Receivables and other assets held by the
Trust, the partners of the partnership being the Owners (including the
Company as assignee of the Depositor pursuant to the Purchase Agreement, in
its capacity as recipient of distributions from the Reserve Account), and the
Notes being debt of the partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust will file or
cause to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust provided in the preceding
sentence for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the
Trust.
SECTION 2.07.
Liability of the Owners. (a) The Depositor shall be liable directly to and
will indemnify any injured party for all losses, claims, damages, liabilities
and expenses of the Trust (including Expenses, to the extent not paid out of
the Owner Trust Estate) to the extent that the Depositor would be liable if
the Trust were a partnership under the Delaware Revised Uniform Limited
Partnership Act in which the Depositor were a general partner; provided,
however, that the Depositor shall not be liable for any losses incurred by a
Certificateholder in the capacity of an investor in the Trust Certificates,
or by a Noteholder in the capacity of an investor in the Notes. In addition,
any third party creditors of the Trust (other than in connection with the
obligations described in the preceding sentence for which the Depositor shall
not be liable) shall be deemed third party beneficiaries of this paragraph.
(b)
Other than to the extent set forth in paragraph (a), no Owner, solely by
virtue of its being the Holder of a Trust Certificate, shall have any
personal liability for any liability or obligation of the Trust.
SECTION 2.08.
Title to Trust Property. Legal title to all the Owner Trust Estate shall be
vested at all times in the Trust as a separate legal entity except where
applicable law in any jurisdiction requires title to any part of the Owner
Trust Estate to be vested in a trustee or trustees, in which case title shall
be deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.
SECTION 2.09.
Situs of Trust. The Trust will be located and administered in the State of
Delaware. All bank accounts maintained by the Owner Trustee on behalf of the
Trust shall be located in the State of Delaware or the State of New York.
The Trust shall not have any employees in any state other than Delaware;
provided, however, that nothing herein shall restrict or prohibit the Owner
Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York. The only
office of the Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.10.
Representations and Warranties of the Depositor. The Depositor hereby
represents and warrants to the Owner Trustee that:
(a)
The Depositor is duly organized and validly existing as a corporation in
good standing under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b)
The Depositor is duly qualified to do business as a foreign corporation in
good standing and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its property or the conduct
of its business shall require such qualifications.
(c)
The Depositor has the power and authority to execute and deliver this
Agreement and to carry out its terms; the Depositor has full power and
authority to sell and assign the property to be sold and assigned to and
deposited with the Trust and the Depositor has duly authorized such sale and
assignment and deposit to the Trust by all necessary corporate action; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Depositor by all necessary corporate action.
(d)
The consummation of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof do not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice
or lapse of time) a default under, the certificate of incorporation or
bylaws of the Depositor, or any indenture, agreement or other instrument to
which the Depositor is a party or by which it is bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the best of the
Depositor's knowledge, any order, rule or regulation applicable to the
Depositor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(e)
There are no proceedings or investigations pending or threatened before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties:
(A) asserting the invalidity of this Agreement, (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
(C) seeking any determination or ruling that might materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement.
SECTION 2.11.
Maintenance of the Demand Note. To the fullest extent permitted by
applicable law, the Depositor agrees that it shall not sell, convey, pledge,
transfer or otherwise dispose of the Demand Note.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION 3.01.
Initial Ownership. Upon the formation of the Trust by the contribution by
the Depositor pursuant to Section 2.05 and until the issuance of the Trust
Certificates, the Depositor shall be the sole beneficiary of the Trust.
SECTION 3.02.
The Trust Certificates. The Trust Certificates shall be issued in minimum
denominations of $20,000 and in integral multiples of $1,000 in excess
thereof; provided, however, that the Trust Certificates issued to the
Depositor may be issued in such denomination as is required to include any
residual amount. The Trust Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of an authorized officer of the Owner
Trustee. Trust Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trust, shall be validly issued
and entitled to the benefit of this Agreement, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Trust Certificates or did not hold such
offices at the date of authentication and delivery of such Trust
Certificates.
A transferee of a Trust Certificate shall become a Certificateholder and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Trust
Certificate duly registered in such transferee's name pursuant to Section
3.04.
The initial Holder of the Trust Certificates shall be the Depositor. In the
event that the Depositor transfers any of the Trust Certificates to any other
Person, the Depositor, by its transfer, and such Person, by its acceptance of
the Trust Certificates so transferred, shall be deemed to have agreed to
treat the Trust as a partnership with the Trust Certificates representing
partnership interests therein and the Notes representing debt thereof. Any
transfer by such transferee shall be subject to the same condition.
SECTION 3.03.
Authentication of Trust Certificates. On the Closing Date, the Owner
Trustee shall cause the Trust Certificates in an aggregate principal amount
equal to the Initial Certificate Balance to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Depositor,
signed by its chairman of the board, its president, any vice president,
secretary or any assistant treasurer, without further corporate action by the
Depositor, in authorized denominations. No Trust Certificate shall entitle
its Holder to any benefit under this Agreement or be valid for any purpose
unless there shall appear on such Trust Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by
the Owner Trustee or The Chase Manhattan Bank, as the Owner Trustee's
authenticating agent, by manual signature; such authentication shall
constitute conclusive evidence that such Trust Certificate shall have been
duly authenticated and delivered hereunder. All Trust Certificates shall be
dated the date of their authentication.
SECTION 3.04.
Registration of Transfer and Exchange of Trust Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.08, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Owner Trustee shall provide
for the registration of Trust Certificates and of transfers and exchanges of
Trust Certificates as herein provided. The Chase Manhattan Bank shall be the
initial Certificate Registrar.
The Trust 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
Trust Certificate shall be made unless such transfer is made pursuant to an
effective registration statement under the Securities Act and any applicable
state securities laws or is exempt from the registration requirements under
said Act and such state securities laws. In the event that a transfer is to
be made in reliance upon an exemption from the Securities Act and state
securities laws, in order to assure compliance with the Securities Act and
such laws, the Holder desiring to effect such transfer and such Holder's
prospective transferee shall each certify to the Owner Trustee or the
Certificate Registrar and the Depositor in writing the facts surrounding the
transfer in substantially the forms set forth in Exhibit C (the "Transferor
Certificate") and Exhibit D (the "Investment Letter"). Except in the case of
a transfer as to which the proposed transferee has provided an Investment
Letter with respect to a Rule 144A transaction, there shall also be delivered
to the Owner Trustee an Opinion of Counsel that such transfer may be made
pursuant to an exemption from the Securities Act and state securities laws,
which Opinion of Counsel shall not be an expense of the Trust, the Owner
Trustee or the Indenture Trustee (unless it is the transferee from whom such
opinion is to be obtained) or of the Depositor or First Merchants Acceptance
Corporation; provided that such Opinion of Counsel in respect of the
applicable state securities laws may be a memorandum of law rather than an
opinion if such counsel is not licensed in the applicable jurisdiction. The
Depositor shall provide to any Holder of a Trust Certificate and any
prospective transferee designated by any such Holder information regarding
the Trust 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 Trust Certificate without registration
thereof under the Securities Act pursuant to the registration exemption
provided by Rule 144A. Each Holder of a Trust Certificate desiring to effect
such a transfer shall, and does hereby agree to, indemnify the Trust, the
Owner Trustee, the Indenture Trustee and the Depositor against any liability
that may result if the transfer is not so exempt or is not made in accordance
with federal and state securities laws.
No transfer of a Trust Certificate shall be made to any Person unless the
Owner Trustee has received (A) a certificate in the form of paragraph 3 to
the Investment Letter attached hereto as Exhibit D from such Person to the
effect that such Person is not (i) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Code or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment
in the entity (each, a "Benefit Plan"), (B) an Opinion of Counsel
satisfactory to the Owner Trustee and the Depositor to the effect that the
purchase and holding of such Trust Certificate will not constitute or result
in the assets of the Trust being deemed to be "plan assets" subject to the
prohibited transactions provisions of ERISA or Section 4975 of the Code and
will not subject the Owner Trustee, the Indenture Trustee or the Depositor to
any obligation in addition to those undertaken in the Basic Documents or (C)
if such Person is an insurance company, a representation that such Person is
an insurance company that is purchasing such Trust Certificates with funds
contained in an "insurance company general account" (as such term is defined
in section v(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-
60")) and that the purchase and holding of such Trust Certificates and any
deemed extension of credit from a Certificateholder which is a party in
interest to a Plan, the assets of which are held by such "insurance company"
are covered under PTCE 95-60; provided, however, that the Owner Trustee will
not require such certificate or opinion in the event that, as a result of a
change of law or otherwise, counsel satisfactory to the Owner Trustee has
rendered an Opinion of Counsel to the effect that the purchase and holding of
a Trust Certificate by a Benefit Plan or a Person that is purchasing or
holding such a Trust Certificate with the assets of a Benefit Plan will not
constitute or result in a prohibited transaction under ERISA or Section 4975
of the Code.
No transfer of a Trust Certificate shall be made to any Person unless the
Owner Trustee has received an Opinion of Counsel satisfactory to the Owner
Trustee and the Depositor to the effect that such transfer will not cause the
Trust to be treated as an association or publicly traded partnership taxable
as a corporation for federal or Illinois income tax purposes and that such
transfer will not result in any materially adverse federal income tax
consequences to Noteholders.
The preparation and delivery of the certificate and opinions referred to
above shall not be an expense of the Trust, the Owner Trustee, the Indenture
Trustee, the Servicer or the Depositor.
Upon surrender for registration of transfer of any Trust Certificate at the
office or agency maintained pursuant to Section 3.08, the Owner Trustee shall
execute, authenticate and deliver (or shall cause The Chase Manhattan Bank as
its authenticating agent to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Trust Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the
option of a Certificateholder, Trust Certificates may be exchanged for other
Trust Certificates of authorized denominations of a like aggregate amount
upon surrender of the Trust Certificates to be exchanged at the office or
agency maintained pursuant to Section 3.08.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or such Certificateholder's attorney duly
authorized in writing. Each Trust Certificate surrendered for registration of
transfer or exchange shall be cancelled and subsequently disposed of by the
Owner Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or exchange
of Trust Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Trust
Certificates.
The preceding provisions of this Section notwithstanding, the Owner Trustee
shall not make, and the Certificate Registrar shall not register transfers or
exchanges of, Trust Certificates for a period of 15 days preceding the due
date for any payment with respect to the Trust Certificates.
SECTION 3.05.
Mutilated, Destroyed, Lost or Stolen Trust Certificates. If (a) any
mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate and
(b) there shall be delivered to the Certificate Registrar and the Owner
Trustee such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Trust Certificate has
been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Trust shall execute and the Owner Trustee or The Chase Manhattan Bank, as the
Owner Trustee's authenticating agent, shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Trust Certificate, a new Trust Certificate of like tenor and denomination.
In connection with the issuance of any new Trust Certificate under this
Section, the Owner Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Trust Certificate
issued pursuant to this Section shall constitute conclusive evidence of
ownership in the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Trust Certificate shall be found at any time.
SECTION 3.06.
Persons Deemed Owners. Prior to due presentation of a Trust Certificate for
registration of transfer, the Owner Trustee, the Certificate Registrar or any
Paying Agent may treat the Person in whose name any Trust Certificate is
registered in the Certificate Register as the owner of such Trust Certificate
for the purpose of receiving distributions pursuant to Section 5.02 and for
all other purposes whatsoever, and none of the Owner Trustee, the Certificate
Registrar or any Paying Agent shall be bound by any notice to the contrary.
SECTION 3.07.
Access to List of Certificateholders' Names and Addresses. The Owner
Trustee shall furnish or cause to be furnished to the Servicer and the
Depositor, within 15 days after receipt by the Owner Trustee of a written
request therefor from the Servicer or the Depositor, a list, in such form as the
Servicer or the Depositor may reasonably require, of the names and addresses
of the Certificateholders as of the most recent Record Date. If (i) three or
more Certificateholders or (ii) one or more Holders of Trust Certificates
evidencing not less than 25% of the Certificate Balance apply in writing to
the Owner Trustee, and such application states that the applicants desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Trust Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each
Certificateholder, by receiving and holding a Trust Certificate, shall be
deemed to have agreed not to hold any of the Depositor, the Certificate
Registrar or the Owner Trustee accountable by reason of the disclosure of its
name and address, regardless of the source from which such information was
derived.
SECTION 3.08.
Maintenance of Office or Agency. The Owner Trustee shall maintain in the
Borough of Manhattan, the City of New York, an office or offices or agency or
agencies where Trust Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Owner
Trustee in respect of the Trust Certificates and the Basic Documents may be
served. The Owner Trustee initially designates The Chase Manhattan Bank,
55 Water Street, New York, New York 10041 as its office for such purposes.
The Owner Trustee shall give prompt written notice to the Depositor and to
the Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
SECTION 3.09.
Appointment of Paying Agent. The Paying Agent shall make distributions to
Certificateholders from the Certificate Distribution Account pursuant to
Section 5.02 and shall report the amounts of such distributions to the Owner
Trustee. Any Paying Agent shall have the revocable power to withdraw funds
from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee may revoke such power and
remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent initially
shall be The Chase Manhattan Bank, and any co-paying agent chosen by The
Chase Manhattan Bank and acceptable to the Owner Trustee. The Chase
Manhattan Bank shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Owner Trustee. In the event that The Chase Manhattan
Bank shall no longer be the Paying Agent, the Owner Trustee shall appoint a
successor to act as Paying Agent (which shall be a bank or trust company).
The Owner Trustee shall cause such successor Paying Agent or any additional
Paying Agent appointed by the Owner Trustee to execute and deliver to the
Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that, as Paying
Agent, such successor Paying Agent or additional Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums shall
be paid to such Certificateholders. The Paying Agent shall return all
unclaimed funds to the Owner Trustee and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the Owner
Trustee. The provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to
the Owner Trustee also in its role as Paying Agent, for so long as the Owner
Trustee shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 3.10.
ARTICLE IV
Actions by Owner Trustee
SECTION 4.01.
Prior Notice with Respect to Certain Matters. With respect to the following
matters, the Owner Trustee shall not take action unless at least 30 days
before the taking of such action, the Owner Trustee shall have notified the
Certificateholders and the Security Insurer (so long as no Security Insurer
Default shall have occurred and be continuing) in writing of the proposed
action and neither the Security Insurer (so long as no Security Insurer
Default shall have occurred and be continuing) nor the Owners shall have
notified the Owner Trustee in writing prior to the 30th day after such notice
is given that such Owners or the Security Insurer (so long as no Security
Insurer Default shall have occurred and be continuing) have withheld consent
or provided alternative direction:
(a)
the initiation of any claim or lawsuit by the Trust (except claims or
lawsuits brought in connection with the collection of the Receivables) and
the compromise of any action, claim or lawsuit brought by or against the
Trust (except with respect to the aforementioned claims or lawsuits for
collection of the Receivables);
(b)
the election by the Trust to file an amendment to the Certificate of Trust
(unless such amendment is required to be filed under the Business Trust
Statute);
(c)
the amendment of the Indenture by a supplemental indenture in circumstances
where the consent of any Noteholder is required;
(d)
the amendment of the Indenture by a supplemental indenture in circumstances
where the consent of any Noteholder is not required and such amendment would
materially adversely affect the interests of the Owners;
(e)
the amendment, change or modification of the Administration Agreement,
except to cure any ambiguity or to amend or supplement any provision in a manner
or add any provision that would not materially adversely affect the interests of
the Owners; or
(f)
the appointment pursuant to the Indenture of a successor Note Registrar,
Paying Agent or Indenture Trustee or pursuant to this Agreement of a
successor Certificate Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent, Indenture Trustee or Certificate Registrar of its
obligations under the Indenture or this Agreement, as applicable.
SECTION 4.02.
Action by Owners with Respect to Certain Matters. The Owner Trustee shall
not have the power, except upon the written direction of the Owners (with the
consent of the Security Insurer (so long as no Security Insurer Default shall
have occurred and be continuing)), to (a) remove the Administrator under the
Administration Agreement pursuant to Section 8 thereof, (b) appoint a
successor Administrator pursuant to Section 8 of the Administration
Agreement, (c) remove the Servicer under the Sale and Servicing Agreement
pursuant to Section 8.02 thereof, (d) amend the Sale and Servicing Agreement
pursuant to Section 10.01(b) of such document, or (e) except as expressly
provided in the Basic Documents, sell the Receivables after the termination
of the Indenture. The Owner Trustee shall take the actions referred to in
the preceding sentence only upon written instructions signed by the Owners.
SECTION 4.03.
Action by Owners with Respect to Bankruptcy. The Owner Trustee shall not
have the power to commence a voluntary proceeding in bankruptcy relating to
the Trust without the unanimous prior approval of all Owners and the Security
Insurer (so long as no Security Insurer Default shall have occurred and be
continuing) and the delivery to the Owner Trustee by each such Owner of a
certificate certifying that such Owner reasonably believes that the Trust is
insolvent.
SECTION 4.04.
Restrictions on Owners' Power. The Owners shall not direct the Owner
Trustee to take or to refrain from taking any action if such action or inaction
would be contrary to any obligation of the Trust or the Owner Trustee under this
Agreement or any of the Basic Documents or would be contrary to Section 2.03;
nor shall the Owner Trustee be obligated to follow any such direction, if
given.
SECTION 4.05.
Majority Control. Except as expressly provided herein, any action that may
be taken by the Owners under this Agreement may be taken by the Holders of
Trust Certificates evidencing not less than a majority of the Certificate
Balance. Except as expressly provided herein, any written notice of the
Owners delivered pursuant to this Agreement shall be effective if signed by
Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION 5.01.
Establishment of Trust Account. The Owner Trustee, for the benefit of the
Certificateholders, shall establish and maintain in the name of the Trust an
Eligible Deposit Account (the "Certificate Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders.
The Owner Trustee shall possess all right, title and interest in all funds
on deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof. Except as otherwise expressly provided herein, the
Certificate Distribution Account shall be under the sole dominion and control
of the Owner Trustee for the benefit of the Certificateholders. If, at any
time, the Certificate Distribution Account ceases to be an Eligible Deposit
Account, the Owner Trustee (or the Depositor on behalf of the Owner Trustee,
if the Certificate Distribution Account is not then held by the Owner Trustee
or an affiliate thereof) shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Certificate Distribution Account as an Eligible
Deposit Account and shall transfer any cash and/or any investments to such
new Certificate Distribution Account.
SECTION 5.02.
Application of Trust Funds. (a) On each Distribution Date, the Owner
Trustee will distribute to Certificateholders, on a pro rata basis, amounts
deposited in the Certificate Distribution Account pursuant to Section 5.06 of
the Sale and Servicing Agreement with respect to such Distribution Date.
(b)
On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee
by the Servicer pursuant to Section 5.11 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(c)
In the event that any withholding tax is imposed on the Trust's payment (or
allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The
Owner Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Owners sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not
prevent the Owner Trustee from contesting any such tax in appropriate
proceedings and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed
with respect to an Owner shall be treated as cash distributed to such Owner
at the time it is withheld by the Trust and remitted to the appropriate
taxing authority. If there is a possibility that withholding tax is payable
with respect to a distribution (such as a distribution to a non-U.S. Owner),
the Owner Trustee may in its sole discretion withhold such amounts in
accordance with this paragraph (c).
SECTION 5.03.
Method of Payment. Subject to Section 9.01(c), distributions required to be
made to Certificateholders on any Distribution Date shall be made to each
Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five Business Days prior
to such Distribution Date and such Holder's Trust Certificates in the
aggregate evidence a denomination of not less than $1,000,000, or, if not, by
check mailed to such Certificateholder at the address of such
Certificateholder appearing in the Certificate Register.
SECTION 5.04.
No Segregation of Moneys; No Interest. Subject to Sections 5.01 and 5.02,
moneys received by the Owner Trustee hereunder need not be segregated in any
manner except to the extent required by law or the Sale and Servicing
Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
SECTION 5.05.
Accounting and Reports to the Noteholders, Owners, the Internal Revenue
Service and Others. The Owner Trustee shall deliver to each Owner such
information, reports or statements as may be required by the Code and
applicable Treasury Regulations and as may be required to enable each Owner
to prepare its federal and state income tax returns. Consistent with the
Trust's characterization for tax purposes as a security arrangement for the
issuance of non-recourse debt, no federal income tax return shall be filed on
behalf of the Trust unless either (i) the Owner Trustee shall receive an
Opinion of Counsel that, based on a change in applicable law occurring after
the date hereof, or as a result of a transfer by the Depositor permitted by
Section 3.04, the Code requires such a filing or (ii) the Internal Revenue
Service shall determine that the Trust is required to file such a return.
Notwithstanding the preceding sentence, the Owner Trustee shall file Internal
Revenue Service Form 8832 and elect for the Trust to be treated as a domestic
eligible entity with a single owner that is disregarded as a separate entity,
which election shall remain in effect so long as the Depositor or any other
party is the sole Owner. In the event that the Trust is required to file tax
returns, the Owner Trustee shall prepare or shall cause to be prepared any
tax returns required to be filed by the Trust and shall remit such returns to
the Depositor (or if the Depositor no longer owns any Certificates, the Owner
designated for such purpose by the Depositor to the Owner Trustee in writing)
at lease five (5) days before such returns are due to be filed. The
Depositor (or such designee Owner, as applicable) shall promptly sign such
returns and deliver such returns after signature to the Owner Trustee and
such returns shall be filed by the Owner Trustee with the appropriate tax
authorities. In no event shall the Owner Trustee or the Depositor (or such
designee Owner, as applicable) be liable for any liabilities, costs or
expenses of the Trust or the Noteholders arising out of the application of
any tax law, including federal, state, foreign or local income or excise
taxes or any other tax imposed on or measured by income (or any interest,
penalty or addition with respect thereto or arising from a failure to comply
therewith) except for any such liability, cost or expense attributable to any
act or omission by the Owner Trustee or the Depositor (or such designee
Owner, as applicable), as the case may be, in breach of its obligations under
this Agreement. In the event the Trust is required to file a tax return as
a partnership, the Depositor shall be designated the "tax matters partner" of
the Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.
ARTICLE VI
Authority and Duties of Owner Trustee
SECTION 6.01.
General Authority. The Owner Trustee is authorized and directed to execute
and deliver the Basic Documents to which the Trust is to be a party and each
certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Trust is to be a party, in each case, in
such form as the Depositor shall approve, as evidenced conclusively by the
Owner Trustee's execution thereof. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Basic Documents. The Owner Trustee is
further authorized from time to time to take such action as the Administrator
recommends with respect to the Basic Documents.
SECTION 6.02.
General Duties. It shall be the duty of the Owner Trustee to discharge (or
cause to be discharged) all of its responsibilities pursuant to the terms of
this Agreement and the Basic Documents to which the Trust is a party and to
administer the Trust in the interest of the Owners, subject to the Basic
Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be
held liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.
SECTION 6.03.
Action upon Instruction. (a) Subject to Article IV and in accordance with
the terms of the Basic Documents, the Owners may by written instruction
direct the Owner Trustee in the management of the Trust. Such direction may
be exercised at any time by written instruction of the Owners pursuant to
Article IV.
(b)
The Owner Trustee shall not be required to take any action hereunder or
under any Basic Document if the Owner Trustee shall have reasonably determined,
or shall have been advised by counsel, that such action is likely to result in
liability on the part of the Owner Trustee or is contrary to the terms hereof
or of any Basic Document or is otherwise contrary to law.
(c)
Whenever the Owner Trustee is unable to decide between alternative courses
of action permitted or required by the terms of this Agreement or under any
Basic Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Owners requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction
of the Owners received, the Owner Trustee shall not be liable on account of
such action to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Agreement
or the Basic Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or
inaction.
(d)
In the event that the Owner Trustee is unsure as to the application of any
provision of this Agreement or any Basic Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this Agreement permits
any determination by the Owner Trustee or is silent or is incomplete as to
the course of action that the Owner Trustee is required to take with respect
to a particular set of facts, the Owner Trustee may give notice (in such form
as shall be appropriate under the circumstances) to the Owners requesting
instruction and, to the extent that the Owner Trustee acts or refrains from
acting in good faith in accordance with any such instruction received, the
Owner Trustee shall not be liable, on account of such action or inaction, to
any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the Basic
Documents, as it shall deem to be in the best interests of the Owners, and
shall have no liability to any Person for such action or inaction.
SECTION 6.04.
No Duties Except as Specified in this Agreement or in Instructions. The
Owner Trustee shall not have any duty or obligation to manage, make any
payment with respect to, register, record, sell, dispose of, or otherwise
deal with the Owner Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with, any document contemplated hereby to
which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Basic
Document. The Owner Trustee nevertheless agrees that it will, at its own
cost and expense, promptly take all action as may be necessary to discharge
any liens on any part of the Owner Trust Estate that result from actions by,
or claims against, the Owner Trustee that are not related to the ownership or
the administration of the Owner Trust Estate.
SECTION 6.05.
No Action Except Under Specified Documents or Instructions. The Owner
Trustee shall not manage, control, use, sell, dispose of or otherwise deal
with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant
to this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.03.
SECTION 6.06.
Restrictions. The Owner Trustee shall not take any action (a) that is
inconsistent with the purposes of the Trust set forth in Section 2.03 or
(b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for federal or Illinois income tax
purposes. The Owners shall not direct the Owner Trustee to take action that
would violate the provisions of this Section.
ARTICLE VII
Concerning the Owner Trustee
SECTION 7.01.
Acceptance of Trusts and Duties. The Owner Trustee accepts the trusts
hereby created and agrees to perform its duties hereunder with respect to such
trusts, but only upon the terms of this Agreement. The Owner Trustee also
agrees to disburse all moneys actually received by it constituting part of
the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Basic Document under any circumstances, except (i) for
its own willful misconduct or negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.03
expressly made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding
sentence):
(a)
The Owner Trustee shall not be liable for any error of judgment made by a
Trust Officer of the Owner Trustee;
(b)
The Owner Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in accordance with the instructions of the
Administrator or any Owner;
(c)
No provision of this Agreement or any Basic Document shall require the Owner
Trustee to expend or risk funds or otherwise incur any financial liability in
the performance of any of its rights or powers hereunder or under any Basic
Document if the Owner Trustee shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured or provided to it;
(d)
Under no circumstances shall the Owner Trustee be liable for indebtedness
evidenced by or arising under any of the Basic Documents, including the
principal of and interest on the Notes;
(e)
The Owner Trustee shall not be responsible for or in respect of the validity
or sufficiency of this Agreement or for the due execution hereof by the
Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate, or for or in respect of the
validity or sufficiency of the Basic Documents, other than the certificate of
authentication on the Trust Certificates, and the Owner Trustee shall in no
event assume or incur any liability, duty or obligation to any Noteholder or
to any Owner, other than as expressly provided for herein or expressly agreed
to in the Basic Documents;
(f)
The Owner Trustee shall not be liable for the default or misconduct of the
Administrator, the Depositor, the Servicer, the Indenture Trustee or the
Backup Servicer under any of the Basic Documents or otherwise, and the Owner
Trustee shall have no obligation or liability to perform the obligations of
the Trust under this Agreement or the Basic Documents that are required to be
performed by the Administrator under the Administration Agreement, the
Indenture Trustee under the Indenture or the Depositor, the Servicer or the
Backup Servicer under the Sale and Servicing Agreement; and
(g)
The Owner Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend
any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Owners, unless such Owners have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or thereby. The right of the
Owner Trustee to perform any discretionary act enumerated in this Agreement
or in any Basic Document shall not be construed as a duty, and the Owner
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
SECTION 7.02.
Furnishing of Documents. The Owner Trustee shall furnish to the Owners,
promptly upon receipt of a written request therefor, duplicates or copies of
all reports, notices, requests, demands, certificates, financial statements
and any other instruments furnished to the Owner Trustee under the Basic
Documents.
SECTION 7.03.
Representations and Warranties. The Owner Trustee hereby represents and
warrants to the Depositor, for the benefit of the Owners, that:
(a)
It is a banking corporation duly organized and validly existing in good
standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.
(b)
It has taken all corporate action necessary to authorize the execution and
delivery by it of this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to execute and
deliver this Agreement on its behalf.
(c)
Neither the execution or the delivery by it of this Agreement, nor the
consummation by it of the transactions contemplated hereby, nor compliance by
it with any of the terms or provisions hereof will contravene any federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party
or by which any of its properties may be bound.
(d)
It is a corporation satisfying the provisions of Section 3807(a) of the
Business Trust Statute; authorized to exercise corporate trust powers; having
a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and having (or
having a parent that has) time deposits that are rated at least A-1 by
Standard & Poor's and P-1 by Moody's.
SECTION 7.04.
Reliance; Advice of Counsel. (a) The Owner Trustee shall incur no
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a
certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has
been duly adopted by such body and that the same is in full force and effect.
As to any fact or matter the method of determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by
the treasurer or other authorized officers of the relevant party, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith
in reliance thereon.
(b)
In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants
and other skilled Persons to be selected with reasonable care and employed by
it. The Owner Trustee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the written opinion or advice
of any such counsel, accountants or other such Persons and not contrary to
this Agreement or any Basic Document.
SECTION 7.05.
Not Acting in Individual Capacity. Except as provided in this Article VII,
in accepting the trusts hereby created, Chase Manhattan Bank Delaware acts
solely as Owner Trustee hereunder and not in its individual capacity, and all
Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.06.
Owner Trustee Not Liable for Trust Certificates or for Receivables. The
recitals contained herein and in the Trust Certificates (other than the
signature and countersignature of the Owner Trustee on the Trust
Certificates) shall be taken as the statements of the Depositor, and the
Owner Trustee assumes no responsibility for the correctness thereof. Except
as set forth in Section 7.03, the Owner Trustee makes no representations as
to the validity or sufficiency of this Agreement, of any Basic Document or of
the Trust Certificates (other than the signature and countersignature of the
Owner Trustee on the Trust Certificates) or the Notes, or of any Receivable
or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Receivable or the perfection and priority of any
security interest created by any Receivable in any Financed Vehicle or the
maintenance of any such perfection and priority, or for or with respect to
the sufficiency of the Owner Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without limitation: the
existence, condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any
Receivable on any computer or other record thereof; the validity of the
assignment of any Receivable to the Trust or of any intervening assignment;
the completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by the Depositor, the Servicer or the Backup
Servicer with any warranty or representation made under any Basic Document or
in any related document or the accuracy of any such warranty or
representation, or any action of the Administrator, the Indenture Trustee,
the Servicer or the Backup Servicer or any subservicer taken in the name of
the Owner Trustee.
SECTION 7.07.
Owner Trustee May Own Trust Certificates and Notes. The Owner Trustee in
its individual or any other capacity may become the owner or pledgee of Trust
Certificates or Notes and may deal with the Depositor, the Administrator, the
Indenture Trustee and the Servicer in banking transactions with the same
rights as it would have if it were not Owner Trustee.
SECTION 7.08.
Pennsylvania Motor Vehicle Sales Finance Act Licenses. The Owner Trustee,
in its individual capacity, shall use its best efforts to maintain, and the
Owner Trustee, as Owner Trustee, shall cause the Trust to use its best
efforts to maintain, the effectiveness of all licenses required under the
Pennsylvania Motor Vehicle Sales Finance Act in connection with this
Agreement and the Basic Documents and the transactions contemplated hereby
and thereby until such time as the Trust shall terminate in accordance with
the terms hereof.
ARTICLE VIII
Compensation of Owner Trustee
SECTION 8.01.
Owner Trustee's Fees and Expenses. The Administrator shall pay to the Owner
Trustee as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Servicer and the
Owner Trustee, and the Administrator shall reimburse the Owner Trustee for
its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
SECTION 8.02.
Indemnification. The Administrator shall be liable as primary obligor for,
and shall indemnify the Owner Trustee and its successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and
all liabilities, obligations, losses, damages, taxes, claims, actions and
suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature
whatsoever (collectively, "Expenses") which may at any time be imposed on,
incurred by, or asserted against the Owner Trustee or any Indemnified Party
in any way relating to or arising out of this Agreement, the Basic Documents,
the Owner Trust Estate, the administration of the Owner Trust Estate or the
action or inaction of the Owner Trustee hereunder, except only that the
Administrator shall not be liable for or required to indemnify an Indemnified
Party from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.01. The indemnities contained
in this Section shall survive the resignation or termination of the Owner
Trustee or the termination of this Agreement. In any event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Administrator, which approval shall not be unreasonably
withheld.
SECTION 8.03.
Payments to the Owner Trustee. Any amounts paid to the Owner Trustee
pursuant to this Article VIII shall be deemed not to be a part of the Owner
Trust Estate immediately after such payment.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01.
Termination of Trust Agreement. (a) This Agreement (other than
Article VIII) and the Trust shall terminate and be of no further force or
effect (i) upon the final distribution by the Owner Trustee of all moneys or
other property or proceeds of the Owner Trust Estate in accordance with the
terms of the Indenture, the Sale and Servicing Agreement and Article V or
(ii) at the time provided in Section 9.02. The bankruptcy, liquidation,
dissolution, death or incapacity of any Owner, other than the Depositor as
described in Section 9.02, shall not (x) operate to terminate this Agreement
or the Trust or (y) entitle such Owner's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate
or (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b)
Except as provided in Section 9.01(a), neither the Depositor nor any Owner
shall be entitled to revoke or terminate the Trust.
(c)
Notice of any termination of the Trust, specifying the Distribution Date
upon which Certificateholders shall surrender their Trust Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Servicer
given pursuant to Section 9.01(c) of the Sale and Servicing Agreement,
stating (i) the Distribution Date upon or with respect to which final payment
of the Trust Certificates shall be made upon presentation and surrender of
the Trust Certificates at the office of the Paying Agent therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Trust Certificates at
the office of the Paying Agent therein specified. The Owner Trustee shall
give such notice to the Certificate Registrar (if other than the Owner
Trustee) and the Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Trust
Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant
to Section 5.02.
In the event that all of the Certificateholders shall not surrender their
Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Owner Trustee shall give
a second written notice to the remaining Certificateholders to surrender
their Trust Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the
Trust Certificates shall not have been surrendered for cancellation, the
Owner Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out
of the funds and other assets that shall remain subject to this Agreement.
Any funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Owner Trustee to the Depositor, subject to applicable
escheat laws.
(d)
Upon the winding up of the Trust and its termination, the Owner Trustee
shall cause the Certificate of Trust to be cancelled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Business Trust Statute.
SECTION 9.02.
Dissolution upon Bankruptcy of the Depositor. In the event that an
Insolvency Event shall occur with respect to the Depositor, this Agreement
shall be terminated in accordance with Section 9.01 90 days after the date
of such Insolvency Event, unless, before the end of such 90-day period, the
Owner Trustee shall have received written instructions from (a) Holders
(other than the Depositor) of Certificates representing more than 50% of the
Certificate Balance (not including the Certificate Balance of the Trust
Certificates held by the Depositor) and (b) each of the (i) Holders (as
defined in the Indenture) of Class A-1 Notes representing more than 50% of
the Outstanding Amount of the Class A-1 Notes, (ii) Holders (as defined in
the Indenture) of Class A-2 Notes representing more than 50% of the
Outstanding Amount of the Class A-2 Notes and (iii) the Security Insurer (so
long as no Security Insurer Default shall have occurred and be continuing),
to the effect that each such party disapproves of the termination of the
Trust. Promptly after the occurrence of any Insolvency Event with respect to
the Depositor, (A) the Depositor shall give the Indenture Trustee and the
Owner Trustee written notice of such Insolvency Event, (B) the Owner Trustee
shall, upon the receipt of such written notice from the Depositor, give
prompt written notice to the Certificateholders and the Indenture Trustee, of
the occurrence of such event and (C) the Indenture Trustee shall, upon
receipt of written notice of such Insolvency Event from the Owner Trustee or
the Depositor, give prompt written notice to the Noteholders of the
occurrence of such event; provided, however, that any failure to give a
notice required by this sentence shall not prevent or delay, in any manner,
a termination of the Trust pursuant to the first sentence of this Section
9.02. Upon a termination pursuant to this Section, the Owner Trustee shall
direct the Indenture Trustee promptly to sell the assets of the Trust (other
than the Trust Accounts and the Certificate Distribution Account) in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds of such a sale of the assets of the Trust shall be treated as
collections under the Sale and Servicing Agreement.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.01.
Eligibility Requirements for Owner Trustee. The Owner Trustee shall at all
times be a corporation satisfying the provisions of Section 3807(a) of the
Business Trust Statute; authorized to exercise corporate trust powers; having
a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and having (or
having a parent that has) time deposits that are rated at least A-1 by
Standard & Poor's and P-1 by Moody's. If such corporation shall publish
reports of condition at least annually pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.02.
SECTION 10.02.
Resignation or Removal of Owner Trustee. The Owner Trustee may at any time
resign and be discharged from the trusts hereby created by giving written
notice thereof to the Administrator. Upon receiving such notice of
resignation, the Administrator shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Owner Trustee may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.01 and shall fail to resign after written
request therefor by the Administrator, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent,
or a receiver of the Owner Trustee or of its property shall be appointed, or
any public officer shall take charge or control of the Owner Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator may remove the Owner Trustee. If the
Administrator shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the outgoing Owner Trustee so removed
and one copy to the successor Owner Trustee, and shall pay all fees owed to
the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.03 and payment of all fees and expenses
owed to the outgoing Owner Trustee. The Administrator shall provide notice
of such resignation or removal of the Owner Trustee to each Rating Agency and
the Security Insurer (so long as no Security Insurer Default shall have
occurred and be continuing).
SECTION 10.03.
Successor Owner Trustee. Any successor Owner Trustee appointed pursuant to
Section 10.01 or 10.02 shall execute, acknowledge and deliver to the
Administrator and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or
removal of the predecessor Owner Trustee shall become effective, and such
successor Owner Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named
as Owner Trustee. The predecessor Owner Trustee shall, upon payment of its
fees and expenses, deliver to the successor Owner Trustee all documents and
statements and monies held by it under this Agreement; and the Administrator
and the predecessor Owner Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such
rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to this
Section, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders, the Security
Insurer (so long as no Security Insurer Default shall have occurred and be
continuing) and the Rating Agencies. If the Administrator shall fail to mail
such notice within 10 days after acceptance of such appointment by the
successor Owner Trustee, the successor Owner Trustee shall cause such notice
to be mailed at the expense of the Administrator.
SECTION 10.04.
Merger or Consolidation of Owner Trustee. Any corporation into which the
Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such corporation shall be eligible pursuant to Section 10.01
and, provided, further, that the Owner Trustee shall mail notice of such
merger or consolidation to each Rating Agency and the Security Insurer (so
long as no Security Insurer Default shall have occurred and be continuing).
SECTION 10.05.
Appointment of Co-Trustee or Separate Trustee. Notwithstanding any other
provisions of this Agreement, at any time, for the purpose of meeting any
legal requirements of any jurisdiction in which any part of the Owner Trust
Estate or any Financed Vehicle may at the time be located, the Administrator
and the Owner Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Administrator and Owner Trustee to act as co-trustee, jointly with the Owner
Trustee, or as separate trustee or separate trustees, of all or any part of
the Owner Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust or any part thereof and, subject to the other provisions
of this Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If
the Administrator shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, the Owner Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor Owner Trustee pursuant to Section 10.01 and no notice of the
appointment of any co-trustee or separate trustee shall be required pursuant
to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(a)
All rights, powers, duties and obligations conferred or imposed upon the
Owner Trustee shall be conferred upon and exercised or performed by the Owner
Trustee and such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to act separately
without the Owner Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or acts are to
be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Owner Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Owner Trustee;
(b)
No trustee under this Agreement shall be personally liable by reason of any
act or omission of any other trustee under this Agreement; and
(c)
The Administrator and the Owner Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Owner Trustee or separately, as may be provided therein, subject to all
the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner Trustee
as its agent or attorney-in-fact with full power and authority, to the extent
not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor co-trustee or separate trustee.
ARTICLE XI
Miscellaneous
SECTION 11.01.
Supplements and Amendments. This Agreement may be amended by the Depositor
and the Owner Trustee, with the consent of the Security Insurer (so long as
no Security Insurer Default shall have occurred and be continuing) and with
prior written notice to each Rating Agency, without the consent of any of the
Noteholders or the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
in this Agreement or of modifying in any manner the rights of the Noteholders
or the Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Depositor and
the Owner Trustee, with the consent of the Security Insurer (so long as no
Security Insurer Default shall have occurred and be continuing) and with
prior written notice to each Rating Agency, with the consent of the Holders
(as defined in the Indenture) of Notes evidencing not less than a majority of
the Outstanding Amount of the Notes and the consent of the Holders of
Certificates evidencing not less than a majority of the Certificate Balance,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of payments
on Receivables or distributions that shall be required to be made for the
benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance required to consent to any such amendment, without the
consent of Holders of all the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture Trustee and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders, Noteholders
or the Security Insurer pursuant to this Section to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization
of the execution thereof by Certificateholders shall be subject to such
reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary
of State.
Prior to the execution of any amendment to this Agreement or the Certificate
of Trust, the Owner Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement. The Owner Trustee may, but shall not be
obligated to, enter into any such amendment that affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
In connection with the execution of any amendment to this Trust Agreement or
any amendment of any other agreement to which the Issuer is a party, the
Owner Trustee shall be entitled to receive and conclusively rely upon an
Opinion of Counsel to the effect that such amendment is authorized or
permitted by the Basic Documents and that all conditions precedent in the
Basic Documents for the execution and delivery thereof by the Issuer or the
Owner Trustee, as the case may be, have been satisfied.
SECTION 11.02.
No Legal Title to Owner Trust Estate in Owners. Neither the Depositor nor
the Owners shall have legal title to any part of the Owner Trust Estate. The
Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and
IX. No transfer, by operation of law or otherwise, of any right, title or
interest of the Owners to and in their ownership interest in the Owner Trust
Estate shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of legal
title to any part of the Owner Trust Estate.
SECTION 11.03.
Limitations on Rights of Others. Except for Section 2.07, the provisions of
this Agreement are solely for the benefit of the Owner Trustee, the
Depositor, the Owners, the Administrator, the Security Insurer and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders,
and nothing in this Agreement (other than Section 2.07 hereof), whether
express or implied, shall be construed to give to any other Person any legal
or equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 11.04.
Notices. (a) Unless otherwise expressly specified or permitted by the
terms hereof, all notices shall be in writing and shall be deemed given upon
receipt by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the Owner Trustee),
if to the Owner Trustee, addressed to the Corporate Trust Office; if to the
Depositor, addressed to First Merchants Auto Receivables Corporation II, 570
Lake Cook Road, Suite 126B, Deerfield, Illinois 60015, Attention: Secretary;
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party.
(b)
Any notice required or permitted to be given to a Certificateholder shall be
given by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed
to have been duly given, whether or not the Certificateholder receives such
notice.
SECTION 11.05.
Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.06.
Separate Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together constitute but one
and the same instrument.
SECTION 11.07.
Successors and Assigns. All covenants and agreements contained herein shall
be binding upon, and inure to the benefit of, each of the Depositor and its
permitted assignees, the Owner Trustee and its successors and each Owner and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by an Owner
shall bind the successors and assigns of such Owner.
SECTION 11.08.
Covenants of the Depositor. In the event that (a) the Certificate Balance
shall be reduced by Realized Losses and (b) any litigation with claims in
excess of $1,000,000 to which the Depositor is a party which shall be
reasonably likely to result in a material judgment against the Depositor that
the Depositor will not be able to satisfy shall be commenced, during the
period beginning immediately following the commencement of such litigation
and continuing until such litigation is dismissed or otherwise terminated
(and, if such litigation has resulted in a final judgment against the
Depositor, such judgment has been satisfied), the Depositor shall not pay any
dividend to First Merchants Acceptance Corporation, or make any distribution
on or in respect of its capital stock to First Merchants Acceptance
Corporation, or repay the principal amount of any indebtedness of the
Depositor held by First Merchants Acceptance Corporation, unless (i) after
giving effect to such payment, distribution or repayment, the Depositor's
liquid assets shall not be less than the amount of actual damages claimed in
such litigation or (ii) the Rating Agency Condition shall have been satisfied
with respect to any such payment, distribution or repayment. The Depositor
will not at any time institute against the Trust any bankruptcy proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
SECTION 11.09.
No Petition. The Owner Trustee, by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Indenture
Trustee and each Noteholder, by accepting the benefits of this Agreement,
hereby covenant and agree that they will not at any time institute against
the Depositor or the Trust, or join in any institution against the Depositor
or the Trust of, any bankruptcy proceedings under any United States federal
or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, this Agreement or any of the
Basic Documents.
SECTION 11.10.
No Recourse. Each Certificateholder by accepting a Trust Certificate
acknowledges that such Trust Certificate represents a beneficial interest in
the Trust only and does not represent an interest in or an obligation of the
Depositor, the Servicer, the Administrator, the Owner Trustee, the Indenture
Trustee, the Backup Servicer or any Affiliate thereof and no recourse may be
had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Trust Certificates or the Basic
Documents.
SECTION 11.11.
Headings. The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
SECTION 11.12.
GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13.
Trust Certificate Transfer Restrictions. The Trust Certificates may not be
acquired by or for the account of (i) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Code or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment
in the entity (each, a "Benefit Plan"). By accepting and holding a Trust
Certificate, the Holder thereof shall be deemed to have represented and
warranted that it is not a Benefit Plan. IN WITNESS WHEREOF, the parties
hereto have caused this Amended and Restated Trust Agreement to be duly executed
by their respective officers hereunto duly authorized, as of the day and year
first above written.
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, as Depositor
by:
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as Owner Trustee
by:
Name:
Title:
EXHIBIT A
FORM OF TRUST CERTIFICATE
THIS TRUST CERTIFICATE IS SUBORDINATE TO THE NOTES, AS SET FORTH IN THE SALE
AND SERVICING AGREEMENT.
THIS TRUST CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 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 TRUST CERTIFICATE THE HOLDER HEREOF UNLESS
SUCH HOLDER IS THE DEPOSITOR OR AN AFFILIATE THEREOF IS DEEMED TO REPRESENT
TO THE DEPOSITOR AND THE OWNER TRUSTEE (i) THAT IT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
PROMULGATED UNDER THE 1933 ACT (AN "ACCREDITED INVESTOR") AND THAT IT IS
ACQUIRING THIS TRUST CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT
OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK 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 (ii) THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE 1933 ACT
AND IS ACQUIRING SUCH TRUST 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 TRUST 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
ACCREDITED INVESTOR THAT EXECUTES A CERTIFICATE, SUBSTANTIALLY IN THE FORM
SPECIFIED IN THE TRUST AGREEMENT, TO THE EFFECT THAT IT IS AN 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 ACCREDITED INVESTORS
UNLESS THE HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY), (iii) SO LONG
AS THIS TRUST CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER
THE 1933 ACT, SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A PERSON WHOM
THE PROSPECTIVE 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 1933 ACT, IN
WHICH CASE (A) THE OWNER TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE
TRANSFEROR AND THE PROSPECTIVE TRANSFEREE CERTIFY TO THE OWNER TRUSTEE AND
THE DEPOSITOR IN WRITING THE FACTS SURROUNDING SUCH TRANSFER, WHICH
CERTIFICATION SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE OWNER
TRUSTEE AND THE DEPOSITOR, AND (B) THE OWNER TRUSTEE SHALL REQUIRE A WRITTEN
OPINION OF COUNSEL (WHICH SHALL NOT BE AT THE EXPENSE OF THE DEPOSITOR, ANY
AFFILIATE OF THE DEPOSITOR OR THE OWNER TRUSTEE) SATISFACTORY TO THE
DEPOSITOR AND THE OWNER TRUSTEE TO THE EFFECT THAT SUCH TRANSFER WILL NOT
VIOLATE THE 1933 ACT. NO SALE, PLEDGE OR OTHER TRANSFER MAY BE MADE TO ANY
ONE PERSON FOR SECURITIES WITH A FACE AMOUNT OF LESS THAN $100,000 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 1933 ACT) ACTING IN ITS
FIDUCIARY CAPACITY), FOR SECURITIES WITH A FACE AMOUNT OF LESS THAN $100,000
FOR EACH SUCH THIRD PARTY."
EACH SECURITYHOLDER, BY ITS ACCEPTANCE OF THIS SECURITY, COVENANTS AND AGREES
THAT SUCH SECURITYHOLDER, SHALL NOT, PRIOR TO THE DATE THAT IS ONE YEAR AND
ONE DAY AFTER THE TERMINATION OF THE TRUST AGREEMENT, ACQUIESCE, PETITION OR
OTHERWISE INVOKE OR CAUSE THE TRUST OR THE DEPOSITOR TO INVOKE THE PROCESS OF
ANY COURT OR GOVERNMENTAL AUTHORITY FOR THE PURPOSE OF COMMENCING OR
SUSTAINING A CASE AGAINST THE TRUST OR 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 TRUST OR THE DEPOSITOR OR ANY SUBSTANTIAL PART OF ITS
PROPERTY, OR ORDERING THE WINDING UP OR LIQUIDATION OF THE AFFAIRS OF THE
TRUST OR THE DEPOSITOR.
NO TRANSFER OF A TRUST CERTIFICATE SHALL BE MADE TO ANY PERSON UNLESS THE
OWNER TRUSTEE HAS RECEIVED (A) A CERTIFICATE IN THE FORM OF PARAGRAPH 3 TO
THE INVESTMENT LETTER ATTACHED TO THE TRUST AGREEMENT AS EXHIBIT D FROM SUCH
PERSON TO THE EFFECT THAT SUCH PERSON IS NOT (I) AN EMPLOYEE BENEFIT PLAN (AS
DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF
ERISA, (II) A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE CODE OR (III) ANY
ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S
INVESTMENT IN THE ENTITY (EACH, A "BENEFIT PLAN"), (B) AN OPINION OF COUNSEL
SATISFACTORY TO THE OWNER TRUSTEE AND THE DEPOSITOR TO THE EFFECT THAT THE
PURCHASE AND HOLDING OF SUCH TRUST CERTIFICATE WILL NOT CONSTITUTE OR RESULT
IN THE ASSETS OF THE TRUST BEING DEEMED TO BE "PLAN ASSETS" SUBJECT TO THE
PROHIBITED TRANSACTIONS PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE AND
WILL NOT SUBJECT THE OWNER TRUSTEE, THE INDENTURE TRUSTEE OR THE DEPOSITOR TO
ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN THE BASIC DOCUMENTS OR (C)
IF SUCH PERSON IS AN INSURANCE COMPANY, A REPRESENTATION THAT SUCH PERSON IS
AN INSURANCE COMPANY THAT IS PURCHASING SUCH TRUST CERTIFICATES WITH FUNDS
CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED
IN SECTION V(E) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-
60")) AND THAT THE PURCHASE AND HOLDING OF SUCH TRUST CERTIFICATES AND ANY
DEEMED EXTENSION OF CREDIT FROM A CERTIFICATEHOLDER WHICH IS A PARTY IN
INTEREST TO A PLAN, THE ASSETS OF WHICH ARE HELD BY SUCH "INSURANCE COMPANY"
ARE COVERED UNDER PTCE 95-60.
NO TRANSFER OF A TRUST CERTIFICATE SHALL BE MADE TO ANY PERSON UNLESS THE
OWNER TRUSTEE HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE OWNER
TRUSTEE AND THE DEPOSITOR TO THE EFFECT THAT SUCH TRANSFER WILL NOT CAUSE THE
TRUST TO BE TREATED AS AN ASSOCIATION OR PUBLICLY TRADED PARTNERSHIP TAXABLE
AS A CORPORATION FOR FEDERAL OR ILLINOIS INCOME TAX PURPOSES AND THAT SUCH
TRANSFER WILL NOT RESULT IN ANY MATERIALLY ADVERSE FEDERAL INCOME TAX
CONSEQUENCES TO NOTEHOLDERS.
NUMBER$_________R-
FIRST MERCHANTS AUTO TRUST 1997-1
6.75% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which consists of
(a) the Receivables and all moneys received thereon on or after the Cutoff
Date; (b) the security interests in the Financed Vehicles and any accessions
thereto granted by Obligors pursuant to the Receivables and any other
interest of the Depositor in such Financed Vehicles; (c) any Liquidation
Proceeds and any other proceeds with respect to the Receivables from claims
on any physical damage, credit life or disability insurance policies covering
Financed Vehicles or Obligors, including any vendor's single interest or
other collateral protection insurance policy; (d) any property that shall
have secured a Receivable and shall have been acquired by or on behalf of the
Depositor, the Servicer or the Trust; (e) all documents and other items
contained in the Receivables Files; (f) all of the Depositor's rights (but
not its obligations) under the Receivables Purchase Agreement; (g) all right,
title and interest in all funds on deposit from time to time in the Trust
Accounts and the Certificate Distribution Account, and in all investments and
proceeds thereof (including all income thereon); and (h) the proceeds of any
and all of the foregoing.
THIS TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR AN OBLIGATION OF
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, FIRST MERCHANTS ACCEPTANCE
CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES.
THIS CERTIFIES THAT ________________ is the registered owner of
____________________________________________ DOLLARS nonassessable, fully
paid, fractional undivided interest in FIRST MERCHANTS AUTO TRUST 1997-1 (the
"Trust"), formed by FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II, a
Delaware corporation (the "Depositor").
The Trust was created pursuant to a Trust Agreement dated as of March
10, 1997, as amended and restated by an Amended and Restated Trust Agreement
dated as of March 1, 1997 (as so amended and restated and further amended or
supplemented from time to time, the "Trust Agreement"), between the Depositor
and Chase Manhattan Bank Delaware, as owner trustee (the "Owner Trustee"), a
summary of certain of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capitalized terms used herein
have the meanings assigned to them in the Trust Agreement or the Sale and
Servicing Agreement dated as of March 1, 1997 (as amended and supplemented
from time to time, the "Sale and Servicing Agreement"), among the Trust, the
Depositor, as seller, First Merchants Acceptance Corporation, as servicer
(the "Servicer"), and Harris Trust and Savings Bank, as indenture trustee and
backup servicer (in such capacities, the "Indenture Trustee" and "Backup
Servicer"), as applicable.
This Trust Certificate is one of the duly authorized Trust Certificates
designated as "6.75% Asset Backed Certificates" (herein called the "Trust
Certificates"). Also issued under an Indenture dated as of March 1, 1997
(the "Indenture"), between the Trust and Harris Trust and Savings Bank, as
indenture trustee, are the two classes of Notes designated as "Floating Rate
Asset Backed Notes, Class A-1" and 6.75% Asset Backed Notes, Class A-2"
(collectively, the "Notes"). This Trust Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the Holder of this Trust Certificate by virtue of its
acceptance hereof assents and by which such Certificateholder is bound. The
property of the Trust consists of a pool of retail installment contracts for
new and used automobiles, vans, minivans and light duty trucks (the
"Receivables") and all monies received thereon on or after March 1, 1997,
security interests in the vehicles financed thereby, certain bank accounts
and the proceeds thereof, proceeds from claims on certain insurance policies
and certain other rights under the Trust Agreement and the Sale and Servicing
Agreement and all proceeds of the foregoing. The rights of the
Certificateholders are subordinate to the rights of the Noteholders, as set
forth in the Sale and Servicing Agreement.
Under the Trust Agreement and Sale and Servicing Agreement, there will
be distributed on the 15th day of each month or, if such 15th day is not a
Business Day, the next Business Day (each, a "Distribution Date"), commencing
on April 15, 1997, to the Person in whose name this Trust Certificate is
registered at the close of business on the last day of the immediately
preceding month (the "Record Date"), such Certificateholder's fractional
undivided interest in the amount to be distributed to Certificateholders on
such Distribution Date. No distributions of principal will be made on any
Trust Certificate until all of the Notes have been paid in full.
The Holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinate to the rights of the Noteholders as described in the Sale and
Servicing Agreement and the Indenture.
It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of federal income, state and local
income and single business tax and any other income taxes, in the event the
Trust Certificates are held by more than one Owner, the Trust will be treated
as a partnership and the Certificateholders (including the Depositor) will be
treated as partners in that partnership. The Depositor and the other
Certificateholders, by acceptance of a Trust Certificate, shall be deemed to
have agreed to the above treatment and to taking no action inconsistent
therewith.
Each Certificateholder, by its acceptance of a Trust Certificate,
covenants and agrees that such Certificateholder will not at any time
institute against the Depositor or the Trust, or join in any institution
against the Depositor or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings
under any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Trust Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the
presentation or surrender of this Trust Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Trust Certificate
will be made after due notice by the Owner Trustee of the pendency of such
distribution and only upon presentation and surrender of this Trust
Certificate at the office or agency maintained for that purpose by the Owner
Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the Holder hereof to any benefit under
the Trust Agreement or the Sale and Servicing Agreement or be valid for any
purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Trust Certificate to be duly
executed.
FIRST MERCHANTS AUTO TRUST 1997-1
by:
CHASE MANHATTAN BANK DELAWARE, not in its individual capacity but solely as
Owner Trustee
Dated:
by:
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned
Trust Agreement.
CHASE MANHATTAN BANK DELAWARE,
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee or as Owner Trustee
by: THE CHASE MANHATTAN BANK,
as
Authenticating Agent
by:
Authorized Signatory
by:
Authorized Signatory
[REVERSE OF TRUST CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Owner Trustee or any affiliates
of any of them and no recourse may be had against such parties or their
assets, except as expressly set forth or contemplated herein or in the Trust
Agreement or the Basic Documents. In addition, this Trust Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in
right of payment to certain collections and recoveries with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Sale and Servicing Agreement. A copy of each of the Sale
and Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of the Depositor and at such other places, if any,
designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of
the Depositor and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee with the consent
of the Holders of the Trust Certificates and the Notes, each voting as a
class, evidencing not less than a majority of the Certificate Balance and the
outstanding principal balance of the Notes of each class. Any such consent
by the Holder of this Trust Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Trust Certificate and of any
Trust Certificate issued upon the transfer hereof or in exchange herefor or
in lieu hereof, whether or not notation of such consent is made upon this
Trust Certificate. The Trust Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any
of the Trust Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Trust
Certificate for registration of transfer at the offices or agencies of the
Certificate Registrar maintained by the Owner Trustee in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing, and thereupon one or
more new Trust Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated transferee.
The initial Certificate Registrar appointed under the Trust Agreement is The
Chase Manhattan Bank, New York, New York.
The initial Holder of the Trust Certificates shall be the
Depositor. In the event that the Depositor transfers any Trust Certificate
to any other Person, the Depositor, by its transfer, and such Person, by its
acceptance of the Trust Certificate so transferred, shall be deemed to have
agreed to treat the Trust as a partnership with the Trust Certificates
representing partnership interests therein and the Notes representing debt
thereof. Any transfer by such transferee shall be subject to the same
condition.
Except as provided in the Trust Agreement, the Trust Certificates
are issuable only as registered Trust Certificates without coupons in
denominations of $20,000 and in integral multiples of $1,000 in excess
thereof provided, however, that the Trust Certificates issued to the
Depositor may be issued in such denomination as is required to include any
residual amount. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Trust Certificates are exchangeable for new
Trust Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge payable
in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the Person in whose name
this Trust Certificate is registered as the owner hereof for all purposes,
and none of the Owner Trustee, the Certificate Registrar or any such agent
shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of
all property held as part of the Owner Trust Estate. The Servicer of the
Receivables may at its option purchase the Owner Trust Estate at a price
specified in the Sale and Servicing Agreement, and such purchase of the
Receivables and other property of the Trust will effect early retirement of
the Trust Certificates; provided, however, such right of purchase is
exercisable only as of the last day of any Collection Period as of which the
Pool Balance is less than or equal to 10% of the Original Pool Balance.
The Trust Certificates may not be acquired by (a) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (b) a plan described in Section 4975(e)(1) of
the Code or (c) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity or which uses plan assets to
acquire Trust Certificates (each, a "Benefit Plan"). By accepting and
holding this Trust Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of
assignee)
the within Trust Certificate, and all rights thereunder, and hereby
irrevocably constitutes and appoints , attorney,
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
___________________________________________*/
Signature Guaranteed:
____________________________*/
_________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Trust Certificate in every particular, without alteration, enlargement
or any change whatever. Such signature must be guaranteed by an
"eligible guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as
may be determined by the Certificate Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities
Exchange Act of 1934, as amended.
EXHIBIT B
Form of Certificate of Trust of First Merchants Auto Trust 1997-1
THIS Certificate of Trust of FIRST MERCHANTS AUTO TRUST 1997-1
(the "Trust"), dated [ ], 1997, is being duly executed and filed by Chase
Manhattan Bank Delaware, a Delaware banking corporation, as trustee, to form
a business trust under the Delaware Business Trust Act (12 Del. Code, & 3801
et seq.).
1. Name. The name of the business trust formed hereby is FIRST
MERCHANTS AUTO TRUST 1997-1.
2. Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware is Chase Manhattan
Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801,
Attention: Corporate Trustee Administration Department.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as owner trustee under
a Trust Agreement dated as of
March [ ], 1997
By:
Name:
Title:
EXHIBIT C
FORM OF TRANSFEROR CERTIFICATE
[DATE]
First Merchants Auto Receivables
Corporation II
570 Lake Cook Road
Suite 126B
Deerfield, IL 60015
Chase Manhattan Bank Delaware, as Owner Trustee
1201 Market Street
Wilmington, DE 19801
Re:First Merchants Auto Trust 1997-1
6.75% Asset Backed Certificates
Ladies and Gentlemen:
In connection with our disposition of the above-referenced 6.75% Asset
Backed Certificates (the "Certificates") we certify that (a) we understand
that the Certificates have not been registered under the Securities Act of
1933, as amended (the "Act"), and are being transferred by us in a
transaction that is exempt from the registration requirements of the Act and
(b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or
taken any other action which would result in, a violation of Section 5 of the
Act.
Very truly yours,
[NAME OF TRANSFEROR]
By:
Authorized Officer
EXHIBIT D
FORM OF INVESTMENT LETTER
First Merchants Auto Receivables
Corporation II, as Depositor
570 Lake Cook Road
Suite 126B
Deerfield, IL 60015
Chase Manhattan Bank Delaware, as Owner Trustee
1201 Market Street
Wilmington, DE 19801
Ladies and Gentlemen:
In connection with our proposed purchase of $
aggregate principal amount of 6.75% Asset Backed Certificates (the
"Certificates") of First Merchants Auto Trust 1997-1 (the "Issuer"), we
confirm that:
1.We understand that the Certificates have not been
registered under the Securities Act of 1933, as amended (the "1933
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 1933 Act and
(y) that such Certificates may be resold, pledged or transferred only
(i) to the Depositor, (ii) to an "accredited investor" as defined in
Rule 501(a)(1),(2),(3) or (7) (an "Accredited Investor") under the
1933 Act acting for its own account (and not for the account of
others) or as a fiduciary or agent for others (which others also are
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 1933 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 1933 Act, in which case the Owner Trustee shall
require that both the prospective transferor and the prospective
transferee certify to the Owner Trustee and the Depositor in writing
the facts surrounding such transfer, which certification shall be in
form and substance satisfactory to the Owner Trustee and the
Depositor. Except in the case of a transfer described in clauses (i)
or (iii) above, the Owner Trustee shall require a written opinion of
counsel (which will not be at the expense of the Depositor, any
affiliate of the Depositor or the Owner Trustee) satisfactory to the
Depositor and the Owner Trustee be delivered to the Depositor and the
Owner Trustee to the effect that such transfer will not violate the
1933 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 Certificates 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 Owner
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 $100,000 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 1933 Act) acting in its fiduciary capacity), of
Certificates with a face amount of less than $100,000 for each such
third party.
2. [CHECK ONE]
(a) We are an "accredited investor" (as defined in Rule
501(a)(1),(2),(3) or (7) of Regulation D under the 1933 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
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 1933 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 1933 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 1933
Act provided by Rule 144A.
3.We are not (i) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) that is subject to the provisions of Title I of
ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or
(iii) any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity (each, a "Benefit Plan"). We
hereby acknowledge that no transfer of any Certificate shall be
permitted to be made to any person unless the Owner Trustee has
received (i) a certificate from such transferee to the effect of the
preceding sentence, (ii) an opinion of counsel satisfactory to the
Owner Trustee to the effect that the purchase and holding of any such
Certificate will not constitute or result in the assets of the Issuer
being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA or Section 4975 of the Code and will
not subject the Owner Trustee, Harris Trust and Savings Bank, as
Indenture Trustee or the Depositor to any obligation in addition to
those undertaken in the Basic Documents with respect to the
Certificates (provided, however, that the Owner Trustee will not
require such certificate or opinion in the event that, as a result of
change of law or otherwise, counsel satisfactory to the Owner Trustee
has rendered an opinion to the effect that the purchase and holding of
any such Certificate by a Benefit Plan or a Person that is purchasing
or holding any such Certificate with the assets of a Benefit Plan will
not constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code) or (iii) if the transferee is an insurance
company, a representation that the transferee is an insurance company
that is purchasing such certificates with funds contained in an
"Insurance Company General Account" (as such term is defined in
Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates and
any deemed extension of credit from a Certificateholder which is a
party in interest to a Plan, the assets of which are held by such
"Insurance Company" are covered under PTCE 95-60.
4.We understand that the Depositor, the Owner Trustee, the
Issuer, Salomon Brothers Inc ("Salomon Brothers") 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 the Owner Trustee and Salomon Brothers.
5.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:_________________________________
Name:
Title:
Date:________________________________
<PAGE>
SALE AND SERVICING AGREEMENT
among
FIRST MERCHANTS AUTO TRUST 1997-1,
Issuer,
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
Seller,
and
FIRST MERCHANTS ACCEPTANCE CORPORATION,
Servicer
and
HARRIS TRUST AND SAVINGS BANK,
Indenture Trustee and Backup Servicer
Dated as of March 1, 1997
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.01. Definitions . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . 20
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables . . . . . . . . 21
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of First Merchants 24
SECTION 3.02. Representations and Warranties of the Seller 25
SECTION 3.03. Repurchase upon Breach. . . . . . . . . . 25
SECTION 3.04. Custody of Receivable Files . . . . . . . 26
SECTION 3.05. Duties of Servicer as Custodian . . . . . 26
SECTION 3.06. Instructions; Authority to Act. . . . . . 27
SECTION 3.07. Custodian's Indemnification . . . . . . . 27
SECTION 3.08. Effective Period and Termination. . . . . 28
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer. . . . . . . . . . . . 28
SECTION 4.02. Collection and Receivable Payments; Modifications of
Receivables . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.03. Realization upon Receivables. . . . . . . 30
SECTION 4.04. Physical Damage Insurance . . . . . . . . 30
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles 30
SECTION 4.06. Covenants of Servicer . . . . . . . . . . 31
SECTION 4.07. Purchase of Receivables upon Breach . . . 32
SECTION 4.08. Servicing Fee . . . . . . . . . . . . . . 32
SECTION 4.09. Servicer's Certificate. . . . . . . . . . 32
SECTION 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event . . . . . . . . . . . . . . . . . 32
SECTION 4.11. Annual Independent Accountants' Report. . 33
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . 33
SECTION 4.13. Monthly Tape. . . . . . . . . . . . . . . 33
SECTION 4.14. Retention and Termination of Servicer . . 34
ARTICLE V
Distributions; Spread Account;
Statements to Certificateholders and Noteholders
SECTION 5.01. Local Post Office Boxes . . . . . . . . . 35
SECTION 5.02. Accounts. . . . . . . . . . . . . . . . . 35
SECTION 5.03. Application of Collections. . . . . . . . 37
SECTION 5.04. Purchase Amounts. . . . . . . . . . . . . 37
SECTION 5.05. Transfers from the Spread Account . . . . 38
SECTION 5.06. Distributions . . . . . . . . . . . . . . 38
SECTION 5.07. Claims Upon the Policy; Policy Payments Account 39
SECTION 5.08. Notices to the Security Insurer . . . . . 41
SECTION 5.09. Rights in Respect of Insolvency Proceedings 41
SECTION 5.10. Effect of Payments by the Security Insurer; Subrogation 41
SECTION 5.11. Statements to Securityholders . . . . . . 42
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller . . . . . . . . 44
SECTION 6.02. Corporate Existence . . . . . . . . . . . 46
SECTION 6.03. Liability of Seller; Indemnities. . . . . 46
SECTION 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. . . . . . . . . . . . . . . 46
SECTION 6.05. Limitation on Liability of Seller and Others 47
SECTION 6.06. Seller May Own Securities . . . . . . . . 47
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer . . . . . . . 47
SECTION 7.02. Indemnities of Servicer . . . . . . . . . 48
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. . . . . . . . . . . . . . 49
SECTION 7.04. Limitation on Liability of Servicer, Backup Servicer and
Others. . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.05. Appointment of Subservicer. . . . . . . . 51
SECTION 7.06. Servicer and Backup Servicer Not to Resign 51
ARTICLE VIII
Default
SECTION 8.01. Servicer Termination Events . . . . . . . 52
SECTION 8.02. Consequences of a Servicer Termination Event 53
SECTION 8.03. Appointment of Successor. . . . . . . . . 53
SECTION 8.04. Notification to Noteholders and Certificateholders 54
SECTION 8.05. Waiver of Past Defaults . . . . . . . . . 54
ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables. . . 54
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment. . . . . . . . . . . . . . . . 56
SECTION 10.02. Protection of Title to Trust . . . . . . 57
SECTION 10.03. Notices. . . . . . . . . . . . . . . . . 58
SECTION 10.04. Assignment by the Seller or the Servicer 59
SECTION 10.05. Limitations on Rights of Others. . . . . 59
SECTION 10.06. Severability . . . . . . . . . . . . . . 59
SECTION 10.07. Separate Counterparts. . . . . . . . . . 59
SECTION 10.08. Headings . . . . . . . . . . . . . . . . 59
SECTION 10.09. Governing Law. . . . . . . . . . . . . . 59
SECTION 10.10. Assignment by Issuer . . . . . . . . . . 59
SECTION 10.11. Nonpetition Covenants. . . . . . . . . . 60
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.13. Servicer Payment Obligation. . . . . . . 60
SCHEDULE A
Schedule of Receivables
SCHEDULE B
Location of Receivable Files
SCHEDULE C
Local Collection Accounts
EXHIBIT A
Representations and Warranties of First Merchants
EXHIBIT B
Form of Distribution Date Statement to Securityholders
EXHIBIT C
Form of Servicer's Certificate
EXHIBIT D
Form of Policy
SALE AND SERVICING AGREEMENT dated as of March 1, 1997, among FIRST
MERCHANTS AUTO TRUST 1997-1, a Delaware business trust (the "Issuer"), FIRST
MERCHANTS AUTO RECEIVABLES CORPORATION II, a Delaware corporation (the
"Seller"), FIRST MERCHANTS ACCEPTANCE CORPORATION, a Delaware corporation
(the "Servicer") and HARRIS TRUST AND SAVINGS BANK, an Illinois banking
corporation, as indenture trustee (in such capacity, the "Indenture
Trustee") and as backup servicer (in such capacity, the "Backup Servicer").
WHEREAS the Issuer desires to purchase a portfolio of receivables arising in
connection with motor vehicle retail installment sale contracts generated by
First Merchants Acceptance Corporation in the ordinary course of business and
sold by First Merchants Acceptance Corporation to the Seller;
WHEREAS the Seller is willing to sell such receivables to the Issuer; and
WHEREAS the Servicer is willing to service such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Amount Financed" means with respect to a Receivable, the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and
any related costs, exclusive of any amount allocable to the premium of force-
placed physical damage insurance covering the Financed Vehicle.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges stated in the related Contract.
"Backup Servicer" means Harris Trust and Savings Bank or its successor in
interest pursuant to Section 7.03 or such other Person as shall have been
appointed as Backup Servicer pursuant to Section 8.03(b).
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Indenture, this Agreement, the Receivables Purchase Agreement, the
Administration Agreement, the Note Depository Agreement, the Spread Account
Agreement, the Policy, the Insurance Agreement, the Indemnification
Agreement, the Premium Letter, the Local Collection Account Agreement and
other documents and certificates delivered in connection therewith.
"Certificate Balance" equals the Initial Certificate Balance reduced by all
amounts allocable to principal previously distributed to Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such term in
the Trust Agreement.
"Certificate Final Scheduled Distribution Date" means the January 15, 2003
Distribution Date.
"Certificate Pool Factor" means, as of the close of business on the last day
of a Collection Period, a seven-digit decimal figure equal to the Certificate
Balance (after giving effect to any reductions therein to be made on the
immediately following Distribution Date) divided by the Initial Certificate
Balance. The Certificate Pool Factor will be 1.0000000 as of the Closing
Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"Certificateholders" has the meaning assigned to such term in the Trust
Agreement.
"Certificateholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date after the first Distribution Date, the amount, if any, by
which the sum of the Certificateholders' Monthly Interest Distributable
Amount for the immediately preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest actually
deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on the amount of interest due but not paid
to the Certificateholders on such preceding Distribution Date, to the extent
permitted by law, at the Pass-Through Rate for the related Interest Accrual
Period.
"Certificateholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date. Interest with
respect to the Certificates shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of this Agreement and the
Basic Documents.
"Certificateholders' Monthly Interest Distributable Amount" means (i) with
respect to the first Distribution Date, interest accrued on the Certificates
for the related Interest Accrual Period at the Pass-Through Rate on the
Certificate Balance on the Closing Date and (ii) with respect to any
Distribution Date after the first Distribution Date, interest accrued on the
Certificates for the related Interest Accrual Period at the Pass-Through Rate
on the Certificate Balance on the immediately preceding Distribution Date,
after giving effect to all distributions of principal to the
Certificateholders on or prior to such preceding Distribution Date.
"Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date (i) prior to the Distribution Date on which
the Class A-1 Notes are paid in full, zero, (ii) on which the Class A-1 Notes
are paid in full, 7% of the Regular Principal Distribution Amount remaining
after the Class A-1 Notes are paid in full, (iii) after the Distribution Date
on which the Class A-1 Notes are paid in full, 7% of the Regular Principal
Distribution Amount and (iv) on or after the Distribution Date on which the
Class A-2 Notes are paid in full, 100% of the Regular Principal Distribution
Amount (less, on the Distribution Date on which the Class A-2 Notes are paid
in full, the portion thereof payable on the Class A-2 Notes).
"Certificateholders' Principal Carryover Shortfall" means, with respect to
any Distribution Date after the first Distribution Date, the amount, if any,
by which the sum of the Certificateholders' Monthly Principal Distributable
Amount for the immediately preceding Distribution Date and any outstanding
Certificateholders' Principal Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of principal actually
deposited in the Certificate Distribution Account on such preceding
Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall for such Distribution Date; provided, however,
that the Certificateholders' Principal Distributable Amount shall not exceed
the Certificate Balance. In addition, on the Certificate Final Scheduled
Distribution Date, the principal required to be included in the
Certificateholders' Principal Distributable Amount will include the amount
that is necessary (after giving effect to the other amounts to be deposited
in the Certificate Distribution Account on such Distribution Date and
allocable to principal) to reduce the Certificate Balance to zero.
"Certificates" means the Trust Certificates (as defined in the Trust
Agreement).
"Class" means any one of the classes of Notes.
"Class A-1 Final Scheduled Distribution Date" means the August 2000
Distribution Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date after the first Distribution Date, the amount, if any, by
which the sum of the Class A-1 Monthly Interest Distributable Amount for the
immediately preceding Distribution Date and any outstanding Class A-1
Interest Carryover Shortfall on such preceding Distribution Date exceeds the
amount in respect of interest actually deposited in the Note Distribution
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to the Class A-1 Noteholders on such preceding
Distribution Date, to the extent permitted by law, at the Class A-1 Rate for
the related Floating Rate Interest Accrual Period.
"Class A-1 Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-1 Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the Basic Documents, interest with respect to the Class A-1 Notes shall be
computed on the basis of the actual number of days in each applicable
Floating Rate Interest Accrual Period.
"Class A-1 Monthly Interest Distributable Amount" means, (i) with respect to
the first Distribution Date, interest accrued for the related Floating Rate
Interest Accrual Period at the Class A-1 Rate on the Outstanding Amount of
the Class A-1 Notes on the Closing Date and (ii) with respect to any
Distribution Date after the first Distribution Date, interest accrued for the
related Floating Rate Interest Accrual Period at the Class A-1 Rate on the
Outstanding Amount of the Class A-1 Notes on the immediately preceding
Distribution Date, after giving effect to all distributions of principal to
the Class A-1 Noteholders on or prior to such preceding Distribution Date.
"Class A-1 Monthly Principal Distribution Amount" means, with respect to any
Distribution Date until the Class A-1 Notes are paid in full, 100% of the
Regular Principal Distribution Amount.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is
registered in the Note Register.
"Class A-1 Principal Carryover Shortfall" means, with respect to any
Distribution Date after the first Distribution Date, the amount, if any, by
which the sum of the Class A-1 Monthly Principal Distributable Amount for the
immediately preceding Distribution Date and any outstanding Class A-1
Principal Carryover Shortfall on such preceding Distribution Date exceeds the
amount in respect of principal actually deposited in the Note Distribution
Account on such preceding Distribution Date.
"Class A-1 Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Monthly Principal Distributable
Amount for such Distribution Date and the Class A-1 Principal Carryover
Shortfall for such Distribution Date; provided, however, that the Class A-1
Principal Distributable Amount shall not exceed the Outstanding Amount of the
Class A-1 Notes. In addition, on the Class A-1 Final Scheduled Distribution
Date, the principal required to be deposited in the Note Distribution Account
will include the amount necessary (after giving effect to the other amounts
to be deposited in the Note Distribution Account on such Distribution Date
and allocable to principal) to reduce the Outstanding Amount of the Class A-1
Notes to zero.
"Class A-2 Additional Principal Distribution Amount" means, (i) with respect
to any Distribution Date prior to the Distribution Date on which the Class
A-1 Notes are paid in full and any Distribution Date after the Distribution
Date on which the Class A-2 Notes are paid in full, zero and (ii) with
respect to any Distribution Date on or after the Distribution Date on which
the Class A-1 Notes are paid in full, 50% of the portion, if any, of the
Total Distribution Amount for the related Collection Period that remains
after the payment of amounts in respect of clauses (1) through (8) of Section
5.06(b); provided, however, that the Class A-2 Additional Principal
Distribution Amount shall not exceed the Outstanding Amount of the Class A-2
Notes.
"Class A-2 Final Scheduled Distribution Date" means the December 2001
Distribution Date.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date after the first Distribution Date, the amount, if any, by
which the sum of the Class A-2 Monthly Interest Distributable Amount for the
immediately preceding Distribution Date and any outstanding Class A-2
Interest Carryover Shortfall on such preceding Distribution Date exceeds the
amount in respect of interest actually deposited in the Note Distribution
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to the Class A-2 Noteholders on such preceding
Distribution Date, to the extent permitted by law, at the Class A-2 Rate for
the related Interest Accrual Period.
"Class A-2 Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-2 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-2 Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the Basic Documents, interest with respect to the Class A-2 Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
"Class A-2 Monthly Interest Distributable Amount" means, (i) with respect to
the first Distribution Date, interest accrued for the related Interest
Accrual Period at the Class A-2 Rate on the Outstanding Amount of the Class
A-2 Notes on the Closing Date and (ii) with respect to any Distribution Date
after the first Distribution Date, interest accrued for the related Interest
Accrual Period at the Class A-2 Rate on the Outstanding Amount of the Class
A-2 Notes on the immediately preceding Distribution Date, after giving effect
to all distributions of principal to the Class A-2 Noteholders on or prior to
such preceding Distribution Date.
"Class A-2 Monthly Principal Distributable Amount" means, with respect to
any Distribution Date (i) prior to the Distribution Date on which the Class A-1
Notes are paid in full, zero and (ii) on or after the Distribution Date on
which the Class A-1 Notes are paid in full, 93% of the Regular Principal
Distribution Amount (or, on the Distribution Date on which the Class A-1
Notes are paid in full, 93% of the Regular Principal Distribution Amount
remaining after such payment on the Class A-1 Notes).
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"Class A-2 Principal Carryover Shortfall" means, with respect to any
Distribution Date after the first Distribution Date, the amount, if any, by
which the sum of the Class A-2 Monthly Principal Distributable Amount for the
immediately preceding Distribution Date and any outstanding Class A-2
Principal Carryover Shortfall on such preceding Distribution Date exceeds the
amount in respect of principal actually deposited in the Note Distribution
Account on such preceding Distribution Date.
"Class A-2 Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-2 Monthly Principal Distributable
Amount for such Distribution Date and the Class A-2 Principal Carryover
Shortfall for such Distribution Date; provided, however, that the Class A-2
Principal Distributable Amount shall not exceed the Outstanding Amount of the
Class A-2 Notes. In addition, on the Class A-2 Final Scheduled Distribution
Date, the principal required to be deposited in the Note Distribution Account
will include the amount necessary (after giving effect to the other amounts
to be deposited in the Note Distribution Account on such Distribution Date
and allocable to principal) to reduce the Outstanding Amount of the Class A-2
Notes to zero.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.02(b).
"Collection Period" means, with respect to any Distribution Date, the
calendar month preceding such Distribution Date. Any amount stated as of the
last day of a Collection Period or as of the first day of a Collection Period
shall give effect to the following calculations as determined as of the close
of business on such last day: (1) all applications of collections and (2)
all distributions to be made on the following Distribution Date.
"Contract" means a motor vehicle retail installment sale contract.
"Controlling Party" means (i) as long as the Policy is in effect and no
Security Insurer Default has occurred and is continuing, the Security
Insurer, (ii) if a Security Insurer Default has occurred and is continuing or
the Policy is otherwise no longer in effect, the Indenture Trustee for the
benefit of the Noteholders and (iii) if the Notes have been paid in full and
there are no amounts owed to the Security Insurer under the Policy, the Owner
Trustee for the benefit of the Certificateholders.
"Corporate Trust Office" means the principal office of the Indenture Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Harris Trust and Savings Bank, 311 West Monroe Street, 12th Floor,
Chicago, Illinois 60606, Attention: Indenture Trust Administration; or at
such other address as the Indenture Trustee may designate from time to time
by notice to the Noteholders and the Seller, or the principal corporate trust
office of any successor Indenture Trustee (of which address such successor
Indenture Trustee will notify the Noteholders and the Seller).
"Cram Down Loss" means any loss resulting from an order issued by a court of
appropriate jurisdiction in an insolvency proceeding that reduces the amount
owed on a Receivable or otherwise modifies or restructures the Obligor's
Scheduled Payments to be made thereon. The amount of any such Cram Down Loss
will equal the excess of (i) the Principal Balance of the Receivable
immediately prior to such order over (ii) the Principal Balance of such
Receivable as so reduced, modified or restructured. A Cram Down Loss will be
deemed to have occurred on the date of issuance of such order.
"Credit Enhancement Fee" means, with respect to any Distribution Date, the
fee paid to the Seller, upon the terms and subject to the conditions set
forth in the Spread Account Agreement, in consideration of the pledge by the
Seller of certain of its assets pursuant to the Spread Account Agreement.
The Credit Enhancement Fee shall be in an amount on each Distribution Date
equal to the funds remaining in the Collection Account on such date after the
distribution by the Indenture Trustee of all amounts required pursuant to
clauses (1) through (9) of Section 5.06(b).
"Cutoff Date" means March 1, 1997.
"Dealer" means the dealer who sold a Financed Vehicle and who originated the
related Receivable and assigned it to First Merchants pursuant to a Dealer
Agreement.
"Dealer Agreement" means an agreement between First Merchants and a Dealer
pursuant to which such Dealer sells Contracts to First Merchants.
"Defaulted Receivable" means a Receivable with respect to which any of the
following shall have occurred: (i) a payment under the related Contract is
120 or more days (or, if the related Obligor is a debtor under Chapter 13 of
the U.S. Bankruptcy Code, 180 or more days) delinquent, (ii) the related
Financed Vehicle has been repossessed or (iii) the Servicer has determined in
good faith that payments under the related Contract are not likely to be
resumed.
"Deficiency Claim Date" means, with respect to each Distribution Date, the
third Business Day preceding such Distribution Date.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Indenture Trustee or its nominee
or custodian by physical delivery to the Indenture Trustee or its nominee or
custodian endorsed to, or registered in the name of, the Indenture Trustee
or its nominee or custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer
thereof (i) by delivery of such certificated security endorsed to, or
registered in the name of, the Indenture Trustee or its nominee or custodian
or endorsed in blank to a financial intermediary (as defined in Section 8-
313 of the UCC) and the making by such financial intermediary of entries on
its books and records identifying such certificated securities as belonging
to the Indenture Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of such
certificated security by the Indenture Trustee or its nominee or custodian,
or (ii) by delivery thereof to a "clearing corporation" (as defined in
Section 8-102(3) of the UCC) and the making by such clearing corporation of
appropriate entries on its books reducing the appropriate securities account
of the transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated securities
for the sole and exclusive account of the financial intermediary, the
maintenance of such certificated securities by such clearing corporation or
a "custodian bank" (as defined in Section 8-102(4) of the UCC) or the
nominee of either subject to the clearing corporation's exclusive control,
the sending of a confirmation by the financial intermediary of the purchase
by the Indenture Trustee or its nominee or custodian of such securities and
the making by such financial intermediary of entries on its books and
records identifying such certificated securities as belonging to the
Indenture Trustee or its nominee or custodian (all of the foregoing,
"Physical Property"), and, in any event, any such Physical Property in
registered form shall be in the name of the Indenture Trustee or its nominee
or custodian; and such additional or alternative procedures as may hereafter
become appropriate to effect the complete transfer of ownership of any such
Trust Account Property (as defined herein) to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the Federal
Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures,
all in accordance with applicable law, including applicable Federal
regulations and Articles 8 and 9 of the UCC: book-entry registration of
such Trust Account Property to an appropriate book-entry account maintained
with a Federal Reserve Bank by a financial intermediary which is also a
"depository" pursuant to applicable Federal regulations and issuance by such
financial intermediary of a deposit advice or other written confirmation of
such book-entry registration to the Indenture Trustee or its nominee or
custodian of the purchase by the Indenture Trustee or its nominee or
custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to Federal book-
entry regulations as belonging to the Indenture Trustee or its nominee or
custodian and indicating that such custodian holds such Trust Account
Property solely as agent for the Indenture Trustee or its nominee or
custodian; and such additional or alternative procedures as may hereafter
become appropriate to effect complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the
interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer
thereof in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the Indenture
Trustee or its nominee or custodian of such uncertificated security, the
making by such financial intermediary of entries on its books and records
identifying such uncertificated certificates as belonging to the Indenture
Trustee or its nominee or custodian.
"Depositor" means the Seller in its capacity as Depositor under the Trust
Agreement.
"Determination Date" means, with respect to each Distribution Date, the
earlier of (i) the eighth calendar day of the month in which such
Distribution Date occurs (or if such eighth day is not a Business Day, the
next succeeding Business Day) and (ii) the fifth Business Day preceding such
Distribution Date.
"Distribution Date" means, with respect to each Collection Period, the
fifteenth day of the following month or, if such day is not a Business Day,
the immediately following Business Day, commencing on April 15, 1997.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution shall have a credit
rating from each Rating Agency in one of its generic rating categories that
signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee or The Chase Manhattan Bank so long as
it shall be Paying Agent under the Trust Agreement or (b) a depository
institution organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia (or any domestic branch
of a foreign bank), which (i) has either (A) a long-term unsecured debt
rating of AAA or better by Standard & Poor's and A1 or better by Moody's or
(B) a certificate of deposit rating of A-1+ by Standard & Poor's and P-1 or
better by Moody's, or any other long-term, short-term or certificate of
deposit rating acceptable to the Rating Agencies and (ii) whose deposits are
insured by the FDIC. If so qualified, the Indenture Trustee, the Owner
Trustee or The Chase Manhattan Bank may be considered an Eligible Institution
for the purposes of clause (b) of this definition.
"Eligible Investments" means book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a)
direct obligations of, and obligations fully guaranteed as to the full and
timely payment by, the United States of America;
(b)
demand deposits, time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the United
States of America or any state thereof (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal or State banking
or depository institution authorities; provided, however, that at the time
of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than
such obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) thereof shall have
a credit rating from each of the Rating Agencies in the highest investment
category granted thereby;
(c)
commercial paper having, at the time of the investment or contractual
commitment to invest therein, a rating from each of the Rating Agencies in
the highest investment category granted thereby;
(d)
investments in money market funds having a rating from each of the Rating
Agencies in the highest investment category granted thereby (including funds
for which the Indenture Trustee or the Owner Trustee or any of their
respective Affiliates is investment manager or advisor);
(e)
bankers' acceptances issued by any depository institution or trust company
referred to in clause (b) above;
(f)
repurchase obligations with respect to any security that is a direct
obligation of, or fully guaranteed by, the United States of America or any
agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company (acting as
principal) described in clause (b);
(g)
repurchase obligations with respect to any security or whole loan, entered
into with (i) a depository institution or trust company (acting as
principal) described in clause (b) above (except that the rating referred to
in the proviso in such clause (b) shall be A-1 or higher in the case of
Standard & Poor's) (such depository institution or trust company being
referred to in this definition as a "financial institution"), (ii) a broker/
dealer (acting as principal) registered as a broker or dealer under Section
15 of the Exchange Act (a "broker/dealer") the unsecured short-term debt
obligations of which are rated P-1 by Moody's and at least A-1 by Standard &
Poor's at the time of entering into such repurchase obligation (a "rated
broker/dealer"), (iii) an unrated broker/dealer (an "unrated broker/dealer")
, acting as principal, that is a wholly-owned subsidiary of a non-bank
holding company the unsecured short-term debt obligations of which are rated
P-1 by Moody's and at least A-1 by Standard & Poor's at the time of entering
into such repurchase obligation (a "Rated Holding Company") or (iv) an
unrated subsidiary (a "Guaranteed Counterparty"), acting as principal, that
is a wholly-owned subsidiary of a direct or indirect parent Rated Holding
Company, which guarantees such subsidiary's obligations under such
repurchase agreement; provided that the following conditions are satisfied:
(A)
the aggregate amount of funds invested in repurchase obligations of a
financial institution, a rated broker/dealer, an unrated broker/dealer
or Guaranteed Counterparty in respect of which the Standard & Poor's
unsecured short-term ratings are A-1 (in the case of an unrated broker/
dealer or Guaranteed Counterparty, such rating being that of the
related Rated Holding Company) shall not exceed 20% of the sum of the
then Outstanding Amount of the Notes and the Certificate Balance (there
being no limit on the amount of funds that may be invested in
repurchase obligations in respect of which such Standard & Poor's
rating is A-1+ (in the case of an unrated broker/dealer or Guaranteed
Counterparty, such rating being that of the related Rated Holding
Company));
(B)
the repurchase obligation must mature within 30 days of the date on
which the Indenture Trustee or the Issuer, as applicable, enters into
such repurchase obligation;
(C)
the repurchase obligation shall not be subordinated to any other
obligation of the related financial institution, rated broker/dealer,
unrated broker/dealer or Guaranteed Counterparty;
(D)
the collateral subject to the repurchase obligation is held, in the
appropriate form, by a custodial bank on behalf of the Indenture
Trustee or the Issuer, as applicable;
(E)
the repurchase obligation shall require that the collateral subject
thereto shall be marked to market daily;
(F)
in the case of a repurchase obligation of a Guaranteed Counterparty,
the following conditions shall also be satisfied:
(i)
the Indenture Trustee or the Issuer, as applicable, shall have
received an opinion of counsel (which may be in-house counsel) to
the effect that the guarantee of the related Rated Holding Company
is a legal, valid and binding agreement of the Rated Holding
Company, enforceable in accordance with its terms, subject as to
enforceability to bankruptcy, insolvency, reorganization and
moratorium or other similar laws affecting creditors' rights
generally and to general equitable principles;
(ii)
the Indenture Trustee or the Issuer, as applicable, shall have
received (x) an incumbency certificate for the signer of such
guarantee, certified by an officer of such Rated Holding Company
and (y) a resolution, certified by an officer of the Rated Holding
Company, of the board of directors (or applicable committee
thereof) of the Rated Holding Company authorizing the execution,
delivery and performance of such guarantee by the Rated Holding
Company;
(iii)
the only conditions to the obligation of such Rated Holding
Company to pay on behalf of the Guaranteed Counterparty shall be
that the Guaranteed Counterparty shall not have paid under such
repurchase obligation when required (it being understood that no
notice to, demand on or other action in respect of the Guaranteed
Counterparty is necessary) and that the Indenture Trustee or the
Issuer shall make a demand on the Rated Holding Company to make
the payment due under such guarantee;
(iv)
the guarantee of the Rated Holding Company shall be irrevocable
with respect to such repurchase obligation and shall not be
subordinated to any other obligation of the Rated Holding
Company;
(v)
each of Standard & Poor's and Moody's has confirmed in writing to
the Indenture Trustee or Issuer, as applicable, that it has
reviewed the form of the guarantee of the Rated Holding Company
and has determined that the issuance of such guarantee will not
result in the downgrade or withdrawal of the ratings assigned to
the Notes or result in an increased capital charge to the
Security Insurer;
(G)
the repurchase obligation shall require that the repurchase obligation
be overcollateralized and shall provide that, upon any failure to
maintain such overcollateralization, the repurchase obligation shall
become due and payable, and unless the repurchase obligation is
satisfied immediately, the collateral subject to the repurchase
agreement shall be liquidated and the proceeds applied to satisfy the
unsatisfied portion of the repurchase obligation; and
(h)
any other investment with respect to which the Issuer or the Servicer has
received written notification from the Rating Agencies that the acquisition
of such investment as an Eligible Investment will not result in a withdrawal
or downgrading of the ratings on the Notes or result in an increased capital
charge to the Security Insurer.
"Eligible Servicer" means First Merchants, 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.
"FDIC" means the Federal Deposit Insurance Corporation.
"Financed Vehicle" means an automobile, light-duty truck, van or minivan,
together with all accessions thereto, securing an Obligor's indebtedness
under the respective 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 Payment" means, with respect to each Distribution Date, an
amount equal to the Noteholders' Interest Distributable Amount plus the
Noteholders' Principal Distributable Amount.
"Holder" means "Noteholder" in connection with the Notes and
"Certificateholder" in connection with the Certificates.
"Indenture" means the Indenture dated as of March 1, 1997, between the
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Certificate Balance" means $8,486,690.83.
"Initial Pool Balance" means the aggregate principal balance of the
Receivables as of the Cutoff Date.
"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 March 1, 1997 among the Security Insurer, the Issuer, First Merchants and the
Seller.
"Insurance Agreement Event of Default" means any Event of Default, as
defined in the Insurance Agreement.
"Interest Accrual Period" means, with respect to the Class A-2 Notes and the
Certificates and any Distribution Date, the period from and including the
15th day of the preceding calendar month (or, in the case of the first
Distribution Date, from and including the Closing Date) to and including the
14th day of the calendar month in which such Distribution Date occurs.
"Interest Distribution Amount" means, with respect to any Distribution Date,
the sum of the following amounts, without duplication, with respect to the
Receivables in respect of the Collection Period preceding such Distribution
Date: (a) that portion of all collections on Receivables allocable to
interest, (b) Liquidation Proceeds with respect to the Receivables to the
extent allocable to interest due thereon in accordance with the Servicer's
customary servicing procedures, (c) the Purchase Amount of each Receivable
that became a Purchased Receivable during such Collection Period to the
extent attributable to accrued interest on such Receivable, (d) Investment
Earnings for the related Distribution Date and (e) Recoveries for such
Collection Period to the extent allocable to interest; provided, however,
that in calculating the Interest Distribution Amount the following will be
excluded: all payments and proceeds (including Liquidation Proceeds and
Recoveries) of any Purchased Receivables the Purchase Amount of which has
been included in the Interest Distribution Amount in a prior Collection
Period.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.02(b).
"Issuer" means First Merchants Auto Trust 1997-1.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor.
"Liquidated Receivable" means any Receivable or with respect to which any of
the following shall have occurred: (i) the related Financed Vehicle has been
repossessed for 90 days or more, (ii) such Receivable is a Defaulted
Receivable with respect to which the Servicer has determined in good faith
that all amounts it expects to recover have been received or (iii) a payment
under the related Contract is 150 or more days (or, if the related Obligor is
a debtor under Chapter 13 of the U.S. Bankruptcy Code, 210 or more days)
delinquent.
"Liquidation Proceeds" means, with respect to any Liquidated Receivable, the
moneys collected in respect thereof, from whatever source on a Liquidated
Receivable during the Collection Period in which such Receivable became a
Liquidated Receivable, net of the sum of any amounts expended by the Servicer
in connection with such liquidation and any amounts required by law to be
remitted to the Obligor on such Liquidated Receivable.
"Local Collection Account" shall have the meaning provided in Section 5.02.
"Local Collection Account Agreement" means the agreement dated as of March
1, 1997, among the Indenture Trustee, First Merchants, the Security Insurer,
First Merchants Auto Receivables Corporation, FMARC II, First Merchants Auto
Trust 1996-A, First Merchants Auto Trust 1996-B, First Merchants Auto Trust
1996-C and the Issuer, as amended, supplemented or otherwise modified from
time to time.
"Local Post Office Box" shall have the meaning specified in Section 5.01.
"Master Spread Account Agreement" means the Master Spread Account Agreement
dated as of March 1, 1996, as amended, among FMARC II, as depositor, the
Security Insurer and Harris Trust and Savings Bank, as trustee and collateral
agent.
"Modification Level" shall have the meaning set forth in the Insurance
Agreement.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Note" shall have the meaning specified in the Indenture.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.02.
"Note Pool Factor" means, with respect to each Class of Notes as of the
close of business on the last day of a Collection Period, a seven-digit decimal
figure equal to the Outstanding Amount of such Class of Notes (after giving
effect to any reductions thereof to be made on the immediately following
Distribution Date) divided by the original Outstanding Amount of such Class
of Notes. The Note Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Note Pool Factor will decline to reflect reductions in the
Outstanding Amount of such Class of Notes.
"Noteholders" shall mean the Class A-1 Noteholders and/or the Class A-2
Noteholders.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Interest Distributable Amount for
such Distribution Date and the Class A-2 Interest Distributable Amount for
such Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Principal Distributable Amount
for such Distribution Date and the Class A-2 Principal Distributable Amount
for such Distribution Date.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under such
Receivable.
"Obligor's 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, "Obligor's Scheduled
Payment" shall refer to the Obligor's scheduled monthly payment obligation as
so modified.
"Officers' Certificate" means a certificate signed by (a) the chairman of
the board, any vice president, the controller or any assistant controller and
(b) the president, a treasurer, assistant treasurer, secretary or assistant
secretary of the Seller or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who may
be an employee of or counsel to the Seller or the Servicer, which counsel
shall be acceptable to the Indenture Trustee, the Owner Trustee or the Rating
Agencies, as applicable.
"Original Pool Balance" means $106,081,690.83.
"Outstanding Amount" shall have the meaning specified in the Indenture.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under
the Trust Agreement.
"Pass-Through Rate" means 6.75% per annum.
"Payment Determination Date" means, with respect to any Distribution Date,
the Business Day immediately preceding such Distribution Date.
"Physical Property" has the meaning assigned to such term in the definition
of "Delivery" above.
"Policy" means the financial guaranty insurance policy issued by the
Security Insurer with respect to the Notes, including any endorsements thereto,
in the form of Exhibit D.
"Policy Payments Account" shall have the meaning specified in Section
5.07(b).
"Pool Balance" means, with respect to each Determination Date, the aggregate
Principal Balance of the Receivables (excluding all Purchased Receivables and
Liquidated Receivables) as of the close of business on the last day of the
related Collection Period, after giving effect to all payments received from
Obligors for such Collection Period, and after adjustment for Cram Down
Losses for such Collection Period.
"Portfolio Performance Test" has the meaning set forth in the Spread Account
Agreement.
"Precomputed Receivable" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the related
Contract as an add-on finance charge) and the portion allocable to the Amount
Financed is determined according to the sum of periodic balances or the sum
of monthly balances or any equivalent method or are monthly actuarial
receivables.
"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 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.
"Purchase Amount" means, with respect to any Receivable that became a
Purchased Receivable, the unpaid principal balance owed by the Obligor
thereon plus interest on such amount at the applicable APR to the last day of
the month of repurchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 or by the Seller pursuant to Section 3.03 or purchased by the
Servicer pursuant to Section 9.01.
"Rating Agency" means either Moody's or Standard & Poor's or, when used in
the plural form, Moody's and Standard and Poor's. If none of Moody's,
Standard & Poor's or a successor to either of them remains in existence,
"Rating Agency" shall mean any nationally recognized statistical rating
organization or other comparable Person designated by the Seller, notice of
which designation shall be given to the Owner Trustee, the Indenture Trustee,
the Servicer and the Security Insurer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Owner
Trustee and the Indenture Trustee in writing that such action will not result
in a reduction or withdrawal of the then current rating of the Notes or
result in an increased capital charge of the Security Insurer.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Contract listed on Schedule A (which Schedule may be
in the form of microfiche).
"Receivable Files" means the documents specified in Section 3.04.
"Receivables Purchase Agreement" means the Receivables Purchase Agreement
dated as of March 1, 1997, between First Merchants, as seller, and FMARC II,
as purchaser.
"Recoveries" means, with respect to any Receivable that becomes a Liquidated
Receivable, monies collected in respect thereof, from whatever source, during
any Collection Period following the Collection Period in which such
Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts
required by law to be remitted to the Obligor.
"Regular Principal Distribution Amount" means, with respect to any
Distribution Date, the sum of the following amounts, without duplication,
with respect to the Receivables in respect of the related Collection Period:
(i) that portion of all collections on the Receivables allocable to
principal, (ii) the aggregate outstanding principal balance of all
Receivables that became Liquidated Receivables during such Collection Period,
(iii) that portion allocable to principal of the aggregate amount of any Cram
Down Losses and (iv) that portion allocable to principal of the Purchase
Amount of all Receivables that became Purchased Receivables during or in
respect of such Collection Period; provided, however, that in calculating the
Regular Principal Distribution Amount the following will be excluded:
(i) all payments and proceeds (including Liquidation Proceeds) of any
Purchased Receivables the Purchase Amount of which has been included in the
Regular Principal Distribution Amount in a prior Collection Period and
(ii) Recoveries.
"Responsible Officer" means the chairman of the board, the president, any
executive vice president, any vice president, the treasurer, any assistant
treasurer, the secretary, or any assistant secretary of the Servicer.
"Securities" means the Notes and the Certificates.
"Security Insurer" means Financial Security Assurance Inc., a monoline
insurance company incorporated under the laws of the State of New York, or
its successor.
"Security Insurer Default" means any one of the following events shall have
occurred and be continuing:
(a)
the Security Insurer shall have failed to make a required payment when due
under the Policy;
(b)
the Security Insurer shall have (i) filed a petition or commenced any case
or proceeding under any provision or chapter of the United States Bankruptcy
Code, the New York State Insurance Law or any other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization, (ii) made a general assignment for the benefit of its
creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization that is final and
nonappealable; or
(c)
a court of competent jurisdiction, the New York Department of Insurance or
any other competent regulatory authority shall have entered a final and
nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent, or receiver for the Security Insurer or for all or any material
portion of its property or (ii) authorizing the taking of possession by a
custodian, trustee, agent, or receiver of the Security Insurer or of all or
any material portion of its property.
"Securityholders" means the Noteholders and/or the Certificateholders.
"Seller" means FMARC II and its successors in interest to the extent
permitted hereunder.
"Servicer" means First Merchants, as the servicer of the Receivables, and
each successor to First Merchants (in the same capacity) pursuant to
Section 7.03 or 8.03.
"Servicer Termination Event" means an event specified in Section 8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicer Extension Notice" shall have the meaning specified in Section 4.14
"Servicing Fee" means the fee payable to the Servicer for services rendered
during each Collection Period, determined pursuant to Section 4.08.
"Simple Interest Method" means the method of allocating the monthly payments
received with respect to a Receivable to interest in an amount equal to the
product of (i) the applicable APR, (ii) the period of time (expressed as a
fraction of a year, based on the actual number of days in the calendar month
and 365 days in the calendar year) elapsed since the preceding payment was
made under such Receivable and (iii) the outstanding principal amount of the
Receivable, and allocating the remainder of each such monthly payment to
principal.
"Simple Interest Receivable" means any Receivable under which the portion of
a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Spread Account" means the account designated as such, established and
maintained pursuant to the Spread Account Agreement.
"Spread Account Agreement" means the Master Spread Account Agreement dated
as of March 1, 1996, among FMARC II, as depositor, the Security Insurer and
Harris Trust and Savings Bank, as trustee and collateral agent, as amended by
Amendments to the Master Spread Account Agreement, dated as of May 1, 1996
and as of March 1, 1997, and as supplemented by the Series 1997-1 Supplement
to the Master Spread Account Agreement, dated as of March 1, 1997, among
FMARC II, the Security Insurer, the Owner Trustee and Harris Trust and
Savings Bank, as the same may be supplemented or amended from time to time.
"Spread Account Required Amount" has the meaning assigned to such term in
the Spread Account Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. or its successor.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Total Distribution Amount" means, for each Distribution Date, the sum of
the applicable Interest Distribution Amount and the applicable Regular Principal
Distribution Amount (other than the portion thereof attributable to Realized
Losses or Cram Down Losses).
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.02.
"Trust Agreement" means the Amended and Restated Trust Agreement dated as of
March 1, 1997, between the Seller, as depositor, and the Owner Trustee.
"Trust Officer" means, in the case of the Indenture Trustee or the Backup
Servicer, any Officer within the Corporate Trust Office of the Indenture
Trustee, including any Assistant Vice President, Assistant Treasurer,
Assistant Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge
of and familiarity with the particular subject and, with respect to the Owner
Trustee, any officer in the Corporate Trust Administration Department of the
Owner Trustee with direct responsibility for the administration of the Trust
Agreement and the Basic Documents on behalf of the Owner Trustee.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture or, if not defined therein, in the Trust Agreement.
(b)
All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c)
As used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document
to the extent not defined, shall have the respective meanings given to them
under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d)
The words "hereof," "herein," "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Article, Section, Schedule and
Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without
limitation".
(e)
The definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.
(f)
Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE
II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables. In consideration of the Issuer's
delivery to or upon the order of the Seller of $103,103,035.03, the Seller
does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (subject to the obligations of the Seller set forth
herein), all right, title and interest of the Seller in and to:
(i)
the Receivables and all moneys received thereon on or after the Cutoff Date;
(ii)
the security interests in the Financed Vehicles and any accessions thereto
granted by Obligors pursuant to the Receivables and any other interest of
the Seller in such Financed Vehicles;
(iii)
any Liquidation Proceeds and any other proceeds with respect to the
Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors, including any
vendor's single interest or other collateral protection insurance policy;
(iv)
any property that shall have secured a Receivable and shall have been
acquired by or on behalf of the Seller or First Merchants;
(v)
all documents and other items contained in the Receivable Files;
(vi)
all of the Seller's rights (but not its obligations) under the Receivables
Purchase Agreement;
(vii)
all funds on deposit from time to time in the Trust Accounts and the
Certificate Distribution Account and all investments and proceeds thereof
(including all income thereon); and
(viii)
the proceeds of any and all of the foregoing.
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of First Merchants. (a)
First Merchants has made each of the representations and warranties set forth in
Exhibit A hereto under the Receivables Purchase Agreement and has consented
to the assignment by the Seller to the Issuer of the Seller's rights with
respect thereto. Such representations and warranties speak as of the
execution and delivery of this Agreement and as of the Closing Date, but
shall survive the sale, transfer and assignment of the Receivables to the
Issuer. Pursuant to Section 2.01 of this Agreement, the Seller has sold,
assigned, transferred and conveyed to the Issuer, as part of the assets of
the Issuer, its rights under the Receivables Purchase Agreement, including
the representations and warranties of First Merchants therein as set forth in
Exhibit A, upon which the Issuer relies in accepting the Receivables and
delivering the Securities and the Security Insurer relies in issuing the
Policy, together with all rights of the Seller with respect to any breach
thereof, including the right to require First Merchants to repurchase
Receivables in accordance with the Receivables Purchase Agreement. It is
understood and agreed that the representations and warranties referred to in
this Section shall survive the delivery of the Receivable Files to the Issuer
or any custodian.
(b) First Merchants hereby agrees that the Issuer shall have the right to
enforce any and all rights under the Receivables Purchase Agreement assigned
to the Issuer herein, including the right to cause First Merchants to
repurchase any Receivable with respect to which it is in breach of any of its
representations and warranties set forth in Exhibit A, directly against First
Merchants as though the Issuer were a party to the Receivables Purchase
Agreement, and the Issuer shall not be obligated to exercise any such rights
indirectly through the Seller.
SECTION 3.02. Representations and Warranties of the Seller. The Seller
makes the following representations and warranties as to the Receivables on
which the Issuer relies in accepting the Receivables and delivering the
Securities and the Security Insurer relies in issuing the 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 Seller to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a)
Title. It is the intention of the Seller that (i) the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Seller to the Issuer, conveying good title thereto, free and clear of any
Liens or rights of other Persons and (ii) the beneficial interest in and
title to the Receivables not be part of the debtor's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been sold, transferred, assigned or
pledged by the Seller to any Person other than the Issuer. Immediately prior
to the transfer and assignment herein contemplated, the Seller had good and
marketable title to each Receivable, free and clear of all Liens and rights
of others and, immediately upon the transfer thereof, the Issuer shall have
good and marketable title to each such Receivable, free and clear of all
Liens and rights of others; and the transfer has been perfected under the
UCC.
(b)
All Filings Made. All filings (including UCC filings) necessary in any
jurisdiction to give the Issuer a first perfected ownership interest in the
Receivables have been made.
SECTION 3.03. Repurchase upon Breach. The Seller and the Servicer shall
inform the other parties to this Agreement and the Security Insurer promptly,
in writing, upon the discovery of any breach of First Merchants'
representations and warranties made pursuant to Section 3.01 of this
Agreement or Section 3.02 of the Receivables Purchase Agreement or of the
Seller's representations and warranties made pursuant to Section 3.02 above.
Unless any such breach shall have been cured by the last day of the first
Collection Period following the discovery or notice thereof by or to the
Seller or the Servicer, the Seller shall be obligated and, if necessary, the
Seller or the Issuer shall enforce the obligation of First Merchants under
the Receivables Purchase Agreement, to repurchase as of such last day any
Receivable materially and adversely affected by any such breach. In
consideration of the repurchase of any such Receivable, the Seller shall
remit the Purchase Amount to the Collection Account, in the manner specified
in Section 5.04; provided, however, that the obligation of the Seller to
repurchase any Receivable arising solely as a result of a breach of First
Merchants' representations and warranties under Section 3.02 of the
Receivables Purchase Agreement is subject to the receipt by the Seller of the
Purchase Amount from First Merchants. The sole remedy of the Issuer, the
Indenture Trustee, the Noteholders or the Certificateholders with respect to
a breach of representations and warranties pursuant to Sections 3.01 and 3.02
and the agreement contained in this Section shall be to require the Seller to
repurchase Receivables pursuant to this Section, subject to the conditions
contained herein, or to enforce First Merchants' obligation to the Seller to
repurchase such Receivables pursuant to the Receivables Purchase Agreement.
SECTION 3.04. Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer
hereby revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee
as custodian of the following documents or instruments, which are hereby
constructively delivered by the Issuer to the Indenture Trustee:
(a)
the fully executed original of each Receivable (together with any agreements
modifying such Receivable, including any extension agreement);
(b)
the original credit application, or a copy thereof, fully executed by each
Obligor thereon;
(c)
the original certificate of title or such other documents that the Servicer
or the Seller shall keep on file in accordance with its customary procedures
evidencing the security interest of the Seller in the Financed Vehicle; and
(d)
any and all other documents that the Servicer or the Seller shall keep on
file in accordance with its customary procedures relating to a Receivable,
an Obligor or a Financed Vehicle.
SECTION 3.05. Duties of Servicer as Custodian. (a) Safekeeping. The
Servicer shall hold the Receivable Files as custodian for the benefit of the
Issuer, the Indenture Trustee and, to the extent provided herein, the
Security Insurer, and shall maintain such accurate and complete accounts,
records and computer systems pertaining to each Receivable File as shall
enable the Issuer to comply with this Agreement. In performing its duties as
custodian, the Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to the
receivable files relating to all comparable automotive receivables that the
Servicer services for itself or others. The Servicer shall conduct, or cause
to be conducted, periodic audits of the Receivable Files held by it under
this Agreement and of the related accounts, records and computer systems, in
such a manner as shall enable the Issuer or the Indenture Trustee to verify
the accuracy of the Servicer's record keeping. The Servicer shall promptly
report to the Issuer and the Indenture Trustee any failure on its part to
hold the Receivable Files and maintain its accounts, records and computer
systems as herein provided and shall promptly take appropriate action to
remedy any such failure. Nothing herein shall be deemed to require an
initial review or any periodic review by the Issuer or the Indenture Trustee
of the Receivable Files.
(b)
Maintenance of and Access to Records. The Servicer shall maintain each
Receivable File at one of its offices specified in Schedule B to this
Agreement or at such other office as shall be specified to the Issuer and the
Indenture Trustee by written notice not later than 90 days after any change
in location. The Servicer shall make available to the Issuer and the
Indenture Trustee or their duly authorized representatives, attorneys or
auditors a list of locations of the Receivable Files and the related
accounts, records and computer systems maintained by the Servicer at such
times during normal business hours as the Issuer shall instruct.
(c)
Release of Documents. Upon instruction from the Indenture Trustee, the
Servicer shall release any Receivable File to the Indenture Trustee, the
Indenture Trustee's agent or the Indenture Trustee's designee, as the case
may be, at such place or places as the Indenture Trustee may designate, as
soon as practicable, and upon the release and delivery of any such document
in accordance with the instructions of the Indenture Trustee, the Servicer
shall be released from any further liability and responsibility under this
Section 3.05 with respect to such documents, unless and until such time as
such documents shall be returned to the Servicer. In no event shall the
Servicer be responsible for any loss occasioned by the Indenture Trustee's
failure to return any Receivable File or any portion thereof in a timely
manner.
SECTION 3.06. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Trust Officer of the
Indenture Trustee.
SECTION 3.07. Custodian's Indemnification. The Servicer, as custodian,
shall indemnify the Trust, the Owner Trustee and the Indenture Trustee and
each of their officers, directors, employees and agents for any and all
liabilities, obligations, losses, compensatory damages, payments, costs, or
expenses of any kind whatsoever that may be imposed on, incurred by or
asserted against the Trust, the Owner Trustee or the Indenture Trustee or any
of their officers, directors, employees or agents as the result of any
improper act or omission in any way relating to the maintenance and custody
by the Servicer as custodian of the Receivable Files; provided, however, that
the Servicer shall not be liable to the Owner Trustee, the Indenture Trustee
or any such officer, director, employee or agent of the Owner Trustee or the
Indenture Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee or the
Indenture Trustee, as the case may be, or any such officer, director,
employee or agent of the Owner Trustee or the Indenture Trustee, as the case
may be.
Indemnification under this Section shall survive the resignation or removal
of the Servicer or the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter collects
any of such amounts from others, such Person shall promptly repay such
amounts to the Servicer, without interest.
SECTION 3.08. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect unless and until terminated pursuant to this
Section 3.08. If First Merchants or any successor Servicer shall resign as
Servicer in accordance with the provisions of this Agreement or if all of the
rights and obligations of First Merchants or any successor Servicer shall have
been terminated under Section 8.02, the appointment of such Servicer as
custodian may be terminated by the Security Insurer, the Issuer or by the
Holders of Notes evidencing not less than 25% of the Outstanding Amount of the
Notes, by the Owner Trustee or by Holders (other than the Seller or an affiliate
thereof) of Certificates evidencing not less than 25% of the Certificate
Balance, in the same manner as the Security Insurer, the Indenture Trustee or
such Securityholders may terminate the rights and obligations of the Servicer
under Section 8.02. The Indenture Trustee or with the consent of the
Indenture Trustee, the Owner Trustee may terminate the Servicer's appointment
as custodian, with cause, at any time upon written notification to the
Servicer and without cause, only by written notification to the Servicer
pursuant to Section 8.02. As soon as practicable after any termination of
such appointment (but in no event more than 10 Business Days after any such
termination of appointment), the Servicer shall deliver the Receivable Files
to the Indenture Trustee or the Indenture Trustee's agent at such place or
places as the Indenture Trustee may reasonably designate.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer. The Servicer, for the benefit of the
Issuer, the Indenture Trustee and the Security Insurer, shall manage,
service, administer and make collections on the Receivables and perform the
other actions required by the Servicer under this Agreement. The Servicer
shall service the Receivables in accordance with its customary and usual
procedures and consistent with the procedures employed by institutions that
service motor vehicle retail installment sale contracts. The Servicer's
duties shall include the collection and posting of all payments, responding
to inquiries of Obligors, investigating delinquencies, sending payment
coupons to Obligors, reporting any required tax information to Obligors,
monitoring the collateral, accounting for collections, furnishing monthly and
annual statements to the Owner Trustee, Indenture Trustee and the Security
Insurer with respect to distributions, monitoring the compliance by Obligors
with the insurance requirements contained in the related Contracts, and
performing the other duties specified herein. The Servicer also shall
administer and enforce all rights of the holder of the Receivables under the
Contracts and the Dealer Agreements. To the extent consistent with the
standards, policies and procedures otherwise required hereby, the Servicer
shall follow its customary standards, policies and procedures and shall have
full power and authority, acting alone, to do any and all things in
connection with the managing, servicing, administration and collection of the
Receivables that it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered
to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders or any of
them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments with
respect to the Receivables and with respect to the Financed Vehicles;
provided, however, that, notwithstanding the foregoing, the Servicer shall
not, except pursuant to an order from a court of competent jurisdiction,
release an Obligor from payment of any unpaid amount due under any Receivable
or waive the right to collect the unpaid balance of any Receivable from an
Obligor. The Servicer is hereby authorized to commence, in its own name or
in the name of the Issuer, the Indenture Trustee, the Owner Trustee, the
Certificateholders or the Noteholders, a legal proceeding to enforce a
Receivable pursuant to Section 4.03 or to commence or participate in any
other legal proceeding (including a bankruptcy proceeding) relating to or
involving a Receivable, an Obligor or a Financed Vehicle. If the Servicer
commences or participates in any such legal proceeding in its own name, the
Indenture Trustee or the Issuer shall thereupon be deemed to have
automatically assigned the applicable Receivable to the Servicer solely for
purposes of commencing or participating in such proceeding as a party or
claimant, and the Servicer is authorized and empowered by the Indenture
Trustee or the Issuer to execute and deliver in the Indenture Trustee's or
the Issuer's name any notices, demands, claims, complaints, responses,
affidavits, or other documents or instruments in connection with any such
proceeding. If in any enforcement suit or legal proceeding it shall be held
that the Servicer may not enforce a Receivable on the ground that it shall
not be a real party in interest or a holder entitled to enforce such
Receivable, the Owner Trustee shall, at the Servicer's expense and direction,
take steps to enforce such Receivable, including bringing suit in its name or
the name of the Issuer, the Indenture Trustee, the Certificateholders or the
Noteholders. The Owner Trustee and the Indenture Trustee shall upon the
written request of the Servicer furnish the Servicer with any powers of
attorney and other documents reasonably necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder.
SECTION 4.02. Collection and Receivable Payments; Modifications of
Receivables. (a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable automotive
receivables that it services for itself or others and otherwise act with
respect to the Receivables in such manner as will, in the reasonable judgment
of the Servicer, maximize the amount to be received by the Trust with respect
thereto. The Servicer is authorized in its discretion to waive any
prepayment charge, late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any Receivable.
(b)
The Servicer may at any time agree to a modification or amendment of a
Receivable in order to (i) change the date during each calendar month when
the related Obligor's Scheduled Payment is due or (ii) reamortize the
Obligor's Scheduled Payments on the Receivable following a partial prepayment
of principal.
(c)
The Servicer may grant payment extensions or other modifications of or
amendments with respect to a Receivable (in addition to those modifications
permitted by Section 4.02(b)) in accordance with its customary procedures if
the Servicer believes in good faith that such extension, modification or
amendment is necessary to avoid a default on such Receivable, will maximize
the amount to be received by the Trust with respect to such Receivable and is
otherwise in the best interests of the Trust; provided, however, that:
(i)
the aggregate period of all extensions on a Receivable shall not exceed four
months;
(ii)
in no event may the final Obligor's Scheduled Payment on a Receivable be
extended beyond the last day of the Collection Period relating to the
Certificate Final Scheduled Maturity Date;
(iii)
no more than two extensions may be granted with respect to any Receivable in
any one-year period; and
(iv)
with respect to any Determination Date, the amount of Receivables subject to
extension or modification shall not exceed the Modification Level applicable
to such Determination Date;
provided, however, that if the Controlling Party waives compliance with this
Section 4.02(c), no breach shall be deemed to have occurred.
SECTION 4.03. Realization upon Receivables. Consistent with the standards,
policies and procedures required by this Agreement, the Servicer shall use
its best efforts to repossess or otherwise convert the ownership of and
liquidate any Financed Vehicle securing a Receivable with respect to which
the Servicer shall have determined that eventual payment in full is unlikely.
The Servicer shall begin such repossession and conversion procedures as soon
as practicable after default on such Receivable, but in no event later than
the date on which all or any portion of an Obligor's Scheduled Payment has
become 91 days delinquent; provided, however, that the Servicer may elect not
to repossess a Financed Vehicle within such time period if in its good faith
judgment it determines that the proceeds ultimately recoverable with respect
to such Receivable would be increased by forbearance. In repossessing or
otherwise converting the ownership of a Financed Vehicle and liquidating a
Receivable, the Servicer is authorized to follow such customary practices and
procedures as it shall deem necessary or advisable, consistent with the
standard of care required by Section 4.01, which practices and procedures may
include reasonable efforts to realize upon any recourse to Dealers, the sale
of the related Financed Vehicle at public or private sale, the submission of
claims under an insurance policy and other actions by the Servicer in order
to realize on a Receivable; provided, however, that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend
funds in connection with any repair or towards the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession shall increase the proceeds of liquidation of the related
Receivable by an amount greater than the expense for such repair or
repossession. The Servicer shall be entitled to recover all reasonable
expenses incurred by it in the course of repossessing and liquidating a
Financed Vehicle into cash proceeds, but only out of the cash proceeds of the
sale of such Financed Vehicle, any deficiency obtained from the Obligor or
any amounts received from recourse to the related Dealer.
SECTION 4.04. Physical Damage Insurance. The Servicer shall, in accordance
with its customary servicing procedures, require that each Obligor shall have
obtained and maintain physical loss damage insurance covering the Financed
Vehicle as of the execution of the Receivable.
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles. (a)
The Servicer shall, in accordance with its customary servicing procedures,
take such steps as are necessary to maintain perfection of the security
interest created by each Receivable in the related Financed Vehicle. The
Servicer is hereby authorized to take such steps as are necessary to re-
perfect such security interest on behalf of the Issuer and the Indenture
Trustee in the event of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Receivable to the Issuer is
insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in
favor of the Issuer, the Servicer hereby agrees that the designation of First
Merchants as the secured party on the certificate of title is in its capacity
as agent of the Issuer.
(b)
The Seller, the Owner Trustee, the Indenture Trustee, the Servicer and the
Backup Servicer hereby agree that, upon the occurrence of a Servicer
Termination Event, the Controlling Party may take or cause to be taken such
actions as may, in the opinion of counsel to the Controlling Party, be
necessary to perfect or re-perfect the security interests in the Financed
Vehicles in the name of the Issuer, including by amending the title documents
of the Financed Vehicles. The Seller hereby agrees to pay all expenses
related to such perfection or reperfection and to take all action necessary
therefor. In addition, the Controlling Party may at any other time instruct
the Servicer to take or cause to be taken such action as may, in the opinion
of counsel to the Controlling Party, be necessary to perfect or re-perfect
the security interest in the Financed Vehicles in the name of the Trust;
provided, however, that if the Controlling Party requests that the title
documents be amended prior to the occurrence of an Insurance Agreement Event
of Default, the out-of-pocket expenses of the Servicer, the Seller or any
other entity incurred in connection with any such action shall be reimbursed
to the Servicer, the Seller or such other party by the Controlling Party.
SECTION 4.06. Covenants of Servicer. By its execution and delivery of this
Agreement, the Servicer hereby covenants as follows (on which covenants the
Issuer, the Indenture Trustee and the Owner Trustee rely in accepting the
Receivables and delivering the applicable Securities 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 (provided that no
breach of this covenant shall be deemed to have occurred unless and until the
remedy provided in Section 4.07, after demand therefor, has not been complied
with); and
(d)
Restrictions on Liens. The Servicer shall not (A) create, incur or suffer
to exist, or agree to create, incur or suffer to exist, or consent to or permit
in the future (upon the occurrence of a contingency or otherwise) the
creation, incurrence or existence of any Lien on or restriction on
transferability of any Receivable except for the Lien in favor of the Trust
and the restrictions on transferability imposed by this Agreement or (B) sign
or file any UCC financing statements in any jurisdiction that names First
Merchants, the Servicer or the Seller as a debtor, and any Person other than
the Seller or the Issuer as a secured party, or sign any security agreement
authorizing any secured party thereunder to file any such financing statement
with respect to the Receivables.
SECTION 4.07. Purchase of Receivables upon Breach. Upon discovery by any
of the Servicer, the Seller, the Owner Trustee, the Indenture Trustee or the
Backup Servicer of a breach of any of the covenants set forth in Sections
4.02(c), 4.05(a) or 4.06 (which breach has not been waived by the Controlling
Party), the party discovering such breach shall give prompt written notice to
the other parties; provided, however, that the failure to give any such
notice shall not affect any obligation of the Servicer under this Section
4.07. On or before the last day of the first Collection Period following its
discovery or receipt of notice of any breach of any covenant set forth in
Sections 4.02(c), 4.05(a) or 4.06 that materially and adversely affects the
interests of the Issuer, the Indenture Trustee, the Owner Trustee, the
Certificateholders, the Noteholders or the Security Insurer in any
Receivable, the Servicer shall, unless such breach shall have been cured in
all material respects by such date, purchase from the Issuer the Receivable
affected by such breach. In consideration of the purchase of any such
Receivable, the Servicer shall remit the related Purchase Amount into the
Collection Account in the manner specified in Section 5.04. Subject to
Section 7.02, it is understood and agreed that the obligation of the Servicer
to purchase any Receivable with respect to which such a breach has occurred
and is continuing shall, if such obligation is fulfilled, constitute the sole
remedy against the Servicer for such breach available to the Issuer, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the
Noteholders.
SECTION 4.08. Servicing Fee. The Servicing Fee payable to the Servicer on
each Distribution Date shall equal the product of (i) one-twelfth, (ii) 2.50%
and (iii) the Pool Balance as of the first day of the related Collection
Period. The Servicing Fee shall be calculated on the basis of a 360-day year
comprised of twelve 30-day months. The Servicer also shall be entitled to
all late fees, prepayment charges (including, in the case of a Receivable
that provides for payments according to the "Rule of 78s" and that is prepaid
in full, the difference between the Principal Balance of such Receivable
(plus accrued interest to the date of prepayment) and the Principal Balance
of such Receivable computed according to the "Rule of 78s"), and other
administrative fees or similar charges allowed by applicable law with respect
to the Receivables, collected (from whatever source) on the Receivables.
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed
on the Servicer and expenses incurred in connection with distributions and
reports made by the Servicer to the Owner Trustee and Indenture Trustee).
The Servicer shall be liable for the fees and expenses of the Backup
Servicer.
SECTION 4.09. Servicer's Certificate. Not later than 10:00 a.m. (New York
City time) on each Determination Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent, the Indenture Trustee, the Backup Servicer,
the Security Insurer and the Seller, with a copy to the Rating Agencies, a
Servicer's Certificate containing all information necessary to make the
distributions to be made on the related Distribution Date pursuant to
Section 5.06 for the related Collection Period. Receivables to be purchased
by the Servicer or to be repurchased by the Seller and each Receivable that
became a Liquidated Receivable shall be identified by the Servicer by account
number with respect to such Receivable (as specified in Schedule A).
SECTION 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event. (a) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, the Backup Servicer, the Security Insurer and each Rating
Agency, within 120 days after the end of the Servicer's fiscal year (with the
first such certificate being delivered no later than April 30, 1998), an
Officer's Certificate signed by a Responsible Officer of the Servicer,
stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or such shorter period as shall have elapsed from
the Closing Date to the end of the first such fiscal year) and of the
performance of its obligations under this Agreement has been made under such
officer's supervision and (ii) to such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such period or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and
the nature and status thereof.
(b)
The Servicer or the Seller shall deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Security Insurer and each Rating Agency,
promptly after having obtained knowledge thereof, but in no event later than
two Business Days thereafter, written notice in an Officer's Certificate of
any event which with the giving of notice or lapse of time or both would
become a Servicer Termination Event under Section 8.01.
SECTION 4.11. Annual Independent Accountants' Report. The Servicer shall
cause a firm of independent certified public accountants, which may also
render other services to the Servicer or its Affiliates, to deliver to the
Owner Trustee, the Indenture Trustee, the Backup Servicer, the Security
Insurer and each Rating Agency, within 120 days after the end of each fiscal
year (with the first such report being delivered no later than April 30,
1998), a report addressed to the Board of Directors of the Servicer, the
Owner Trustee, the Indenture Trustee, the Backup Servicer and the Security
Insurer, to the effect that such firm has audited the books and records of
the Servicer and issued its report thereon and that (1) such audit was made
in accordance with generally accepted auditing standards and accordingly
included such tests of the accounting records and such other auditing
procedures as such firm considered necessary in the circumstances; (2) the
firm is independent of the Seller and the Servicer within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants; and (3) a review in accordance with agreed upon procedures was
made of three randomly selected Servicer's Certificates, including the
delinquency, default and loss statistics required to be specified therein
and, except as disclosed in the accountants' report, no exceptions or errors
in the Servicer's Certificates were found.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Owner
Trustee, the Indenture Trustee, the Backup Servicer, the Security Insurer (so
long as no Security Insurer Default shall have occurred and be continuing),
the Certificateholders and Noteholders reasonable access to the documentation
regarding the Receivables. Access shall be afforded without charge, but only
upon reasonable request and during the normal business hours at the offices
of the Servicer. Nothing in this Section shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of
this Section.
SECTION 4.13. Monthly Tape. On or before the eighth Business Day, but in
no event later than the tenth calendar day, of each month, the Servicer shall
deliver or cause to be delivered to the Indenture Trustee, Owner Trustee and
the Backup Servicer a computer tape and a diskette (or any other form of
electronic transmission acceptable to the Owner Trustee, the Indenture
Trustee and the Backup Servicer) in a format acceptable to the Indenture
Trustee, Owner Trustee and the Backup Servicer containing the information
with respect to the Receivables as of the last day of the preceding
Collection Period and necessary for preparation of the Servicer's Certificate
for the immediately succeeding Determination Date and to determine the
application of payments received on the Receivables as provided herein. The
Backup Servicer shall use such tape or diskette (or other electronic
transmission acceptable to the Indenture Trustee, Owner Trustee and the
Backup Servicer) to verify the mathematical accuracy of the Servicer's
Certificate delivered by the Servicer, and the Backup Servicer shall certify
to the Indenture Trustee and the Owner Trustee that it has verified the
mathematical accuracy of the Servicer's Certificate in accordance with this
Section 4.13 and shall notify the Servicer, the Indenture Trustee and the
Owner Trustee of any discrepancies, in each case, on or before the third
Business Day following the related Determination Date. In the event that the
Backup Servicer reports any discrepancies, the Servicer and the Backup
Servicer shall attempt to reconcile such discrepancies prior to the related
Distribution Date, but in the absence of a reconciliation, the Servicer's
Certificate shall control for the purpose of calculations and distributions
with respect to the related Distribution Date. In the event that the Backup
Servicer and the Servicer are unable to reconcile discrepancies with respect
to a Servicer's Certificate by the related Distribution Date, the Servicer
shall cause a firm of nationally recognized independent certified public
accountants, at the Servicer's expense, to audit the Servicer's Certificate
and, prior to the third Business Day, but in no event later than the fifth
calendar day, of the following month, to reconcile the discrepancies. The
effect, if any, of such reconciliation shall be reflected in the Servicer's
Certificate for the next succeeding Determination Date. In addition, upon
the occurrence of a Servicer Termination Event, the Servicer shall, if so
requested by the Indenture Trustee or the Owner Trustee, deliver to the
Backup Servicer within 15 days after demand therefor its records relating to
the Receivables and a computer tape containing as of the close of business on
the date of demand all of the data maintained by the Servicer in computer
format in connection with servicing the Receivables. Other than the duties
specifically set forth in this Agreement, the Backup Servicer shall have no
obligations hereunder, including, without limitation, to supervise, verify or
monitor the performance of the Servicer. The Backup Servicer shall have no
liability for any actions taken or omitted by the Servicer.
SECTION 4.14. Retention and Termination of Servicer. The Servicer hereby
covenants and agrees to act as Servicer under this Agreement for an initial
term commencing on the Closing Date and ending on June 30, 1997, which term
shall be extendible by the Security Insurer (or the Indenture Trustee for as
long as the Notes are outstanding, 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 September 30, December 31, March 31 and June
30 (or pursuant to revocable written standing instructions delivered from
time to time to the Servicer, the Indenture Trustee and the Owner Trustee,
for any specified number of terms), until the Notes are paid in full;
provided, however, that on the date that the Notes are paid in full, the then
current term of the Servicer shall be automatically extended until the
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,
the Indenture Trustee or the Owner Trustee, as applicable, to the other
parties to this Agreement. The Servicer hereby agrees that, as of the date
hereof and upon its receipt of any such Servicer Extension Notice, the
Servicer shall be bound for the duration of the initial term or the term
covered by such Servicer Extension Notice to act as the Servicer, subject to
and in accordance with the other provisions of this Agreement. Until such
time as a Security Insurer Default shall have occurred and be continuing, the
Servicer agrees that if as of the last day of the calendar month preceding
the last day of any such servicing term the Servicer shall not have received
a Servicer Extension Notice from the Security Insurer, the Servicer shall,
within five days thereafter, give written notice of such non-receipt to the
Indenture Trustee, the Owner Trustee, the Security Insurer and the Backup
Servicer.
ARTICLE V
Distributions; Spread Account;
Statements to Certificateholders and Noteholders
SECTION 5.01. Local Post Office Boxes. On or prior to the Closing Date, the
Servicer shall send revised payment statements (which statements will
indicate (by notation specific to this transaction) that such payments relate
to Receivables owned by the Issuer) to each Obligor pursuant to which
payments made by such Obligor after the Closing Date will be addressed to a
regional post office box (each a "Local Post Office Box") separate from any
post office box to which receivables owned by First Merchants are or will be
sent. All payments and other proceeds of any type and from any source on or
with respect to the Receivables that are delivered to one of the Local Post
Office Boxes shall be the property of the Issuer, subject to the lien of the
Indenture and the rights of the Indenture Trustee thereunder.
SECTION 5.02. Accounts. (a) The Servicer has established various accounts
in the name of the Indenture Trustee (the "Local Collection Accounts"), at
the locations identified on Schedule C. Each Local Collection Account shall
be maintained as an Eligible Deposit Account and shall bear a designation
clearly indicating that the amounts deposited thereto and held therein are
for the benefit of the Issuer, as provided in the Local Collection Account
Agreement. All payments on the Receivables mailed by Obligors or any other
Person to the Local Post Office Boxes or otherwise delivered to the Servicer
shall be deposited on a daily basis into the applicable Local Collection
Account, from which they will be swept within two Business Days to the
Collection Account. Amounts on deposit in any Local Collection Account shall
not be invested.
(b)
(i) On or prior to the Closing Date, the Servicer shall establish, or
cause to be established, an account in the name of the Indenture Trustee (the
"Collection Account"), which shall be maintained as an Eligible Deposit
Account and shall bear a designation clearly indicating that the amounts
deposited thereto are held for the benefit of the Noteholders and
Certificateholders. The Servicer shall cause the Indenture Trustee to sweep
any amounts deposited to any Local Collection Account on or with respect to
the Receivables into the Collection Account as promptly as possible, but in
no event later than the second Business Day following receipt thereof in the
Local Collection Accounts.
(ii)
The Servicer, for the benefit of the Noteholders, shall establish and
maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "Note Distribution Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Noteholders.
(iii)
Funds on deposit in the Collection Account and the Note Distribution
Account (collectively, the "Trust Accounts") shall be invested by the
Indenture Trustee in Eligible Investments selected in writing by the
Servicer or, if an Insurance Agreement Event of Default shall have occurred
and be continuing, the Security Insurer. All such Eligible Investments
shall be held by the Indenture Trustee for the benefit of the Noteholders
and the Certificateholders or the Noteholders, as applicable; provided that,
on each Payment Determination Date all interest and other investment income
(net of losses and investment expenses) on funds on deposit in the Trust
Accounts shall be deposited into the Collection Account and shall be deemed
to constitute a portion of the Interest Distribution Amount for the related
Distribution Date. Other than as permitted by the Rating Agencies, funds on
deposit in the Trust Accounts shall be invested in Eligible Investments that
will mature not later than the Business Day immediately preceding the next
Distribution Date. Funds deposited in a Trust Account on a day which
immediately precedes a Distribution Date upon the maturity of any Eligible
Investments are not required to be invested overnight.
(iv)
The Indenture Trustee shall not be held liable in any way by reason of any
insufficiency in the Collection Account resulting from any loss on an
Eligible Investment included therein, except for losses attributable to the
Indenture Trustee's failure to make payments on such Eligible Investments
issued by the Indenture Trustee, in its commercial capacity as principal
obligor and not as Indenture Trustee, in accordance with their terms.
(c) (i) The Indenture Trustee and, to the extent provided herein, the
Security Insurer shall possess all right, title and interest in all funds
received in the Local Post Office Boxes and all funds on deposit from time
to time in the Local Collection Accounts and the Trust Accounts and in all
proceeds thereof (including all income thereon), subject to the Local
Collection Account Agreement. The Local Post Office Boxes, the Local
Collection Accounts and the Trust Accounts shall be under the sole dominion
and control of the Indenture Trustee for the benefit of the Noteholders or
the Noteholders and the Certificateholders, as the case may be, subject to
the Local Collection Account Agreement. If, at any time, any Local
Collection Account or Trust Account ceases to be an Eligible Deposit
Account, the Indenture Trustee (or the Servicer on its behalf) shall within
10 Business Days (or such longer period, not to exceed 30 calendar days, as
to which each Rating Agency may consent) establish a new Local Collection
Account or Trust Account, as applicable, as an Eligible Deposit Account and
shall transfer any cash and/or any investments from the account that is no
longer an Eligible Deposit Account to the new Local Collection Account or
Trust Account.
(ii)
With respect to the Trust Account Property, the Indenture Trustee agrees, by
its acceptance hereof, that:
(A)
any Trust Account Property that is held in deposit accounts shall be held
solely in the Eligible Deposit Accounts, subject to the last sentence of
Section 5.02(c)(i); and each such Eligible Deposit Account shall be subject
to the exclusive custody and control of the Indenture Trustee, and the
Indenture Trustee shall have sole signature authority with respect thereto;
(B)
any Trust Account Property that constitutes Physical Property shall be
delivered to the Indenture Trustee in accordance with paragraph (a) of the
definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a financial intermediary
(as such term is defined in Section 8-313(4) of the UCC) acting solely for
the Indenture
Trustee;
(C)
any Trust Account Property that is a book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations shall be
delivered in accordance with paragraph (b) of the definition of "Delivery"
and shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such Trust
Account Property as described in such paragraph; and
(D)
any Trust Account Property that is an "uncertificated security" under
Article VIII of the UCC and that is not governed by clause (C) above shall
be delivered to the Indenture Trustee in accordance with paragraph (c) of
the definition of "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition, through continued registration of
the Indenture Trustee's (or its nominee's) ownership of such security.
(iii)
The Servicer shall have the power, revocable by the Indenture Trustee or by
the Owner Trustee with the consent of the Indenture Trustee, to instruct the
Indenture Trustee to make withdrawals and payments from the Trust Accounts
for the purpose of permitting the Servicer or the Owner Trustee to carry out
its respective duties hereunder or permitting the Indenture Trustee to carry
out its duties under the Indenture.
SECTION 5.03. Application of Collections. All amounts received with
respect to the Receivables during each Collection Period shall be applied by the
Servicer as follows:
With respect to each Simple Interest Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be applied to
interest and principal in accordance with the Simple Interest Method. With
respect to each Precomputed Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, first, to the
Obligor's Scheduled Payment, with any excess amounts being applied to future
Scheduled Payments of such Obligor.
SECTION 5.04. Purchase Amounts. The Servicer and the Seller shall deposit
or cause to be deposited in the Collection Account, on or prior to each
Determination Date, the aggregate Purchase Amount with respect to Purchased
Receivables and the Servicer shall deposit therein all amounts to be paid
under Section 4.07.
SECTION 5.05. Transfers from the Spread Account. The Indenture Trustee
shall determine, no later than 11:00 a.m., New York City time, on each
Deficiency Claim Date whether a shortfall exists with respect to the
distributions that the Indenture Trustee is required to make on the upcoming
Distribution Date pursuant to clauses (1) through (5) of Section 5.06(b). In
the event that the Indenture Trustee determines that such a shortfall exists,
the Indenture Trustee shall furnish to the Collateral Agent and the Security
Insurer, no later than 12:00 noon, New York City time, on such Deficiency
Claim Date, a written notice specifying the amount of the shortfall and
directing the Collateral Agent to remit an amount equal to such shortfall (to
the extent of funds available to be so distributed pursuant to the Spread
Account Agreement) to the Indenture Trustee for deposit in the Collection
Account. Upon receipt of any such funds, the Indenture Trustee shall
immediately deposit such amounts into the Collection Account for distribution
on the Distribution Date pursuant to Section 5.06.
SECTION 5.06. Distributions.
(a) On each Payment Determination Date, the Servicer shall calculate all
amounts required to be deposited in the Note Distribution Account and the
Certificate Distribution Account.
(b)
On each Distribution Date, the Servicer shall instruct the Indenture Trustee
in writing (based on the information contained in the Servicer's Certificate
delivered on the related Payment Determination Date pursuant to Section
4.09) to make the following deposits and distributions for receipt by the
Servicer or deposit in the applicable account by 11:00 a.m. (New York City
time), to the extent of the Total Distribution Amount plus all amounts
transferred to the Collection Account from the Spread Account, plus any
amounts deposited thereto from the Policy Payments Account pursuant to
Section 5.07(b), to make required payments and distributions on such date
pursuant to clauses (1) through (10) below, in the following order and
priority:
(1)
To the Servicer, from the Interest Distribution Amount, the Servicing Fee
(and all unpaid Servicing Fees from prior Collection Periods). Shortfalls
in amounts due to the Servicer as Servicing Fees on any Distribution Date
may be paid using amounts transferred from the Spread Account only to the
extent provided in Section 3.03(b) of the Master Spread Account Agreement;
(2)
to the Owner Trustee and the Indenture Trustee, from the Interest
Distribution Amount remaining after the application of clause (1) above, any
accrued and unpaid fees and expenses (including legal fees and expenses)
due, but only to the extent not previously paid by the Servicer. Shortfalls
in any such amounts due to the Owner Trustee or the Indenture Trustee on any
Distribution Date may be paid using amounts transferred from the Spread
Account only to the extent provided in Section 3.03(b) of the Master Spread
Account Agreement;
(3)
to the Note Distribution Account, from the Total Distribution Amount
remaining after the application of clauses (1) and (2) above, the
Noteholders' Interest Distributable Amount;
(4)
to the Note Distribution Account, from the Total Distribution Amount
remaining after the application of clauses (1) through (3), the Noteholders'
Principal Distributable Amount;
(5)
to the Security Insurer, from the Total Distribution Amount remaining after
the application of clauses (1) through (4), any amounts due to the Security
Insurer under the Insurance Agreement;
(6)
to the Spread Account, from the Total Distribution Amount remaining after
the application of clauses (1) through (5), an amount up to the amount of
any deficiency in the Spread Account Required Amount;
(7)
to the Certificate Distribution Account, from the Total Distribution Amount
remaining after the application of clauses (1) through (6), the
Certificateholders' Interest Distributable Amount;
(8)
only after the Class A-1 Notes have been paid in full, to the Certificate
Distribution Account, from the Total Distribution Amount remaining after the
application of clauses (1) through (7), the Certificateholders' Principal
Distributable Amount;
(9)
only after the Class A-1 Notes have been paid in full, to the Note
Distribution Account, from the Total Distribution Amount remaining after the
application of clauses (1) through (8), the Class A-2 Additional Principal
Distribution Amount; and
(10)
to the Collateral Agent, the portion, if any, of the Total Distribution
Amount remaining after the application of clauses (1) through (9) above to
pay the Credit Enhancement Fee to the Seller pursuant to the terms and
subject to the conditions set forth in the Spread Account Agreement.
Notwithstanding that the Notes have been paid in full, the Indenture Trustee
shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
SECTION 5.07. Claims Upon the Policy; Policy Payments Account. (a) If on
the third Business Day prior to a Distribution Date, the Total Distribution
Amount on deposit or to be deposited in the Collection Account for the
related Collection Period (after giving effect to all transfers thereto of
any amounts from the Spread Account and to the payment of all amounts
required to be paid pursuant to clauses (1) and (2) of Section 5.06(b)) is
insufficient to pay the Guaranteed Payment on the related Distribution Date,
then the Indenture 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 by the Indenture Trustee 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 Indenture Trustee shall establish a separate special purpose trust
account for the benefit of the Noteholders (the "Policy Payments Account").
The Indenture Trustee shall have exclusive control over the Policy Payments
Account and sole right of withdrawal. The Indenture Trustee shall deposit
any amount paid under the Policy in the Policy Payments Account and
distribute such amount only to pay to Noteholders the Guaranteed Payment for
which a claim has been made, and such amount may not be applied to satisfy
any costs, expenses or liabilities of the Servicer, the Indenture Trustee or
the Owner Trustee. Amounts paid under the Policy shall be transferred to the
Collection Account in accordance with the next succeeding paragraph and
disbursed by the Indenture Trustee to Noteholders in accordance with Section
5.06. It shall not be necessary for any payments under the Policy to be made
by checks or wire transfers separate from the checks or wire transfers used
to pay the Guaranteed Payment from other funds available to make such
payment. However, the amount of any payment of principal of or interest on
the Notes 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 Noteholders pursuant to Section 5.11. Funds
held in the Policy Payments Account shall not be invested by the Indenture
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 Indenture Trustee as a
result of any claim under the Policy, to the extent required to make the
Guaranteed Payment on such Distribution Date, shall be withdrawn from the
Policy Payments Account and deposited in the Collection Account and applied
by the Indenture Trustee, together with the other funds to be distributed
from the Collection Account pursuant to Section 5.06, directly to the payment
in full of the Guaranteed Payment due with respect to the Notes. 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 Indenture Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Notes 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 Indenture Trustee at the expense of the Security
Insurer.
SECTION 5.08. Notices to the Security Insurer. All notices, statements,
reports, notes, or opinions required by this Agreement to be sent to any
other party hereto or to the Noteholders at any time when the Security
Insurer is the Controlling Party shall also be sent to the Security Insurer.
SECTION 5.09. Rights in Respect of Insolvency Proceedings. (a) In the event
that the Indenture Trustee has received a certified copy of a final,
nonappealable order of the appropriate court that any Guaranteed Payment has
been voided in whole or in part as a preference payment under applicable
bankruptcy or insolvency law, the Indenture Trustee shall (i) deliver to the
Security Insurer a certified copy of such court order, an irrevocable
assignment to the Security Insurer of the Noteholders' rights with respect to
any such recovered payment and an instrument appointing the Security Insurer
as agent of the Noteholders with respect to any such recovered payments and
(ii) notify the Noteholders by mail that, in the event that any Guaranteed
Payment distributed to a Noteholder is so recovered, such Noteholder will be
entitled to payment of such recovered amounts pursuant to the Policy.
(b)
The Indenture Trustee shall promptly notify the Security Insurer of either
of the following as to which an applicable Trust Officer has actual knowledge:
(i) the commencement of any proceeding by or against the Seller or the Issuer
commenced under the United States Bankruptcy Code or any other applicable
United States federal or state bankruptcy, insolvency, receivership,
rehabilitation, or similar law (an "Insolvency Proceeding") or (ii) the
making of any claim in connection with any Insolvency Proceeding seeking the
avoidance as a preferential transfer (a "Preference Claim") of any payment of
principal of or interest on the Notes. Each Noteholder, by its purchase of
a Note, and the Indenture Trustee hereby agree that, so long as a Security
Insurer Default shall not have occurred and be continuing, the Security
Insurer may at any time during the continuation of an Insolvency Proceeding
direct all matters relating to such Insolvency Proceeding, including (i) all
matters relating to any Preference Claim, (ii) the direction of any appeal of
any order relating to any Preference Claim at the expense of the Security
Insurer and (iii) the posting of any surety, supersedeas or performance bond
pending any such appeal. In addition, and without limitation of the
foregoing, as set forth in Section 5.10, the Security Insurer shall be
subrogated to, and each Noteholder and the Indenture Trustee hereby delegate
and assign, to the fullest extent permitted by law, the rights of the
Indenture Trustee and such Noteholder 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 Indenture Trustee shall furnish to the Security Insurer its records
evidencing the distributions of principal of and interest on the Notes that
have been made by the Indenture Trustee and subsequently recovered from
Noteholders and the dates on which such payments were made.
SECTION 5.10. Effect of Payments by the Security Insurer; Subrogation.
(a) Anything herein to the contrary notwithstanding, any distribution of
principal of or interest on the Notes that is made with moneys received
pursuant to the terms of the Policy shall not be considered payment of the
Notes by the Issuer and shall not discharge the Trust assets in respect of
such distribution. The Indenture Trustee acknowledges that, without the need
for any further action on the part of the Security Insurer, the Indenture
Trustee or the Note Registrar, (i) to the extent the Security Insurer makes
payments, directly or indirectly, on account of principal of or interest on
the Notes to the Noteholders, the Security Insurer will be fully subrogated
to the rights of such Noteholders 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 Noteholder and (ii) the Security Insurer shall
be paid principal and interest in its capacity as a Noteholder 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 Noteholders have
received all Guaranteed Payments due to them under this Agreement.
(b)
Without limiting the rights or interests of the Noteholders as otherwise set
forth herein and subject to Article X, so long as no Security Insurer Default
exists, the Indenture 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
Notes or under this Agreement, enforce any judgment obtained and collect
moneys adjudged due; and
(ii)
exercise any remedies of a secured party under the UCC and take any other
appropriate action to protect and enforce the rights and remedies of the
Security Insurer hereunder.
SECTION 5.11. Statements to Securityholders. On each Distribution Date,
the Servicer shall provide to the Indenture Trustee (with a copy to the Rating
Agencies and each Paying Agent) for the Indenture Trustee to forward to each
Noteholder of record as of the most recent Record Date and to the Owner
Trustee (with a copy to each Paying Agent) for the Owner Trustee to forward
to each Certificateholder of record as of the most recent Record Date a
statement substantially in the form of Exhibit B, setting forth at least the
following information as to the Securities to the extent applicable:
(i)
the amount of such distribution allocable to principal allocable to each
Class of Notes and to the Certificates;
(ii)
the amount of such distribution allocable to interest allocable to each
Class of Notes and to the Certificates;
(iii)
the Outstanding Amount of each Class of Notes, the Note Pool Factor for each
such Class, the Certificate Balance and the Certificate Pool Factor as of
the close of business on the last day of the preceding Collection Period,
after giving effect to payments allocated to principal reported under clause
(i) above;
(iv)
the amount of the Servicing Fee paid to the Servicer and the amount of any
fees payable to the Owner Trustee or the Indenture Trustee with respect to
the related Collection Period;
(v)
the aggregate amounts of Realized Losses, if any, and Cram Down Losses, if
any, separately identified, with respect to the related Collection Period;
(vi)
the amount, if any, of the distribution payable pursuant to claims under the
Policy;
(vii)
the balance of the Spread Account on the related Payment Determination Date
after giving effect to deposits and withdrawals to be made on such
Distribution Date, if any;
(viii)
the Pool Balance as of the close of business on the last day of the related
Collection Period, after giving effect to payments allocated to principal
reported under clause (i) above.
(ix)
the amount of any Class A-2 Additional Principal Distribution Amount on such
Distribution Date;
(x)
the amount of any deposit to the Spread Account and the amount and
application of any funds withdrawn from the Spread Account;
(xi)
the aggregate principal balance of all Receivables that became Liquidated
Receivables or Purchased Receivables during the related Collection Period;
(xii)
the aggregate principal balance of Receivables that are 30 to 59 days, 60 to
89 days or 90 days or more delinquent;
(xiii)
the Class A-1 Interest Carryover Shortfall, the Class A-1 Principal
Carryover Shortfall, the Class A-2 Interest Carryover Shortfall, the Class
A-2 Principal Carryover Shortfall, the Certificateholders' Interest
Carryover Shortfall and the Certificateholders' Principal Carryover
Shortfall, if any,in each case after giving effect to payments on such
Distribution Date, and any change in such amounts from the preceding
statement; and
(xiv)
the aggregate Purchase Amounts for Receivables, if any, that were purchased
during or with respect to such Collection Period.
Each amount set forth on the Distribution Date statement under clauses (i),
(ii), (vi), (ix) and (xiii) above shall be expressed as a dollar amount per
$1,000 of original principal balance of a Certificate or Note, as applicable.
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller. The Seller makes the following
representations on which the Issuer relies in accepting the Receivables and
delivering the Securities and the Security Insurer relies in issuing the
Policy. The representations 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 Seller to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a)
Organization and Good Standing. The Seller is duly organized and validly
existing as a corporation in good standing under the laws of the State of
Delaware, with the corporate power and authority to own its properties and
to conduct its business as such properties are currently owned and such
business is presently conducted.
(b)
Due Qualification. The Seller is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions where the failure to do so would materially
and adversely affect the Seller's ability to transfer the Receivables to the
Trust pursuant to this Agreement or the validity or enforceability of the
Receivables.
(c)
Power and Authority. The Seller has the corporate power and authority to
execute and deliver this Agreement and the other Basic Documents to which it
is a party and to carry out their respective terms; the Seller has full
power and authority to sell and assign the property to be sold and assigned
to and deposited with the Issuer, and the Seller shall have duly authorized
such sale and assignment to the Issuer by all necessary corporate action;
and the execution, delivery and performance of this Agreement and the other
Basic Documents to which the Seller is a party have been duly authorized by
the Seller by all necessary corporate action.
(d)
Binding Obligation. This Agreement and the other Basic Documents to which
the Seller is a party, when duly executed and delivered by the other parties
hereto and thereto, shall constitute legal, valid and binding obligations of
the Seller, enforceable against the Seller in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, and similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and to general
principles of equity (whether applied in a proceeding at law or in equity).
(e)
No Violation. The consummation of the transactions contemplated by this
Agreement and the other Basic Documents and the fulfillment of the terms of
this Agreement and the other Basic Documents shall not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time, or both) a default under, the certificate
ofincorporation or bylaws of the Seller, or any indenture, agreement,
mortgage, deed of trust, or other instrument to which the Seller is a party
or by which it is bound; or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust, or other instrument, other than this
Agreement and the other Basic Documents; or violate any law, order, rule or
regulation applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties.
(f)
No Proceedings. There are no proceedings or investigations pending or, to
the Seller's knowledge, threatened against the Seller, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties: (1)
asserting the invalidity of this Agreement or any other Basic Document; (2)
seeking to prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement or
any other Basic Document; (3) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement or
any other Basic Document; or (4) seeking to adversely affect the federal
income tax attributes of the Trust, the Notes or the Certificates.
(g)
No Consents. The Seller is not required to obtain the consent of any other
party or any consent, license, approval, registration, authorization, or
declaration of or with any governmental authority, bureau or agency in
connection with the execution, delivery, performance, validity, or
enforceability of this Agreement or any other Basic Document to which it is
a party that has not already been obtained.
SECTION 6.02. Corporate Existence. During the term of this Agreement, the
Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic
Documents and each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Seller and
its Affiliates will be conducted on an arm's-length basis.
SECTION 6.03. Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement (which shall not include
distributions on account of the Notes or Certificates).
SECTION 6.04. Merger or Consolidation of, or Assumption of the Obligations
of, Seller. The Seller shall not merge or consolidate with any other Person
or permit any other Person to become the successor to the Seller's business
without the prior written consent of the Security Insurer. Any such
successor Person shall execute an agreement of assumption of every obligation
of the Seller under this Agreement and the other Basic Documents and, whether
or not such assumption agreement is executed, shall be the successor to the
Seller under this Agreement without the execution or filing of any document
or any further act on the part of any of the parties to this Agreement. The
Seller shall provide prompt notice of any merger, consolidation or succession
pursuant to this Section 6.04 to the Owner Trustee, the Indenture Trustee,
the Security Insurer, the Securityholders and the Rating Agencies.
Notwithstanding the foregoing, the Seller shall not merge or consolidate with
any other Person or permit any other Person to become a successor to the
Seller's business unless (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.02 or
6.01 shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such
transaction), (y) the Seller shall have delivered to the Owner Trustee, the
Indenture Trustee and the Security Insurer an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 6.04 and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with and (z) the Seller shall have delivered
to the Owner Trustee, the Indenture Trustee and the Security Insurer an
Opinion of Counsel stating that, in the opinion of such counsel, either (A)
all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Trust in the Receivables and reciting the details of the
filings or (B) no such action is necessary to preserve and protect such
interest.
SECTION 6.05. Limitation on Liability of Seller and Others. The Seller and
any director, officer, employee or agent of the Seller may rely in good faith
on the advice of counsel or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 6.06. Seller May Own Securities. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or
pledgee of Securities with the same rights as it would have if it were not
the Seller or an Affiliate thereof, except as expressly provided herein or in
any Basic Document.
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables and the Security Insurer relies in issuing the Policy.
The representations speak as of the execution and delivery of this Agreement and
as of the Closing Date and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a)
Organization and Good Standing. The Servicer is duly organized and validly
existing as a corporation in good standing under the laws of the state of
its incorporation, with the corporate power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant
times, and has, the corporate power, authority and legal right to acquire,
own, sell and service the Receivables and to hold the Receivable Files as
custodian.
(b)
Due Qualification. The Servicer is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such
qualifications.
(c)
Power and Authority. The Servicer has the power and authority to execute
and deliver this Agreement and the other Basic Documents to which it is a
party and to carry out their respective terms; and the execution, delivery
and performance of this Agreement and the other Basic Documents to which it
is a party have been duly authorized by the Servicer by all necessary
corporate action;
(d)
Binding Obligation. This Agreement and the Basic Documents to which it is a
party constitute legal, valid and binding obligations of the Servicer,
enforceable against the Servicer in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability
is considered in a proceeding in equity or at law;
(e)
No Violation. The consummation of the transactions contemplated by this
Agreement and the Basic Documents to which it is a party and the fulfillment
of their respective terms shall not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, the articles of incorporation or
bylaws of the Servicer, or any indenture, agreement, mortgage, deed of
trust, or other instrument to which the Servicer is a party or by which it
is bound; or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust, or other instrument other than this Agreement and
the Basic Documents, or violate any law, order, rule or regulation
applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties;
(f)
No Proceedings. There are no proceedings or investigations pending or, to
the Servicer's knowledge, threatened against the Servicer before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Servicer or its properties: (i)
asserting the invalidity of this Agreement or any of the Basic Documents;
(ii) seeking to prevent the issuance of the Securities or the consummation
of any of the transactions contemplated by this Agreement or any of the
Basic Documents; (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement or
any of the Basic Documents; or (iv) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Securities.
(g)
No Insolvent Obligors. As of the related Cutoff Date, no Obligor on a
Receivable is shown on the Receivable Files as the subject of a bankruptcy
proceeding.
SECTION 7.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer and the representations made by the Servicer under
this Agreement:
(a)
The Servicer shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Seller, the Backup Servicer, the
Security Insurer, their respective officers, directors, employees and
agents, and the Securityholders from and against any and all costs,
expenses, losses, damages, claims and liabilities arising out of or
resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle.
(b)
The Servicer shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Seller, the Backup Servicer, the
Security Insurer, their respective officers, directors, agents and
employees, and the Securityholders from and against any taxes that may at
any time be asserted against any of such parties with respect to the
transactions contemplated in this Agreement, including any sales, gross
receipts, tangible or intangible personal property, privilege or license
taxes (but not including any federal or other income taxes, including
franchise taxes asserted with respect to, and as of the date of, the
transfer of the Receivables to the Trust or the issuance and original sale
of the Securities), and costs and expenses in defending against the same.
(c)
The Servicer shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Seller, the Backup Servicer, the
Security Insurer, their respective officers, directors, employees and
agents, and the Securityholders from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the negligence, misfeasance or bad faith of
the Servicer in the performance of its duties under this Agreement or by
reason of reckless disregard of its obligations and duties under this
Agreement.
For purposes of this Section, in the event of the termination of the rights
and obligations of First Merchants (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.02, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.03.
Indemnification under this Section shall survive the resignation or removal
of any indemnified party or the termination of this Agreement and shall
include reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer shall have made any indemnity payments pursuant to this
Section and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Servicer, without interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer. (a) The Servicer shall not merge or consolidate with any
other Person, convey, transfer or lease substantially all its assets as an
entirety to another Person, or permit any other Person to become the
successor to the Servicer's business unless, after the merger, consolidation,
conveyance, transfer, lease, or succession, the successor or surviving entity
shall be capable of fulfilling the duties of the Servicer contained in this
Agreement and shall be reasonably acceptable to the Controlling Party. Any
Person (i) into which the Servicer may be merged or consolidated, (ii)
resulting from any merger or consolidation to which the Servicer shall be a
party, (iii) that acquires by conveyance, transfer or lease substantially all
of the assets of the Servicer or (iv) succeeding to the business of the
Servicer, which Person shall execute an agreement of assumption to perform
every obligation of the Servicer under this Agreement, shall be the successor
to the Servicer under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement.
The Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section 7.03(a) to the Owner Trustee, the Indenture Trustee,
the Certificateholders, the Security Insurer and each Rating Agency.
Notwithstanding the foregoing, the Servicer shall not merge or consolidate
with any other Person or permit any other Person to become a successor to the
Servicer's business unless (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 7.01
shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such
transaction) and no event that, after notice or lapse of time or both, would
become a Servicer Termination Event shall have occurred and be continuing,
(ii) the Servicer shall have delivered to the Owner Trustee, the Indenture
Trustee and the Security Insurer an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 7.03(a) and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) immediately after giving effect to
such transaction, the successor to the Servicer shall become the
Administrator under the Administration Agreement in accordance with Section
8 of such Agreement and (iv) the Servicer shall have delivered to the Owner
Trustee, the Indenture Trustee and the Security Insurer an Opinion of Counsel
stating that either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary to
preserve and protect the interest of the Owner Trustee and the Indenture
Trustee, respectively, in the Receivables and reciting the details of such
filings or (B) no such action shall be necessary to preserve and protect such
interest.
(b)
Any Person (i) into which the Backup Servicer may be merged or consolidated,
(ii) resulting from any merger or consolidation to which the Backup Servicer
shall be a party, (iii) which acquires by conveyance, transfer or lease
substantially all of the assets of the Backup Servicer or (iv) succeeding to
the business of the Backup Servicer, which Person shall execute an agreement
of assumption to perform every obligation of the Backup Servicer under this
Agreement, shall be the successor to the Backup Servicer under this Agreement
without the execution or filing of any paper or any further act on the part
of any of the parties to this Agreement.
SECTION 7.04.
Limitation on Liability of Servicer, Backup Servicer and Others. (a) None
of the Servicer, the Backup Servicer or any of their respective directors,
officers, employees or agents shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided in this Agreement,
for any action taken or for refraining from the taking of any action pursuant
to this Agreement; provided, however, that this provision shall not protect
the Servicer, the Backup Servicer or any such person against any liability
that would otherwise be imposed by reason of a breach of this Agreement or
willful misfeasance, bad faith or negligence in the performance of duties.
The Servicer, the Backup Servicer and any director, officer, employee or
agent of the Servicer or Backup Servicer may conclusively rely in good faith
on the written advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement.
(b)
The Backup Servicer shall not be liable for any obligation of the Servicer
contained in this Agreement or for any errors of the Servicer contained in
any computer tape, certificate or other data or document delivered to the
Backup Servicer hereunder or on which the Backup Servicer must rely in order
to perform its obligations hereunder, and the Owner Trustee, the Indenture
Trustee, the Seller and the Security Insurer and the Securityholders shall
look only to the Servicer to perform such obligations. The Backup Servicer,
the Owner Trustee and the Indenture Trustee shall have no responsibility and
shall not be in default hereunder or incur any liability for any failure,
error, malfunction or any delay in carrying out any of their respective
duties under this Agreement if such failure or delay results from the Backup
Servicer acting in accordance with information prepared or supplied by a
Person other than the Backup Servicer or the failure of any such other Person
to prepare or provide such information. The Backup Servicer shall have no
responsibility, shall not be in default and shall incur no liability for (i)
any act or failure to act of any third party, including the Servicer or the
Controlling Party, (ii) any inaccuracy or omission in a notice or
communication received by the Backup Servicer from any third party, (iii) the
invalidity or unenforceability of any Receivable under applicable law, (iv)
the breach or inaccuracy of any representation or warranty made with respect
to any Receivable, or (v) the acts or omissions of any successor Backup
Servicer.
(c)
The parties expressly acknowledge and consent to Harris Trust and Savings
Bank simultaneously acting in the capacity of Backup Servicer or successor
Servicer and Indenture Trustee and as collateral agent under the Spread
Account Agreement and the Local Collection Account Agreement. Harris Trust
and Savings Bank may, in such capacities, discharge its separate functions
fully, without hinderance or regard to conflict of interest principles, duty
of loyalty principles or other breach of fiduciary duties to the extent that
any such conflict or breach arises from the performance by Harris Trust and
Savings Bank of express duties set forth in this Agreement in any of such
capacities.
SECTION 7.05.
Appointment of Subservicer. The Servicer may at any time, with the Security
Insurer's consent, appoint a subservicer to perform all or any portion of its
obligations as Servicer hereunder; provided, however, that 10 days' prior
notice of such appointment shall have been given to the Rating Agencies and
each Rating Agency shall have notified the Servicer, the Backup Servicer, the
Owner Trustee and the Indenture Trustee in writing that such appointment will
not result in a reduction or withdrawal of the then current ratings of the
Notes or result in an increased capital charge to the Security Insurer; and,
provided, further, that the Servicer shall remain obligated and be liable to
the Owner Trustee, the Indenture Trustee, the Security Insurer and the
Securityholders for the servicing and administering of the Receivables in
accordance with the provisions hereof without diminution of such obligation
and liability by virtue of the appointment of such subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Receivables. The fees and expenses of
any subservicer shall be as agreed between the Servicer and such subservicer
from time to time, and none of the Owner Trustee, the Indenture Trustee, the
Issuer, the Backup Servicer, the Security Insurer or the Securityholders
shall have any responsibility therefor.
SECTION 7.06.
Servicer and Backup Servicer Not to Resign. (a) Subject to the provisions
of Section 7.03(a), the Servicer shall not resign from the obligations and
duties imposed on it by this Agreement as Servicer except upon a
determination that the performance of its duties under this Agreement shall
no longer be permissible under applicable law.
(b) Subject to the provisions of Section 7.03(b), the Backup Servicer may
resign from the obligations and duties imposed on it by this Agreement as
Backup Servicer (i) upon a determination that the performance of its duties
under this Agreement shall no longer be permissible under applicable law,
(ii) if the Backup Servicer resigns or is removed as Indenture Trustee (in
which case the Backup Servicer may resign as Backup Servicer subject to the
same conditions applicable to the Indenture Trustee pursuant to Section 6.08
of the Indenture), or (iii) with the prior written consent of the Rating
Agency and the Controlling Party; provided, that, the Rating Agency Condition
shall have been satisfied.
(c) Notice of any determination that the performance by either the Servicer
or the Backup Servicer of its duties hereunder is no longer permitted under
applicable law shall be communicated to the Owner Trustee, the Indenture
Trustee and the Security Insurer at the earliest practicable time (and, if
such communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination shall be evidenced by
an Opinion of Counsel to such effect delivered by the Servicer or Backup
Servicer, as applicable, to the Owner Trustee, the Indenture Trustee and the
Security Insurer concurrently with or promptly after such notice. No
resignation of the Servicer shall become effective until the Backup Servicer
or a successor Servicer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 8.03. No resignation
of the Backup Servicer shall become effective until an entity acceptable to
the Controlling Party shall have assumed the responsibilities and obligations
of the Backup Servicer.
ARTICLE VIII
Default
SECTION 8.01. Servicer Termination Events. For purposes of this Agreement,
each of the following shall constitute a "Servicer Termination Event":
(a)
any failure by the Servicer to deposit into any Local Collection Account or
the Collection Account any proceeds or payment required to be so delivered
under the terms of this Agreement that continues unremedied for a period of
two Business Days (one Business Day with respect to payments of Purchase
Amounts) after written notice is received by the Servicer or after discovery
of such failure by a Responsible Officer of the Servicer;
(b)
failure by the Servicer to deliver to the Owner Trustee, the Indenture
Trustee, the Seller and (so long as the Security Insurer is the Controlling
Party) the Security Insurer the Servicer's Certificate by the applicable
Determination Date, or to observe any covenant or agreement set forth in
Section 4.06;
(c)
failure on the part of the Servicer duly to observe or perform any other
covenants or agreements of the Servicer set forth in this Agreement, which
failure (i) materially and adversely affects the rights of the
Securityholders (determined without regard to the availability of funds under
the 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 any of the Owner Trustee, the Indenture Trustee
or the Security Insurer (or, if a Security Insurer Default shall have
occurred and be continuing, Noteholders evidencing not less than 25% of the
Outstanding Amounts of the Notes);
(d)
the occurrence of an Insolvency Event with respect to the Servicer or, so
long as First Merchants is the Servicer, the Seller;
(e)
so long as the Security Insurer is the Controlling Party, any failure by the
Security Insurer to have delivered a Servicer Extension Notice pursuant to
Section 4.14;
(f)
so long as the Security Insurer is the Controlling Party, an Insurance
Agreement Event of Default shall have occurred and be continuing; or
(g)
the Servicer is terminated as servicer with respect to any other trust that
has issued one or more classes of asset backed securities with respect to
which the Security Insurer has issued a financial insurance guaranty policy.
SECTION 8.02.
Consequences of a Servicer Termination Event. If a Servicer Termination
Event shall occur and be continuing, the Security Insurer or, if the Security
Insurer is no longer the Controlling Party, the Indenture Trustee or the
Holders of at least 25% of the Outstanding Amount of the Notes, by notice
given in writing to the Servicer (and to the Indenture Trustee, the Owner
Trustee and the Seller if given by the Security Insurer or such Noteholders),
may terminate all of the rights and obligations of the Servicer under this
Agreement. On or after the receipt by the Servicer of such written notice or
upon termination of the Servicer pursuant to Section 4.14, all authority,
power, obligations and responsibilities of the Servicer under this Agreement
automatically shall pass to, be vested in and become obligations and
responsibilities of the Backup Servicer (or such other successor Servicer
appointed by the Controlling Party); provided, however, that the successor
Servicer shall have no liability with respect to any obligation that was
required to be performed by the terminated Servicer prior to the date that
the successor Servicer becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated Servicer. The
successor Servicer is authorized and empowered by this Agreement to execute
and deliver, on behalf of the terminated Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents to show the Indenture
Trustee (or Owner Trustee if the Notes have been paid in full) as lienholder
or secured party on the related certificates of title of the Financed
Vehicles or otherwise. The terminated Servicer agrees to cooperate with the
successor Servicer in effecting the termination of the responsibilities and
rights of the terminated Servicer under this Agreement, including the
transfer to the successor Servicer for administration by it of all money and
property held by the Servicer with respect to the Receivables and the
delivery to the successor Servicer of all Receivable Files and other records
relating to the Receivables and a computer tape in readable form as of the
most recent Business Day containing all information necessary to enable the
successor Servicer to service the Receivables.
SECTION 8.03. Appointment of Successor. (a) On and after the time the
Servicer receives a notice of termination pursuant to Section 8.02, upon
non-extension of the servicing term as referred to in Section 4.14, or upon
the resignation of the Servicer pursuant to Section 7.06, the Backup Servicer
(unless the Security Insurer shall have exercised its option pursuant to
Section 8.03(b) to appoint an alternate successor Servicer) shall be the
successor in all respects to the Servicer in its capacity as Servicer under
this Agreement (including its appointment as Administrator under the
Administration Agreement as set forth in Section 8.03(c)) and shall be
subject to all the rights, responsibilities, restrictions, duties,
liabilities, and termination provisions relating to the Servicer under this
Agreement, except as otherwise stated herein. The Seller, the Owner Trustee,
the Indenture Trustee and such successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. If a successor Servicer is acting as Servicer hereunder, it
shall be subject to term-to-term servicing as referred to in Section 4.14 and
to termination under Section 8.02 upon the occurrence of any Servicer
Termination Event applicable to it as Servicer.
(b)
The Controlling Party may exercise at any time its right to appoint as
Backup Servicer or as successor to the Servicer a Person other than the Person
serving as Backup Servicer at the time, and shall have no liability to the
Owner Trustee, the Indenture Trustee, the Servicer, the Seller, the Person
then serving as Backup Servicer, any Noteholders, any Certificateholders or
any other Person if it does so. Notwithstanding the above, if the Backup
Servicer shall be legally unable or unwilling to act as Servicer, and the
Security Insurer is no longer the Controlling Party, the Backup Servicer, the
Indenture Trustee or the Holders of at least 25% of the Outstanding Amount of
the Notes may petition a court of competent jurisdiction to appoint any
Eligible Servicer as the successor to the Servicer. Pending appointment
pursuant to the preceding sentence, the Backup Servicer shall act as
successor Servicer unless it is legally unable to do so, in which event the
outgoing Servicer shall continue to act as Servicer until a successor has
been appointed and accepted such appointment. Subject to Section 7.06, no
provision of this Agreement shall be construed as relieving the Backup
Servicer of its obligation to succeed as successor Servicer upon the
termination of the Servicer pursuant to Section 8.02, the resignation of the
Servicer pursuant to Section 7.06 or the non-extension of the servicing term
of the Servicer pursuant to Section 4.14. If upon the termination of the
Servicer pursuant to Section 8.02 or the resignation of the Servicer pursuant
to Section 7.06, the Controlling Party appoints a successor Servicer other
than the Backup Servicer, the Backup Servicer shall not be relieved of its
duties as Backup Servicer hereunder.
(c)
Upon appointment, the successor Servicer (including the Backup Servicer
acting as successor Servicer) shall (i) be the successor in all respects to
the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Servicing Fee and all the
rights granted to the predecessor Servicer by the terms and provisions of
this Agreement and (ii) become the Administrator under the Administration
Agreement in accordance with Section 8 of such Agreement.
SECTION 8.04. Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to
this Article VIII, the Owner Trustee shall give prompt written notice thereof
to Certificateholders, and the Indenture Trustee shall give prompt written
notice thereof to Noteholders and the Rating Agencies.
SECTION 8.05. Waiver of Past Defaults. The Security Insurer or (if the
Security Insurer is no longer the Controlling Party) the Holders of a
majority of the Outstanding Amount of the Notes or the Holders of
Certificates evidencing a majority of the outstanding Certificate Balance (in
the case of any default which does not adversely affect the Indenture Trustee
or the Noteholders) may, on behalf of all Securityholders, waive in writing
any default by the Servicer in the performance of its obligations hereunder
and its consequences, except a default in making any required deposits to or
payments from any of the Trust Accounts in accordance with this Agreement.
Upon any such waiver of a past default, such default shall cease to exist
nunc pro tunc from the time of occurrence and shall be deemed not to have
occurred, and any Servicer Termination Event arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereto.
ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables. (a) On each
Determination Date as of which the Pool Balance is equal to or less than 10%
of the Original Pool Balance, the Servicer shall have the option to purchase
the Receivables (with the consent of the Security Insurer, if a claim has
previously been made under 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 5.04 an amount
equal to the aggregate Purchase Amount for the Receivables (including
Defaulted Receivables) and shall succeed to all interests in and to the
Receivables.
(b)
Upon any sale of the assets of the Trust pursuant to Section 9.02 of the
Trust Agreement, the Servicer shall instruct the Indenture Trustee in writing
to deposit the proceeds from such sale after all payments and reserves
therefrom have been made (the "Insolvency Proceeds") in the Collection
Account. On the Distribution Date on which the Insolvency Proceeds are
deposited in the Collection Account (or, if such proceeds are not so
deposited on a Distribution Date, on the Distribution Date immediately
following such deposit), the Servicer shall instruct the Indenture Trustee to
make the following deposits (after the application on such Distribution Date
of the Total Distribution Amount pursuant to Section 5.06) from the
Insolvency Proceeds and any funds remaining on deposit in the Spread Account,
including the proceeds of any sale of investments therein as follows:
(i)
to the Note Distribution Account, any portion of the Noteholders' Interest
Distributable Amount not otherwise deposited into the Note Distribution
Account on such Distribution Date;
(ii)
to the Note Distribution Account, the Outstanding Amount of the Notes (less
the deposits made to the Note Distribution Account on such Distribution Date
and on prior Distribution Dates);
(iii)
to pay any amount owed to the Security Insurer under the Insurance
Agreement;
(iv)
to the Certificate Distribution Account, any portion of the
Certificateholders' Interest Distributable Amount not otherwise deposited
into the Certificate Distribution Account on such Distribution Date; and
(v)
to the Certificate Distribution Account, the Certificate Balance (less the
deposits made to the Certificate Distribution Account on such Distribution
Date).
Any investments on deposit in the Note Distribution Account which will not
mature on or before such Distribution Date shall be sold by the Indenture
Trustee at such time as will result in the Indenture Trustee receiving the
proceeds from such sale not later than the Payment Determination Date
preceding such Distribution Date. Any Insolvency Proceeds remaining after
the deposits described above shall be paid to the Seller.
(c)
As described in Article IX of the Trust Agreement, notice of any termination
of the Trust shall be given by the Servicer to the Owner Trustee, the
Indenture Trustee and the Security Insurer as soon as practicable after the
Servicer has received notice thereof.
(d)
Following the satisfaction and discharge of the Indenture and the payment in
full of the principal of and interest on the Notes and all amounts owed to
the Security Insurer, the Certificateholders will succeed to the rights of
the Noteholders hereunder (other than Section 5.09 (b)) and the Owner Trustee
will succeed to the rights of, and assume the obligations of, the Indenture
Trustee pursuant to this Agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment. (a) This Agreement may be amended by the Seller,
the Servicer, the Backup Servicer, the Owner Trustee, the Indenture Trustee
and the Issuer, with the prior written consent of the Security Insurer (so
long as the Security Insurer is the Controlling Party), but without the
consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Owner Trustee and the Indenture Trustee, adversely affect in
any material respect the interests of any Noteholder or Certificateholder.
(b)
This Agreement may also be amended from time to time by the Seller, the
Servicer, the Backup Servicer, the Owner Trustee, the Indenture Trustee and
the Issuer, with the prior written consent of the Security Insurer (so long
as the Security Insurer is the Controlling Party), the Holders holding not
less than a majority of the Outstanding Amount of the Notes and the Holders
of outstanding Certificates evidencing not less than a majority of the
outstanding Certificate Balance, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Securityholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made
for the benefit of the Securityholders or (b) reduce the aforesaid portion of
the Outstanding Amount of the Notes or the Certificate Balance, the Holders
of which are required to consent to any such amendment, without the consent
of the Noteholders holding all the outstanding Notes and Certificateholders
holding all the outstanding Certificates.
Promptly after the execution of any amendment or consent, the Owner Trustee
shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the
Rating Agencies.
It shall not be necessary for the consent of Securityholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.
Prior to the execution of any amendment to this Agreement, the Owner Trustee
and the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement and the Opinion of Counsel referred to in
Section 10.02(i)(1). The Owner Trustee and the Indenture Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Owner Trustee's or the Indenture Trustee's, as applicable, own rights, duties
or immunities under this Agreement or otherwise.
SECTION 10.02. Protection of Title to Trust. (a) The Servicer shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and of the Indenture Trustee in the Receivables and in the proceeds
thereof. The Servicer shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following
such filing.
(b)
Neither the Seller nor the Servicer shall change its name, identity or
corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of & 9-402(7) of
the UCC, unless it shall have given the Owner Trustee and the Indenture
Trustee at least five days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c)
Each of the Seller and the Servicer shall have an obligation to give the
Owner Trustee and the Indenture Trustee at least 60 days' prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment or new financing statement. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d)
The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know
at any time the status of such Receivable, including payments and recoveries
made and payments owing (and the nature of each) and (ii) reconciliation
between payments or recoveries on (or with respect to) each Receivable and
the amounts from time to time deposited in the Collection Account in respect
of such Receivable.
(e)
The Servicer shall maintain its computer systems so that, from and after the
time of sale under this Agreement of the Receivables, the Servicer's master
computer records (including any backup archives) that refer to a Receivable
shall indicate clearly the interest of the Issuer and the Indenture Trustee
in such Receivable and that such Receivable is owned by the Issuer and has
been pledged to the Indenture Trustee. Indication of the Issuer's and the
Indenture Trustee's interest in a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the related
Receivable shall have been paid in full or repurchased.
(f)
If at any time the Seller or the Servicer shall propose to sell, grant a
security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g)
The Servicer shall permit the Indenture Trustee and the Security Insurer (so
long as no Security Insurer Default shall have occurred and be continuing)
and their agents at any time during normal business hours to inspect, audit
and make copies of and abstracts from the Servicer's records regarding any
Receivable.
(h)
Upon request, the Servicer shall furnish to the Owner Trustee, the Security
Insurer (so long as no Security Insurer Default shall have occurred and be
continuing) or to the Indenture Trustee, within five Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i)
The Servicer shall deliver to the Owner Trustee, the Security Insurer (so
long as no Security Insurer Default shall have occurred and be continuing)
and the Indenture Trustee:
(1)
promptly after the execution and delivery of this Agreement and each
amendment hereto, an Opinion of Counsel stating that, in the opinion of such
counsel, either (A) all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) no such action
shall be necessary to preserve and protect such interest; and
(2)
within 90 days after the beginning of each calendar year beginning with the
first calendar year beginning more than three months after the Cutoff Date,
an Opinion of Counsel, dated as of a date during such 90-day period, stating
that, in the opinion of such counsel, either (A) all financing statements
and continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner Trustee and the
Indenture Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (B) no such action shall be necessary to preserve and protect
such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 10.03. Notices. All demands, notices, communications and
instructions upon or to the Seller, the Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in
the case of the Seller, to First Merchants Auto Receivables Corporation II,
570 Lake Cook Road, Suite 126B, Deerfield, Illinois 60015, Attention: Norman
Smagley; (b) in the case of the Servicer, to First Merchants Acceptance
Corporation, 570 Lake Cook Road, Suite 126, Deerfield, Illinois 60015,
Attention: Norman Smagley; (c) in the case of the Backup Servicer or the
Indenture Trustee, to Harris Trust and Savings Bank, 311 West Monroe Street,
12th Floor, Chicago, Illinois 60606, Attention: Indenture Trust
Administration; (d) in the case of the Issuer or the Owner Trustee, at the
Corporate Trust Office (as defined in the Trust Agreement), (e) in the case
of the Security Insurer, to Financial Security Assurance Inc., 350 Park
Avenue, New York, New York 10022, Attention: Surveillance Department; (f) in
the case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007 and (g) in the case of
Standard & Poor's, to Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., 25 Broadway (15th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department; or, as to each of
the foregoing, at such other address as shall be designated by written notice
to the other parties. In addition, copies of such notices shall be sent to
the Security Insurer pursuant to Section 5.08.
SECTION 10.04. Assignment by the Seller or the Servicer. Notwithstanding
anything to the contrary contained herein, except as provided in the
remainder of this Section, as provided in Sections 6.04 and 7.03 herein and
as provided in the provisions of this Agreement concerning the resignation of
the Servicer, this Agreement may not be assigned by the Seller or the
Servicer.
SECTION 10.05. Limitations on Rights of Others. The Security Insurer is an
intended third party beneficiary of this Agreement entitled to enforce the
provisions hereof as if a party hereto. The provisions of this Agreement are
solely for the benefit of the Seller, the Servicer, the Issuer, the Owner
Trustee, the Security Insurer, the Certificateholders, the Indenture Trustee
and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 10.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 10.07. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit
any of the terms or provisions hereof.
SECTION 10.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.10. Assignment by Issuer. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest
by the Issuer to the Indenture Trustee pursuant to the Indenture for the
benefit of the Noteholders of all right, title and interest of the Issuer in,
to and under the Receivables and/or the assignment of any or all of the
Issuer's rights and obligations hereunder to the Indenture Trustee.
SECTION 10.11. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, the Servicer and the Seller shall not, prior
to the date which is one year and one day after the termination of this
Agreement, acquiesce, petition or otherwise invoke or cause the Issuer or the
Seller to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer or the Seller
under any federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Issuer or the Seller or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of
the Issuer or the Seller.
(b)
Notwithstanding any prior termination of this Agreement, the Servicer shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Seller, acquiesce, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Seller under any federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Seller or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Seller.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Chase Manhattan Bank Delaware not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall Chase Manhattan Bank Delaware in its individual
capacity or, except as expressly provided in the Trust Agreement, as
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance
of its duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to,
and entitled to the benefits of, the terms and provisions of Articles VI, VII
and VIII of the Trust Agreement.
(b)
Notwithstanding anything contained herein to the contrary, this Agreement
has been accepted by Harris Trust and Savings Bank, not in its individual
capacity but solely as Indenture Trustee and in no event shall Harris Trust
and Savings Bank have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets of the Issuer.
SECTION 10.13.
Servicer Payment Obligation. The Servicer shall be responsible for payment
of the Administrator's fees under the Administration Agreement and shall
reimburse the Administrator for all expenses and liabilities of the
Administrator incurred thereunder. In addition, the Servicer shall be
responsible for the payment of all fees and expenses of the Trust, the Owner
Trustee and the Indenture Trustee paid by any of them in connection with any
of their obligations under the Basic Documents to obtain or maintain any
required license under the Pennsylvania Motor Vehicle Sales Finance Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
FIRST MERCHANTS AUTO TRUST 1997-1
By:
CHASE MANHATTAN BANK DELAWARE, not in its individual capacity but solely as
Owner Trustee on behalf of the Trust
By:
Name:
Title:
FIRST MERCHANTS AUTO RECEIVABLES
CORPORATION II, Seller
By:
Name:
Title:
FIRST MERCHANTS ACCEPTANCE
CORPORATION, Servicer
By:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK,
Indenture Trustee and Backup Servicer
By:
Name:
Title:
SCHEDULE A
Schedule of Receivables
[To be Delivered to the Trust at Closing]
SCHEDULE B
Location of Receivable Files
EXHIBIT A
Representations and Warranties of First Merchants Acceptance Corporation
Under Section 3.02 of the Receivables Purchase Agreement
EXHIBIT B
First Merchants Acceptance Corporation
First Merchants Auto Trust 1997-1 Distribution Date Statement to
Securityholders
Principal Distribution Amount
Class A-1 Notes:
($ per $1,000 original principal balance)
Class A-2 Notes:
($ per $1,000 original principal balance)
Interest Distribution Amount
Class A-1 Notes:
($ per $1,000 original principal balance)
Class A-2 Notes:
($ per $1,000 original principal balance)
Principal Distribution Amount
Principal Per $1,000 Certificate
Interest Distribution Amount
Interest Per $1,000 Certificate
Class A-1 Interest Carryover Shortfall
Class A-1 Principal Carryover Shortfall
Class A-2 Interest Carryover Shortfall
Class A-2 Principal Carryover Shortfall
Certificateholders' Interest Carryover Shortfall
Certificateholders' Principal Carryover Shortfall
Class A-2 Additional Principal Distribution Amount
Note Balance:
Class A-1 Notes:
Class A-2 Notes:
Note Pool Factor:
Class A-1 Notes:
Class A-2 Notes:
Certificate Balance
Certificate Pool Factor
Servicing Fee
Servicing Fee Per $1,000
Owner Trustee Fee
Indenture Trustee Fee
Pool Balance
Realized Losses
Cram Down Losses
Liquidated Receivables or Purchased Receivables
Purchase Amounts
Distribution Under Policy
Spread Account Balance
Amount Deposited to Spread Account
Principal Balance of Receivables that were delinquent:
30 to 59 days
60 to 89 days
90 days or more
Amount Withdrawn from Spread Account
EXHIBIT C
Form of Servicer's Certificate
First Merchants Acceptance Corporation
Monthly Servicing Report
[Date]
First Merchants Auto Trust 1997-1
$ Floating Rate Asset Backed Notes, Class A-1
$ % Asset Backed Notes, Class A-2
$ % Asset Backed Certificates
Distribution Date:
I.
Original Deal Parameter Inputs
(A)
Initial Pool Balance
(B)
Initial Class A-1 Balance
(C)
Initial Class A-2 Balance
(D) Initial Certificate Balance
(E)
Class A-1 Rate
(F) Class A-2 Rate
(G) Pass-Through Rate
(E)
Servicing Fee Rate
(F)
Trustee Fee
(G)
Security Insurer's Premium
(H)
Original Weighted Average Coupon (WAC)
(I)
Original Weighted Average Remaining Term (WAM)
(J)
Number of Contracts
(K)
Spread Account
i.
Spread Account Initial Deposit
ii.
Spread Account Required Amount
II.
Inputs from Previous Monthly Servicer Reports
(Not Applicable for First Monthly Report)
(A)
Current Pool Balance
(B)
Current Class A-1 Note Balance
(C)
Current Class A-2 Note Balance
(D) Current Certificate Balance
(D)
Class A-1 Note Pool Factor
(E)
Class A-2 Note Pool Factor
(F) Certificate Pool Factor
(G)
Spread Account Balance
(H)
Weighted Average Coupon of Remaining Portfolio (WAC)
(I)
Weighted Average Remaining Term of Remaining Portfolio (WAM)
(J)
Number of Contracts
III.
Inputs from the System
(A)
Simple Interest Loans
i.
Principal Payments Received
ii.
Interest Payments Received
iii.
Repurchased Receivables
iv.
Late Fees
(B)
Spread Account Release to Collection Account
(C)
Spread Account Release to Depositor
(D)
Liquidated Contracts
i.
Gross Principal Balance of Liquidated Receivables
ii.
Net Liquidation Proceeds & Recoveries Received during the Collection Period
(F)
Weighted Average Coupon of Remaining Portfolio (WAC)
(G)
Weighted Average Remaining Maturity of Remaining Portfolio (WAM)
(H)
Remaining Number of Contracts
(I)
Receivable Balance of Vehicles in Repossession During the Collection Period
(J)
Number of Vehicles in Repossession During the Collection Period
(K)
Aggregate Net Losses for Collection Period
(L)
Delinquent Contracts
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.
Collections
(1)
Total Principal Payments Received
(a)
Principal Payments on Receivables (includes Partial and Full Prepayments)
(b)
Repurchased Receivables
(c)
Cram Down Loss
(2)
Interest Payments Received
B.
Draw on Credit Enhancements
(1)
Withdrawal from Spread Account
(2)
Draw on the Insurance Policy
(3)
Total Draw on Credit Enhancements
C.
Total Distribution Amount
(1)
Total Distribution Amount
(2)
Interest Distribution Amount
(3)
Regular Principal Distribution Amount
D.
Liquidated Receivables, Net (includes repos repurchased in October)
(1)
Gross Principal Balance of Liquidated Receivables
(2)
Net Liquidation Proceeds & Recoveries Received during the Collection Period
(3)
Liquidated Receivables, Net
E.
Monthly Distributions
(1)
Noteholders' Principal Distributable Amount
(2)
Certificateholders' Principal Distributable Amount
(3)
Principal Distribution Amount
(a)
Principal Payments on Receivables
(b)
Repurchased Receivables
(c)
Cram Down Loss
(4)
Noteholders' Interest Distributable Amount
(a) amount allocated to Class A-1 Notes
(b) amount allocated to Class A-2 Notes
(5)
Certificateholders' Interest Distributable Amount
(6)
Required Distributions
(a)
Servicing Fee (Includes late fees collected)
(b)
Fees Paid to the Indenture Trustee and Owner Trustee
(c)
Monthly Security Insurer's Premium
(d)
Deposits into Spread Account
F.
Pool Balances and Portfolio Information
Beginning
of Period
End
of Period
(1)
Total Pool Balance
(2)
Total Pool Factor
(3)
Note Balance
(4) Certificate Balance
(5)
Remaining
Overcollateralization
Amount
(6)
Weighted Average
Coupon
(7)
Weighted Average
Remaining Maturity
(8)
Remaining Number
of Contracts
G.
Spread Account
(1)
Required Spread Account Balance
(2)
Beginning Balance
(3)
Amount Available for Deposit to the Spread Account
(4)
Withdrawal from Spread Account
(5)
Amount Released to Seller
(6)
Ending Balance
H.
Net Loss and Delinquency Activities
(1)
Net Losses for the Collection Period (including Cram Down)
(2)
Liquidated Receivables for the Collection Period
(3)
Cumulative Net Losses
(4)
Delinquent and Repossessed Receivables
(a)
60 Days Delinquent (Receivables Balance)
(b)
60 Days Delinquent (Number of Receivables)
(c)
61 Days or More (Receivables Balance)
(d)
91 Days or More (Number of Receivables)
(e)
Receivables Balance of Vehicles in Repossession During the Monthly Period
(f)
Number of Vehicles in Repossession During the Collection Period
I.
Portfolio Performance Test
(1)
Delinquency Ratio
(a)
Second Preceding Collection Period
(b)
Preceding Collection Period
(c)
Current Collection Period
(d)
Three Month Average
(2)
Cumulative Default Rate
(a)
All Collection Periods prior to Current Collection Period
(b)
Current Collection Period
(c)
Total Cumulative Rate
(3)
Cumulative Net Loss Rate
(a)
All Collection Periods prior to Current Collection Period
(b)
Current Collection Period
(c)
Total Cumulative Rate
(4)
Delinquency Trigger Indicator
(5)
Default Trigger Indicator
(6)
Loss Trigger Indicator
J.
Aggregate extensions and deferrals
K.
(1)
Amount of principal being paid to the Noteholders:
(2)
Per $1,000 original principal amount:
L.
(1)
Amount of principal being paid to the Certificateholders:
(2)
Per $1,000 original principal amount:
M.
(1)
Amount of interest being paid to the Noteholders:
(a) amount allocated to the Class A-1 Notes:
(b) amount allocated to the Class A-2 Notes:
(2)
Per $1,000 original principal amount:
N.
(1)
Amount of interest being paid to Certificateholders:
(2)
Per $1,000 original principal amount:
O.
Pool Balance at the end of the related Collection Period:
P.
Outstanding Amount of Notes:
(1) Outstanding Amount of the Class A-1 Notes:
(2) Outstanding Amount of the Class A-2 Notes:
Note Pool Factor:
(1) Class A-1 Note Pool Factor:
(2) Class A-2 Note Pool Factor:
Q.
Outstanding Certificate Balance:
Certificate Pool Factor:
R.
(1)
Amount of Servicing Fee:
(2)
Per $1,000 original principal amount:
S.
Aggregate Purchase Amounts for Collection Period:
T.
Aggregate Amount of Realized Losses for the Collection Period:
U.
Amount in Spread Account:
EXHIBIT D
Form of Policy
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
between
FIRST MERCHANTS ACCEPTANCE CORPORATION,
as Seller,
and
FIRST MERCHANTS AUTO RECEIVABLES CORPORATION II,
as Purchaser
Dated as of March 1, 1997
TABLE OF CONTENTS
ARTICLE I
Certain Definitions . . . . . . . . . . . . . . . . 1
ARTICLE II
Conveyance of Receivables . . . . . . . . . . . . . 2
SECTION 2.01.
Conveyance of Receivables . . . . . . . . . . . . . 2
SECTION 2.02.
The Closing . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
Representations and Warranties. . . . . . . . . . . 3
SECTION 3.01.
Representations and Warranties of the Purchaser . . 3
SECTION 3.02.
Representations and Warranties of Seller. . . . . . 3
ARTICLE IV
Conditions. . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.01.
Conditions to Obligation of the Purchaser . . . . . 7
SECTION 4.02.
Conditions to Obligation of the Seller. . . . . . . 7
ARTICLE V
Covenants of the Seller . . . . . . . . . . . . . . 8
SECTION 5.01.
Protection of Right, Title and Interest . . . . . . 8
SECTION 5.02.
Other Liens or Interests. . . . . . . . . . . . . . 8
SECTION 5.03.
Costs and Expenses. . . . . . . . . . . . . . . . . 8
SECTION 5.04.
Indemnification . . . . . . . . . . . . . . . . . . 8
ARTICLE VI
Miscellaneous Provisions. . . . . . . . . . . . . . 9
SECTION 6.01.
Obligations of Seller . . . . . . . . . . . . . . . 9
SECTION 6.02.
Repurchase Events . . . . . . . . . . . . . . . . . 9
SECTION 6.03.
Purchaser Assignment of Repurchased Receivables . . 9
SECTION 6.04.
Transfer to the Issuer. . . . . . . . . . . . . . . 9
SECTION 6.05.
Amendment . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6.06.
Waivers . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6.07.
Notices . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6.08.
Costs and Expenses. . . . . . . . . . . . . . . . . 10
SECTION 6.09.
Representations of the Seller and the Purchaser . . 10
SECTION 6.10.
Confidential Information. . . . . . . . . . . . . . 10
SECTION 6.11.
Headings and Cross-References . . . . . . . . . . . 10
SECTION 6.12.
Governing Law . . . . . . . . . . . . . . . . . . . 10
SECTION 6.13.
Counterparts. . . . . . . . . . . . . . . . . . . . 10
EXHIBIT A
Form of Assignment. . . . . . . . . . . . . . . . .A-1
SCHEDULE I
Schedule of Receivables . . . . . . . . . . . . . .I-1
SCHEDULE II
Location of Receivable Files. . . . . . . . . . . II-1
RECEIVABLES PURCHASE AGREEMENT dated as of March 1, 1997, 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 Auto Trust 1997-1 (the "Issuer") pursuant to a Sale and Servicing
Agreement dated as of March 1, 1997 (the "Sale and Servicing Agreement"), by
and among First Merchants Auto Trust 1997-1, as Issuer, First Merchant Auto
Receivables Corporation II, as Seller, First Merchants Acceptance
Corporation, as Servicer, and Harris Trust and Savings Bank, as Indenture
Trustee 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 XXII
Certain Definitions
Terms not defined in this Agreement shall have the meanings assigned thereto
in the Sale and Servicing Agreement. As used in this Agreement, the
following terms shall, unless the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular
and plural forms of the terms defined):
"Agreement" shall mean this Receivables Purchase Agreement, as the same may
be amended and supplemented from time to time.
"Assignment" shall mean the document of assignment substantially in the form
attached to this Agreement as Exhibit A.
"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.
"Sale and Servicing Agreement" shall have the meaning set forth in the
recitals
"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 XXIII
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 $103,103,035.03, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to
the Purchaser, without recourse (subject to the obligations herein) all
right, title, and interest of the Seller in and to:
(a)
the Receivables and all monies received thereon on or after March 1, 1997;
(b)
the security interests in the Financed Vehicles and any accessions thereto
granted by Obligors pursuant to the Receivables and any other interest of the
Seller in such Financed Vehicles;
(c)
any Liquidation Proceeds and any other proceeds with respect to the
Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors, including any
vendor's single interest or other collateral protection insurance policy;
(d)
any property that shall have secured a Receivable and that shall have been
acquired by or on behalf of the Seller;
(e)
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 Seller shall be deemed to have hereby granted to the
Purchaser a perfected first priority security interest in all such assets,
and this Agreement shall constitute a security agreement under applicable
law. Pursuant to the Sale and Servicing Agreement and Section 6.04 hereof,
the Purchaser may sell, transfer and reassign to the Issuer (i) all or any
portion of the assets assigned to the Purchaser hereunder, (ii) all or any
portion of the Purchaser's rights against the Seller under this Agreement and
(iii) all proceeds thereof. Such reassignment may be made by the Purchaser
with or without a reassignment by the Purchaser of its rights under this
Agreement, and without further notice to or acknowledgement from the Seller.
The Seller waives, to the extent permitted under applicable law, all claims,
causes of action and remedies, whether legal or equitable (including any
right of setoff), against the Purchaser or any assignee of the Purchaser
relating to such action by the Purchaser in connection with the transactions
contemplated by the Sale and Servicing Agreement.
SECTION 2.02.
The Closing. The sale and purchase of the Receivables shall take place at a
closing at the offices of Brown & Wood LLP, One World Trade Center, New York,
New York 10048 on the Closing Date, simultaneously with the closing under (a)
the Sale and Servicing Agreement and (b) the Indenture.
ARTICLE XXIV
Representations and Warranties
SECTION 3.01.
Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants as follows to the Seller as of the date hereof and 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 as follows 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. Upon giving effect to the consent described in Section
3.02(b)(14), the consummation of the transactions contemplated by this
Agreement and the other Basic Documents to which the Seller is a party and
the fulfillment of their respective terms do not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the articles of
incorporation or bylaws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it is bound, or result
in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than this Agreement), or violate any law or, to the best of the
Seller's knowledge, any order, rule or regulation applicable to the Seller
of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Seller or its properties.
(5)
No Proceedings. There are no proceedings or investigations pending or, to
the Seller's knowledge, threatened against the Seller before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties (i) asserting the
invalidity of this Agreement or any other Basic Document to which the Seller
is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Basic Document to
which the Seller is a party or (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the Seller of
its obligations under, or the validity or enforceability of, this Agreement
or any other Basic Document to which the Seller is a party.
(6)
Valid Sale, Binding Obligations. This Agreement and the other Basic
Documents to which the Seller is a party, when duly executed and delivered
by the other parties hereto and thereto, shall constitute legal, valid and
binding obligations of the Seller, enforceable against the Seller in
accordance with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization and similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally and to general principles of equity (whether applied in a
proceeding at law or in equity).
(7)
Chief Executive Office. The chief executive office of the Seller is located
at 570 Lake Cook Road, Suite 126, Deerfield, Illinois 60015.
(8)
No Consents. The Seller is not required to obtain the consent of any other
party or any consent, license, approval, registration, authorization, or
declaration of or with any governmental authority, bureau or agency in
connection with the execution, delivery, performance, validity, or
enforceability of this Agreement or any other Basic Document to which it is
a party that has not already been obtained.
(b)
The Seller makes the following representations and warranties with respect
to the Receivables, on which the Purchaser relies in accepting the Receivables
and in transferring the Receivables to the Issuer under the Sale and
Servicing Agreement, and on which the Issuer relies in pledging the same to
the Indenture Trustee. 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
Purchaser, the subsequent sale, transfer and assignment of the Receivables by
the Purchaser to the Issuer pursuant to the Sale and Servicing Agreement and
the Grant thereof pursuant to the Indenture.
(1)
Characteristics of Receivables. Each Receivable (A) was originated in the
United States by a Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business in accordance with the Seller's
credit policies, was fully and properly executed by the parties thereto, was
purchased by the Seller from such Dealer under an existing Dealer Agreement
and was validly assigned by such Dealer to the Seller, (B) has created or
shall create a valid, subsisting and enforceable first priority security
interest in favor of the Seller in the Financed Vehicle, which security
interest is assignable by the Seller to the Purchaser, and by the Purchaser
to the Issuer, (C) contains customary and enforceable provisions such that
the rights and remedies of the holder thereof are adequate for realization
against the collateral of the benefits of the security and (D) provides for
level monthly payments (provided that the payment in the last month of the
term of the Receivable may be different from the level payments) that fully
amortize the Amount Financed by maturity and yield interest at the APR.
(2)
Compliance with Law. Each Receivable and the sale of the related Financed
Vehicle complied at the time it was originated or made, and at the time of
execution of this Agreement complies, in all material respects with all
requirements of applicable federal, state and local laws and regulations
thereunder, including usury laws, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief Act of
1940, and state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(3)
Binding Obligation. Each Receivable represents the genuine, legal, valid
and binding payment obligation of the Obligor thereon, enforceable by the
holder thereof in accordance with its terms, except (A) as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless
of whether such enforceability is considered in a proceeding in equity or at
law and (B) as such Receivable may be modified by the application after the
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. 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 Issuer in accordance with the terms of the Sale and Servicing
Agreement and pledged by the Issuer to the Indenture Trustee in accordance
with the terms of the Indenture.
(8)
Computer Tape. The computer tape regarding the Receivables made available
by the Seller to the Purchaser is complete and accurate in all respects as
of the Cutoff Date.
(9)
No Adverse Selection. No selection procedures believed by the Seller to be
adverse to the Noteholders or Certificateholders were utilized in selecting
the Receivables.
(10)
Chattel Paper. The Receivables constitute chattel paper within the meaning
of the UCC as in effect in the State of Illinois.
(11)
One Original. There is only one original executed copy of each Receivable.
(12)
Receivables in Force. No Receivable has been satisfied, subordinated or
rescinded, nor has any Financed Vehicle been released from the lien of the
related Receivable in whole or in part. None of the terms of any Receivable
has been waived, altered or modified in any respect since its origination,
except by instruments or documents identified in the related Receivable
File. No Receivable has been modified as a result of the application of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(13)
Lawful Assignment. No Receivable has been originated in, or is subject to
the laws of, any jurisdiction the laws of which would make unlawful, void or
voidable the sale, transfer and assignment of such Receivable under this
Agreement or the Sale and Servicing Agreement or the pledge of such
Receivable under the Indenture.
(14)
Title. It is the intention of the Seller that the transfers and assignments
herein contemplated constitute sales of the Receivables from the Seller to
the Purchaser and that the beneficial interest in and title to the
Receivables not be part of the debtor's estate in the event of the filing of
a bankruptcy petition by or against the Seller under any bankruptcy law. No
Receivable has been sold, transferred, assigned or pledged by the Seller to
any Person other than to the Purchaser or pursuant to this Agreement (or by
the Purchaser to the Issuer pursuant to the Sale and Servicing Agreement).
Immediately prior to the transfers and assignments herein contemplated, the
Seller has good and marketable title to each Receivable free and clear of
all Liens (other than the Lien of the Seller's senior lenders identified in
the Consent dated as of March 31, 1997 under the Fourth Amended and Restated
Loan and Security Agreement dated as of February 29, 1996, by and among the
Seller and such secured lenders), which Lien is being released
simultaneously with the transfers and assignments herein contemplated) and,
immediately upon the transfer thereof, the Purchaser shall have good and
marketable title to each Receivable, free and clear of all Liens.
(15)
Security Interest in Financed Vehicle. Immediately prior to its sale,
assignment and transfer to the Purchaser pursuant to this Agreement, each
Receivable shall be secured by a validly perfected first priority security
interest in the related Financed Vehicle in favor of the Seller as secured
party, or all necessary and appropriate actions have been commenced that
will result in the valid perfection of a first priority security interest in
such Financed Vehicle in favor of the Seller as secured party.
(16)
All Filings Made. All filings (including UCC filings) required to be made
in any jurisdiction to give the Purchaser a first perfected ownership
interest in the Receivables have been made.
(17)
No Defenses. No Receivable is subject to any right of rescission, setoff,
counterclaim or defense, and no such right has been asserted or threatened
with respect to any Receivable.
(18)
No Default. There has been no default, breach, violation or event
permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than 30 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 January 21, 2002.
(21)
Certain Characteristics of the Receivables. As of the Cutoff Date, (A) each
Receivable had an original maturity of not more than 66 months; (B) no
Receivable was more than 30 days past due; and (C) no funds have been
advanced by the Seller, any Dealer or anyone acting on behalf of either of
them in order to cause any Receivable to qualify under clause (B) above.
ARTICLE XXV
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 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 Sale and Servicing
Agreement, the Indenture and the Trust 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 XXVI
Covenants of the Seller
The Seller agrees with the Purchaser as follows:
SECTION 5.01.
Protection of Right, Title and Interest. (a) Filings. The Seller shall
cause all financing statements and continuation statements and any other
necessary documents covering the right, title and interest of the Seller and
the Purchaser, respectively, in and to the Receivables and the other property
included in the Owner Trust Estate to be promptly filed and at all times to
be kept recorded, registered and filed, all in such manner and in such places
as may be required by law fully to preserve and protect the right, title and
interest of the Purchaser hereunder in and to the Receivables and the other
property included in the Owner Trust Estate. The Seller shall deliver to the
Purchaser file stamped copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available
following such recordation, registration or filing. The Purchaser shall
cooperate fully with the Seller in connection with the obligations set forth
above and will execute any and all documents reasonably required to fulfill
the intent of this paragraph.
(b)
Name Change. If the Seller makes any change in its name, identity or
corporate structure that would make any financing statement or continuation
statement filed in accordance with paragraph (a) above seriously misleading
within the applicable provisions of the UCC or any title statute, the Seller
shall give the Purchaser, the Indenture Trustee, the Owner Trustee and the
Security Insurer written notice thereof at least 5 days prior to such change
and shall promptly file such financing statements or amendments as may be
necessary to continue the perfection of the Purchaser's interest in the
property included in the Owner Trust Estate.
SECTION 5.02.
Other Liens or Interests. Except for the conveyances hereunder and pursuant
to the Basic Documents, the Seller shall not sell, pledge, assign or transfer
to any Person, or grant, create, incur, assume, or suffer to exist any Lien
on, or any interest in, to or under the Receivables, and the Seller shall
defend the right, title and interest of the Purchaser in, to and under the
Receivables against all claims of third parties claiming through or under the
Seller; provided, however, that the Seller's obligations under this Section
shall terminate upon the termination of the Issuer pursuant to the Trust
Agreement.
SECTION 5.03.
Costs and Expenses. The Seller agrees to pay all reasonable costs and
disbursements in connection with the perfection, as against all third
parties, of the Purchaser's and the Issuer's right, title and interest in and
to the Receivables.
SECTION 5.04.
Indemnification. The Seller shall indemnify the Purchaser, the Issuer and
the Security Insurer for any liability resulting from the failure of a
Receivable to be originated in compliance with all requirements of law and
for any breach of any of its representations and warranties contained herein.
These indemnity obligations shall be in addition to any obligation that the
Seller may otherwise have.
ARTICLE XXVII
Miscellaneous Provisions
SECTION 6.01.
Obligations of Seller. The obligations of the Seller under this Agreement
shall not be affected by reason of any invalidity, illegality or irregularity
of any Receivable.
SECTION 6.02.
Repurchase Events. The Seller hereby covenants and agrees with the Purchaser
for the benefit of the Purchaser, the Indenture Trustee, the Owner Trustee,
the Certificateholders, the Noteholders and the Security Insurer that the
occurrence of a breach of any of the Seller's representations and warranties
contained in Section 3.02(b) shall constitute an event obligating the Seller
to repurchase the Receivables to which the breach is applicable ("Repurchase
Events"), at the Purchase Amount, from the Purchaser or from the Issuer, as
applicable, unless any such breach shall have been cured by the last day of
the first Collection Period following the discovery or notice thereof by or
to the Seller or the Servicer. The repurchase obligation of the Seller shall
constitute the sole remedy available to the Purchaser, the Indenture Trustee,
the Owner Trustee, the Issuer, the Noteholders or the Certificateholders
against the Seller with respect to any Repurchase Event.
SECTION 6.03.
Purchaser Assignment of Repurchased Receivables. With respect to all
Receivables repurchased by the Seller pursuant to this Agreement, the
Purchaser shall assign, without recourse, representation or warranty, to the
Seller all of the Purchaser's right, title and interest in and to such
Receivables and all security and documents relating thereto.
SECTION 6.04.
Transfer to the Issuer. The Seller acknowledges and agrees that (a) the
Purchaser will, pursuant to the Sale and Servicing Agreement, transfer and
assign the Receivables and assign its rights under this Agreement with
respect thereto to the Issuer and the Issuer will pledge the Receivables to
the Indenture Trustee and (b) the representations and warranties contained in
this Agreement and the rights of the Purchaser under this Agreement,
including under Section 6.02, are intended to benefit the Issuer, the
Noteholders, the Certificateholders and the Security Insurer. The Seller
hereby consents to such transfers and assignments.
SECTION 6.05.
Amendment. This Agreement may be amended from time to time, with prior
written notice to the Rating Agencies and, so long as the Security Insurer is
the Controlling Party under the Sale and Servicing Agreement, the prior
written consent of the Security Insurer but without the consent of the
Noteholders or the Certificateholders, by a written amendment duly executed
and delivered by the Seller and the Purchaser, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of Noteholders or
Certificateholders; provided that such amendment shall not, as evidenced by
an Opinion of Counsel, materially and adversely affect the interest of any
Noteholder or Certificateholder. This Agreement may also be amended by the
Seller and the Purchaser, with prior written notice to the Rating Agencies
and the prior written consent of Holders of Notes evidencing at least a
majority of the Outstanding Amount of the Notes and Holders of Certificates
evidencing at least a majority of the Certificate Balance (excluding, for
purposes of this Section 6.05, Certificates held by the Seller or any of its
affiliates) and, so long as the Security Insurer is the Controlling Party
under the Sale and Servicing Agreement, the prior written consent of the
Security Insurer, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or Certificateholders;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that are required to be made for the
benefit of Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the Notes or the Certificates that is required to consent to
any such amendment, without the consent of the Holders of all the outstanding
Notes and Certificates.
SECTION 6.06.
Waivers. No failure or delay on the part of the Purchaser in exercising any
power, right or remedy under this Agreement or the Assignment shall operate
as a waiver thereof, nor shall any single or partial exercise of any such
power, right or remedy preclude any other or further exercise thereof or the
exercise of any other power, right or remedy.
SECTION 6.07.
Notices. All demands, notices and communications under this Agreement shall
be in writing, personally delivered or mailed by certified mail, return
receipt requested, to: (a) in the case of the Seller, First Merchants
Acceptance Corporation, 570 Lake Cook Road, Suite 126, Deerfield, Illinois
60015, Attention: Norman Smagley; (b) in the case of the Purchaser, First
Merchants Auto Receivables Corporation II, 570 Lake Cook Road, Suite 126B,
Deerfield, Illinois 60015, Attention: Norman Smagley; (c) in the case of
Moody's, Moody's Investors Service, Inc., ABS Monitoring Department, 99
Church Street, New York, New York 10007; (d) in the case of Standard &
Poor's, Standard & Poor's Ratings Service, 26 Broadway (20th Floor), New
York, New York 10004, Attention: Asset Backed Surveillance Department; (e) in
the case of the Security Insurer, Financial Security Assurance Inc., 350 Park
Avenue, New York, New York 10022, Attention: Surveillance Department; or as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 6.08.
Costs and Expenses. The Seller shall pay all expenses incident to the
performance of its obligations under this Agreement and the Seller agrees to
pay all reasonable out-of-pocket costs and expenses of the Purchaser,
excluding fees and expenses of counsel, in connection with the perfection as
against third parties of the Purchaser's right, title and interest in and to
the Receivables and the enforcement of any obligation of the Seller
hereunder.
SECTION 6.09.
Representations of the Seller and the Purchaser. The respective agreements,
representations, warranties and other statements by the Seller and the
Purchaser set forth in or made pursuant to this Agreement shall remain in
full force and effect and will survive the closing under Section 2.02 and the
transfers and assignments referred to in Section 6.04.
SECTION 6.10.
Confidential Information. The Purchaser agrees that it will neither use nor
disclose to any Person the names and addresses of the Obligors, except in
connection with the enforcement of the Purchaser's rights hereunder, under
the Receivables, under the Sale and Servicing Agreement or any other Basic
Document, or as required by any of the foregoing or by law.
SECTION 6.11.
Headings and Cross-References. The various headings in this Agreement are
included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this
Agreement to section names or numbers are to such Sections of this Agreement.
SECTION 6.12.
Governing Law. This Agreement and the Assignment shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder or thereunder shall be determined in accordance with such
laws.
SECTION 6.13.
Counterparts. This Agreement may be executed in two or more counterparts
and by different parties on separate counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date and year
first above written.
FIRST MERCHANTS ACCEPTANCE CORPORATION
By:
Name: Brian P. Hake
Title: Treasurer
FIRST MERCHANTS AUTO
RECEIVABLES CORPORATION II
By:
Name: Brian P. Hake
Title: Treasurer
EXHIBIT A
Form of Assignment
ASSIGNMENT
For value received, in accordance with the Receivables Purchase Agreement
dated as of March 1, 1997 (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 monies
received thereon on or after March 1, 1997; (ii) the security interests in
the Financed Vehicles and any accessions thereto granted by Obligors pursuant
to the Receivables and any other interest of the Seller in such Financed
Vehicles; (iii) any Liquidation Proceeds and any other proceeds with respect
to the Receivables from claims on any physical damage, credit life or
disability insurance policies covering Financed Vehicles or Obligors,
including any vendor's single interest or other collateral protection
insurance policy; (iv) any property that shall have secured a Receivable and
that shall have been acquired by or on behalf of the Seller; (v) all
documents and other items contained in the Receivable Files; and (vi) the
proceeds of any and all of the foregoing. 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 March , 1997.
FIRST MERCHANTS ACCEPTANCE CORPORATION,
By:
Name:
Title:
SCHEDULE I
Schedule of Receivables
SCHEDULE II
Location of Receivable Files
<PAGE>
INDENTURE
between
FIRST MERCHANTS AUTO TRUST 1997-1,
as Issuer
and
HARRIS TRUST AND SAVINGS BANK,
as Indenture Trustee
Dated as of March 1, 1997
TABLE OF CONTENTS
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01.
Definitions. . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02.
Rules of Construction. . . . . . . . . . . . . . . . . . 8
SECTION 1.03.
Incorporation by Reference of Trust Indenture Act. . . . 9
ARTICLE II
The Notes
SECTION 2.01.
Form . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.02.
Execution, Authentication and Delivery . . . . . . . . . 10
SECTION 2.03.
Temporary Notes. . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.04.
Registration; Registration of Transfer and Exchange. . . 11
SECTION 2.05.
[Reserved.]. . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.06.
Mutilated, Destroyed, Lost or Stolen Notes . . . . . . . 12
SECTION 2.07.
Persons Deemed Owner . . . . . . . . . . . . . . . . . . 12
SECTION 2.08.
Payment of Principal and Interest; Defaulted Interest. . 13
SECTION 2.09.
Cancellation . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.10.
Book-Entry Notes . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.11.
Notices to Clearing Agency . . . . . . . . . . . . . . . 15
SECTION 2.12.
Definitive Notes . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.13.
Tax Treatment. . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.14.
Determination of LIBOR . . . . . . . . . . . . . . . . . 15
SECTION 2.15.
Initial Calculation Agent; Replacement of Calculation Agent 16
ARTICLE III
Covenants
SECTION 3.01.
Payment of Principal and Interest. . . . . . . . . . . . 16
SECTION 3.02.
Maintenance of Office or Agency. . . . . . . . . . . . . 16
SECTION 3.03.
Money for Payments To Be Held in Trust . . . . . . . . . 16
SECTION 3.04.
Existence. . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.05.
Protection of Trust Estate . . . . . . . . . . . . . . . 18
SECTION 3.06.
Opinions as to Trust Estate. . . . . . . . . . . . . . . 18
SECTION 3.07.
Performance of Obligations; Servicing of Receivables . . 19
SECTION 3.08.
Negative Covenants . . . . . . . . . . . . . . . . . . . 21
SECTION 3.09.
Annual Statement as to Compliance. . . . . . . . . . . . 21
SECTION 3.10.
Issuer May Consolidate, etc., Only on Certain Terms. . . 22
SECTION 3.11.
Successor or Transferee. . . . . . . . . . . . . . . . . 23
SECTION 3.12.
No Other Business. . . . . . . . . . . . . . . . . . . . 23
SECTION 3.13.
No Borrowing . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.14.
Servicer's Obligations . . . . . . . . . . . . . . . . . 23
SECTION 3.15.
Guarantees, Loans, Advances and Other Liabilities. . . . 24
SECTION 3.16.
Capital Expenditures . . . . . . . . . . . . . . . . . . 24
SECTION 3.17.
Removal of Administrator . . . . . . . . . . . . . . . . 24
SECTION 3.18.
Restricted Payments. . . . . . . . . . . . . . . . . . . 24
SECTION 3.19.
Notice of Events of Default. . . . . . . . . . . . . . . 24
SECTION 3.20.
Further Instruments and Acts . . . . . . . . . . . . . . 24
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01.
Satisfaction and Discharge of Indenture. . . . . . . . . 24
SECTION 4.02.
Application of Trust Money . . . . . . . . . . . . . . . 26
SECTION 4.03.
Repayment of Moneys Held by Paying Agent . . . . . . . . 26
SECTION 4.04.
Release of Collateral. . . . . . . . . . . . . . . . . . 26
ARTICLE V
Remedies
SECTION 5.01.
Events of Default. . . . . . . . . . . . . . . . . . . . 26
SECTION 5.02.
Acceleration of Maturity; Rescission and Annulment . . . 27
SECTION 5.03.
Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee; . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.04.
Remedies; Priorities . . . . . . . . . . . . . . . . . . 31
SECTION 5.05.
Optional Preservation of the Receivables . . . . . . . . 33
SECTION 5.06.
Limitation of Suits. . . . . . . . . . . . . . . . . . . 33
SECTION 5.07.
Unconditional Rights of Noteholders To Receive Principal and
Interest . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.08.
Restoration of Rights and Remedies . . . . . . . . . . . 34
SECTION 5.09.
Rights and Remedies Cumulative . . . . . . . . . . . . . 34
SECTION 5.10.
Delay or Omission Not a Waiver . . . . . . . . . . . . . 34
SECTION 5.11.
Control by Noteholders . . . . . . . . . . . . . . . . . 34
SECTION 5.12.
Waiver of Past Defaults. . . . . . . . . . . . . . . . . 35
SECTION 5.13.
Undertaking for Costs. . . . . . . . . . . . . . . . . . 35
SECTION 5.14.
Waiver of Stay or Extension Laws . . . . . . . . . . . . 36
SECTION 5.15.
Action on Notes. . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.16.
Performance and Enforcement of Certain Obligations . . . 36
ARTICLE VI
The Indenture Trustee
SECTION 6.01.
Duties of Indenture Trustee. . . . . . . . . . . . . . . 37
SECTION 6.02.
Rights of Indenture Trustee. . . . . . . . . . . . . . . 38
SECTION 6.03.
Individual Rights of Indenture Trustee . . . . . . . . . 38
SECTION 6.04.
Indenture Trustee's Disclaimer . . . . . . . . . . . . . 39
SECTION 6.05.
Notice of Defaults . . . . . . . . . . . . . . . . . . . 39
SECTION 6.06.
Reports by Indenture Trustee to Holders. . . . . . . . . 39
SECTION 6.07.
Compensation and Indemnity . . . . . . . . . . . . . . . 39
SECTION 6.08.
Replacement of Indenture Trustee . . . . . . . . . . . . 40
SECTION 6.09.
Successor Indenture Trustee by Merger. . . . . . . . . . 41
SECTION 6.10.
Appointment of Co-Indenture Trustee or Separate Indenture
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.11.
Eligibility; Disqualification. . . . . . . . . . . . . . 42
SECTION 6.12.
Pennsylvania Motor Vehicle Sales Finance Act Licenses. . 42
SECTION 6.13.
Preferential Collection of Claims Against Issuer . . . . 42
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01.
Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.02.
Preservation of Information; Communications to Noteholders 43
SECTION 7.03.
Reports by Issuer. . . . . . . . . . . . . . . . . . . . 43
SECTION 7.04.
Reports by Indenture Trustee . . . . . . . . . . . . . . 44
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01.
Collection of Money. . . . . . . . . . . . . . . . . . . 44
SECTION 8.02.
Trust Accounts . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.03.
General Provisions Regarding Accounts. . . . . . . . . . 45
SECTION 8.04.
Release of Trust Estate. . . . . . . . . . . . . . . . . 46
SECTION 8.05.
Opinion of Counsel . . . . . . . . . . . . . . . . . . . 46
ARTICLE IX
Supplemental Indentures
SECTION 9.01.
Supplemental Indentures Without Consent of Noteholders . 47
SECTION 9.02.
Supplemental Indentures with Consent of Noteholders. . . 48
SECTION 9.03.
Execution of Supplemental Indentures . . . . . . . . . . 49
SECTION 9.04.
Effect of Supplemental Indenture . . . . . . . . . . . . 49
SECTION 9.05.
Reference in Notes to Supplemental Indentures. . . . . . 49
SECTION 9.06.
Conformity with Trust Indenture Act. . . . . . . . . . . 50
ARTICLE X
Redemption of Notes
SECTION 10.01.
Redemption . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.02.
Form of Redemption Notice. . . . . . . . . . . . . . . . 50
SECTION 10.03.
Notes Payable on Redemption Date . . . . . . . . . . . . 51
ARTICLE XI
Miscellaneous
SECTION 11.01.
Compliance Certificates and Opinions, etc. . . . . . . . 51
SECTION 11.02.
Form of Documents Delivered to Indenture Trustee . . . . 53
SECTION 11.03.
Acts of Noteholders. . . . . . . . . . . . . . . . . . . 53
SECTION 11.04.
Notices, etc., to Indenture Trustee, Issuer and Rating Agencies 54
SECTION 11.05.
Notices to Noteholders; Waiver . . . . . . . . . . . . . 55
SECTION 11.06.
Alternate Payment and Notice Provisions. . . . . . . . . 55
SECTION 11.07.
Effect of Headings and Table of Contents . . . . . . . . 55
SECTION 11.08.
Successors and Assigns . . . . . . . . . . . . . . . . . 55
SECTION 11.09.
Separability . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.10.
Benefits of Indenture. . . . . . . . . . . . . . . . . . 56
SECTION 11.11.
Legal Holidays . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.12.
GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.13.
Counterparts . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.14.
Recording of Indenture . . . . . . . . . . . . . . . . . 56
SECTION 11.15.
Trust Obligation . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.16.
No Petition. . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.17.
Inspection . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.18.
Conflict with Trust Indenture Act. . . . . . . . . . . . 57
SCHEDULE A
Schedule of Receivables
EXHIBIT A-1
Form of Class A-1 Note
EXHIBIT A-2
Form of Class A-2 Note
EXHIBIT B
Form of the Note Depository Agreement INDENTURE dated as of March 1, 1997,
between FIRST MERCHANTS AUTO TRUST 1997-1, a Delaware business trust (the
"Issuer"), and HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation,
as trustee and not in its individual capacity (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Issuer's Floating Rate Asset
Backed Notes, Class A-1 (the "Class A-1 Notes") and 6.75% Asset Backed Notes,
Class A-2 (the "Class A-2 Notes" and, together with the Class A-1 Notes, the
"Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
Indenture Trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest in and to (a) the Receivables and all
moneys received thereon on or after March 1, 1997; (b) the security interests
in the Financed Vehicles and any accessions thereto granted by Obligors
pursuant to the Receivables and any other interest of the Issuer in such
Financed Vehicles; (c) any Liquidation Proceeds and any other proceeds with
respect to the Receivables from claims on any physical damage, credit life or
disability insurance policies covering Financed Vehicles or Obligors,
including any vendor's single interest or other collateral protection
insurance policy; (d) any property that shall have secured a Receivable and
that shall have been acquired by or on behalf of the Seller, the Servicer, or
the Issuer; (e) all documents and other items contained in the Receivables
Files; (f) all funds on deposit from time to time in the Trust Accounts and
in all investments and proceeds thereof (including all income thereon);
(g) the Sale and Servicing Agreement (including the Issuer's right to cause
the Seller to repurchase Receivables from the Issuer under certain
circumstances described therein); and (h) all present and future claims,
demands, causes of action and choses in action in respect of any or all of
the foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every
kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, on behalf of the Holders of the Notes, acknowledges
such Grant, accepts the trusts under this Indenture in accordance with the
provisions of this Indenture and agrees to perform its duties required in
this Indenture to the best of its ability to the end that the interests of
the Holders of the Notes may be adequately and effectively protected.
ARTICLE XXVIII
Definitions and Incorporation by Reference
SECTION 1.01.
(a) Definitions. Except as otherwise specified herein or as the context
may otherwise require, the following terms have the respective meanings set
forth below for all purposes of this Indenture.
"Act" has the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement dated as of
March 1, 1997, among the Administrator, the Issuer and the Indenture Trustee.
"Administrator" means First Merchants, or any successor Administrator under
the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized
Officers delivered by the Owner Trustee to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter) and, so long as the Administration Agreement is in effect, any
Vice President or more senior officer of the Administrator who is authorized
to act for the Administrator in matters relating to the Issuer and to be
acted upon by the Administrator pursuant to the Administration Agreement and
who is identified on the list of Authorized Officers delivered by the
Administrator to the Indenture Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter).
"Book-Entry Notes" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York, Chicago,
Illinois or the city in which the Corporate Trust Office is located are
authorized or obligated by law, regulation or executive order to remain
closed.
"Calculation Agent" means the Indenture Trustee or any other Person
authorized by the Issuer to make the calculations described in Section 2.12
on behalf of the Trust and the Noteholders. The Indenture Trustee shall be
the initial Calculation Agent.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Notes" means the Floating Rate Asset Backed Notes, Class A-1,
substantially in the form of Exhibit A-1.
"Class A-1 Rate" means a per annum rate equal to LIBOR plus 0.13% per annum,
subject to a maximum rate with respect to any Floating Rate Interest Accrual
Period of 11% per annum (computed on the basis of the actual number of days
in each Floating Rate Interest Accrual Period divided by 360).
"Class A-2 Notes" means the 6.75% Asset Backed Notes, Class A-2,
substantially in the form of Exhibit A-2.
"Class A-2 Rate" means 6.75% per annum (computed on the basis of a 360-day
year consisting of twelve 30-day months).
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means March 31, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Corporate Trust Office" means the principal office of the Indenture Trustee
at which at any particular time its corporate trust business is administered,
which office at the date of execution of this Agreement is located at Harris
Trust and Savings Bank, 311 West Monroe Street, 12th Floor, Chicago, Illinois
60606 (facsimile number (312) 461-3525); Attention: Indenture Trust
Administration, or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders, the Security
Insurer and the Issuer, or the principal corporate trust office of any
successor Indenture Trustee at the address designated by such successor
Indenture Trustee by notice to the Noteholders, the Security Insurer and the
Issuer.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any
general partner thereof.
"Floating Rate Interest Accrual Period" means, with respect to the Class A-1
Notes and a given Distribution Date, the period from and including the most
recent Distribution Date on which interest has been paid on the Class A-1
Notes (or, in the case of the first Distribution Date, the Closing Date) to
but excluding such given Distribution Date.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and a right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any
other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give
receipt for principal and interest payments in respect of the Collateral and
all other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights
and options, to bring Proceedings in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party
is or may be entitled to do or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means (a) a Person in whose name a Note is
registered on the Note Register or (b) if the Security Insurer has made a
payment under the Policy, the Security Insurer to the extent provided in
Section 2.08(c) of this Indenture, Section 5.10 of the Sale and Servicing
Agreement and the proviso to the definition of "Outstanding".
"Indenture Trustee" means Harris Trust and Savings Bank, an Illinois banking
corporation, not in its individual capacity, but as Indenture Trustee under
this Indenture, or any successor Indenture Trustee under this Indenture.
"Independent" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor on the
Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Seller or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is
Independent within the meaning thereof.
"Interest Accrual Period" means, with respect to the Class A-2 Notes and a
given Distribution Date, the period from and including the 15th day of the
month preceding the month of such Distribution Date (or, in the case of the
first Distribution Date, the Closing Date) to, but excluding, the 15th day of
the month of such Distribution Date.
"Interest Rate" means the Class A-1 Rate or the Class A-2 Rate.
"Issuance Date" means the date on which the Notes are first authenticated
and issued.
"Issuer" means First Merchants Auto Trust 1997-1 until a successor replaces
it and, thereafter, means the successor and, for purposes of any provision
contained herein and required by the TIA, each other obligor on the Notes.
"Issuer Order" or "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
"LIBOR" means, with respect to the applicable Floating Rate Interest Accrual
Period, the London interbank offered rate for U.S. dollar deposits for one
month determined by the Calculation Agent on the related LIBOR Determination
Date pursuant to Section 2.14.
"LIBOR Business Day" means any day that is both a Business Day and a day on
which banking institutions in the City of London, England are not required or
authorized by law to be closed.
"LIBOR Determination Date" means (i) with respect to the first Floating Rate
Interest Accrual Period, the second LIBOR Business Day prior to the Closing
Date and (ii) with respect to each Floating Rate Interest Accrual Period
thereafter, the second LIBOR Business Day prior to the first day of such
Floating Rate Interest Accrual Period for so long as the Class A-1 Notes are
outstanding.
"Note" means a Class A-1 Note or a Class A-2 Note.
"Note Depository Agreement" means the agreement dated March 31, 1997, among
the Issuer, the Administrator, the Indenture Trustee and The Depository Trust
Company, as the initial Clearing Agency, relating to the Class A-1 Notes and
the Class A-2 Notes, substantially in the form of Exhibit B.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is the
beneficial owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing
Agency).
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.04.
"Officer's Certificate" means a certificate signed by any Authorized Officer
of the Issuer, under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.01, and delivered to the
Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the Issuer and who shall be satisfactory to the Indenture
Trustee and (if the Security Insurer is an addressee of such Opinion of
Counsel) to the Security Insurer, and which opinion or opinions shall be
addressed to the Indenture Trustee, shall comply with any applicable
requirements of Section 11.01 and shall be in form and substance satisfactory
to the Indenture Trustee and (if the Security Insurer is an addressee of such
Opinion of Counsel) to the Security Insurer.
"Outstanding" means, as of any date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:
(i)
Notes theretofore cancelled by the Note Registrar or delivered to the Note
Registrar for cancellation;
(ii)
Notes or portions thereof the payment for which money in the necessary amount
has been theretofore deposited with the Indenture Trustee or any Paying Agent
in trust for the Holders of such Notes (provided, however, that if such Notes
are to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision for such notice has been made, satisfactory to
the Indenture Trustee); and
(iii)
Notes in exchange for or in lieu of which other Notes have been authenticated
and delivered pursuant to this Indenture unless proof satisfactory to the
Indenture Trustee is presented that any such Notes are held by a bona fide
purchaser;
provided, however, that Notes that have been paid with proceeds of the Policy
shall continue to remain Outstanding for purposes of this Indenture until the
Security Insurer has been paid as subrogee hereunder or reimbursed pursuant
to the Insurance Agreement, as evidenced by a written notice from the
Security Insurer delivered to the Indenture Trustee, and the Security Insurer
shall be deemed to be the Holder of such Notes to the extent of any payments
made thereon by the Security Insurer; provided, further that in determining
whether the Holders of the requisite Outstanding Amount of the Notes have
given any request, demand, authorization, direction, notice, consent or
waiver hereunder or under any Basic Document, Notes owned by the Issuer, any
other obligor upon the Notes, the Seller or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Indenture Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that the Indenture Trustee knows to be so owned
shall be so disregarded. Notes so owned that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Indenture Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means, as of any date of determination the aggregate
principal amount of all Notes, or a Class of Notes, as applicable,
Outstanding as of such date of determination.
"Owner Trustee" means Chase Manhattan Bank Delaware, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any
successor Owner Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
and is authorized by the Issuer to make payments to and distributions from the
Collection Account and the Note Distribution Account, including payments of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" means a Distribution Date.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Policy" means the Notes Policy.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.06 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Issuer and
(if the Security Insurer is the Controlling Party) the Security Insurer in
writing that such action will not result in a reduction or withdrawal of the
then current rating of the Notes and will not result in an increased capital
charge to the Security Insurer.
"Rating Agency" means each of Moody's and Standard & Poor's. If no such
organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other
comparable Person designated by the Issuer, notice of which designation shall
be given to the Indenture Trustee, the Owner Trustee and the Servicer.
"Record Date" means, with respect to a Distribution Date or Redemption Date,
the close of business on the day immediately preceding such Distribution Date
or Redemption Date.
"Redemption Date" means, in the case of a redemption of the Notes pursuant
to Section 10.01(a) or a payment to Noteholders pursuant to Section 10.01(b),
the Distribution Date specified by the Servicer or the Issuer pursuant to
Section 10.01(a) or (b), as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the unpaid principal amount
of the Notes redeemed plus accrued and unpaid interest thereon at the Class
A-2 Rate for each Note being so redeemed to but excluding the Redemption
Date, or (b) in the case of a payment made to Noteholders pursuant to
Section 10.01(b), the amount on deposit in the Note Distribution Account, but
not in excess of the amount specified in clause (a) above.
"Registered Holder" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge
of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement dated
as of March 1, 1997, among the Issuer, the Seller, the Servicer and the
Indenture Trustee, as Backup Servicer, Collateral Agent and Indenture
Trustee.
"Schedule of Receivables" means the list of Receivables set forth in
Schedule A (which Schedule may be in the form of microfiche).
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means FMARC II, in its capacity as seller under the Sale and
Servicing Agreement, and its successors in interest.
"Servicer" means First Merchants, in its capacity as servicer under the Sale
and Servicing Agreement, and any Successor Servicer thereunder.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
"Telerate Page 3750" means the page so designated on the Dow Jones Telerate
Service or such other page as may replace that page on that service, or such
other service as may be nominated as the information vendor, for the purpose
of displaying London interbank offered rates of major banks.
"Trust Estate" means all money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including, without
limitation, all property and interests Granted to the Indenture Trustee),
including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to
time.
(b)
Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used but not otherwise defined herein have the
respective meanings set forth in the Sale and Servicing Agreement for all
purposes of this Indenture.
SECTION 1.02.
Rules of Construction. Unless the context otherwise requires:
(i)
a term has the meaning assigned to it;
(ii)
an accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles as in effect from
time to time;
(iii)
"or" is not exclusive;
(iv)
"including" means including without limitation;
(v)
definitions are applicable to the singular and plural forms of such terms
and to the masculine, feminine and neuter genders of such terms; and
(vi)
any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
SECTION 1.03.
Incorporation by Reference of Trust Indenture Act. Whenever this Indenture
refers to a provision of the TIA, the provision is incorporated by reference
in and made a part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other obligor
on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
ARTICLE XXIX
The Notes
SECTION 2.01.
Form. The Class A-1 Notes and the Class A-2 Notes, in each case together
with the Indenture Trustee's certificate of authentication, shall be in
substantially the form set forth in Exhibit A-1 and Exhibit A-2,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by
the officers executing such Notes, as evidenced by their execution of the
Notes. Any portion of the text of any Note may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the Note.
The definitive Notes shall be typewritten, printed, lithographed or engraved
or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibit A-1 and Exhibit A-2 are part of the terms of this
Indenture.
SECTION 2.02.
Execution, Authentication and Delivery. The Notes shall be executed on
behalf of the Issuer by any of its Authorized Officers. The signature of any
such Authorized Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not
hold such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and deliver Class
A-1 Notes for original issue in an aggregate principal amount of $68,000,000
and Class A-2 Notes for original issue in an aggregate principal amount of
$29,595,000. The aggregate principal amount of Class A-1 Notes and Class A-2
Notes outstanding at any time may not exceed such respective amounts except
as provided in Section 2.06.
Each Note shall be dated the date of its authentication. The Notes shall be
issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by
the Indenture Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.03.
Temporary Notes. Pending the preparation of definitive Notes, the Issuer
may execute, and upon receipt of an Issuer Order the Indenture Trustee shall
authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the
definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing
such Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer shall cause definitive Notes to be
prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer
shall execute, and the Indenture Trustee shall authenticate and deliver in
exchange therefor, a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as definitive Notes.
SECTION 2.04.
Registration; Registration of Transfer and Exchange. The Issuer shall
cause to be kept a register (the "Note Register") in which, subject to such
reasonable regulations as it may prescribe and the restrictions on transfers
of the Notes set forth herein, the Issuer shall provide for the registration
of Notes and the registration of transfers of Notes. The Indenture Trustee
initially shall be the "Note Registrar" for the purpose of registering Notes
and transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not
to make such an appointment, assume the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to
conclusively rely upon a certificate executed on behalf of the Note Registrar
by an Executive Officer thereof as to the names and addresses of the Holders
of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(1) of the UCC are met the Issuer shall execute, and the
Indenture Trustee shall authenticate and the Noteholder shall obtain from the
Indenture Trustee, the Notes which the Noteholder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or exchange
shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Exchange Act.
No service charge shall be made to a Holder for any registration of transfer
or exchange of Notes, but the Issuer may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.03 or 9.05 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer shall
not be required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05.
[Reserved.]
SECTION 2.06.
Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated Note is
surrendered to the Indenture Trustee, or the Indenture Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any Note,
and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, and provided that the requirements of Section 8-405 of the
UCC are met, the Issuer shall execute, and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Note, a replacement Note of the
same Class; provided, however, that if any such destroyed, lost or stolen
Note, but not a mutilated Note, shall have become or within seven days shall
be due and payable, or shall have been called for redemption, instead of
issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen
Note when so due or payable or upon the Redemption Date without surrender
thereof. If, after the delivery of such replacement Note or payment of a
destroyed, lost or stolen Note pursuant to the proviso to the preceding
sentence, a bona fide purchaser of the original Note in lieu of which such
replacement Note was issued presents for payment such original Note, the
Issuer and the Indenture Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or
expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section, the Issuer may
require the payment by the Holder of such Note of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto
and any other reasonable expenses (including the fees and expenses of the
Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.07.
Persons Deemed Owner. Prior to due presentment for registration of
transfer of any Note, the Issuer, the Indenture Trustee, the Security Insurer
and any agent of the Issuer, the Indenture Trustee or the Security Insurer may
treat the Person in whose name any Note is registered (as of the day of
determination) as the owner of such Note for the purpose of receiving
payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note be overdue, and none of the
Issuer, the Indenture Trustee, the Security Insurer or any agent of the
Issuer, the Indenture Trustee or the Security Insurer shall be affected by
notice to the contrary.
SECTION 2.08.
Payment of Principal and Interest; Defaulted Interest. (a) The Class A-1
Notes and the Class A-2 Notes shall accrue interest at the Class A-1 Rate and
the Class A-2 Rate, respectively, as set forth in Exhibits A-1 and A-2,
respectively, and such interest shall be payable on each Distribution Date as
specified therein, subject to Section 3.01. Any installment of interest or
principal payable on a Note that is punctually paid or duly provided for by
the Issuer on the applicable Distribution Date shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered on the
Record Date (i) by check mailed first-class postage prepaid to such Person's
address as it appears on the Note Register on such Record Date, except that,
unless Definitive Notes have been issued pursuant to Section 2.12, with
respect to Notes registered on the Record Date in the name of the nominee of
the Clearing Agency (initially, such nominee to be Cede & Co.), payment will
be made by wire transfer in immediately available funds to the account
designated by such nominee; provided, however, that the final installment of
principal payable with respect to such Note on a Distribution Date or on the
Final Scheduled Distribution Date (including the Redemption Price for any
Note called for redemption pursuant to Section 10.01) shall be payable as
provided in paragraph (b) below. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.03.
(b)
The principal of each Note shall be payable in installments on each
Distribution Date as provided in the forms of the Notes set forth in Exhibit
A-1 and A-2. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes may be declared immediately due and payable, if not
previously paid, in the manner provided in Section 5.02 on the date on which
an Event of Default shall have occurred and be continuing by the Indenture
Trustee or Holders of Notes representing not less than a majority of the
Outstanding Amount; provided, however, that if on the date any such Event of
Default occurs or is continuing the Security Insurer is the Controlling
Party, the Security Insurer, in its sole discretion, may determine whether or
not to accelerate payments on the Notes. All principal payments on each
Class of Notes shall be made pro rata to the Noteholders of each Class
entitled thereto. The Indenture Trustee shall notify the Person in whose
name a Note is registered at the close of business on the Record Date
preceding the Distribution Date on which the Issuer expects the final
installment of principal of and interest on such Note to be paid. Such
notice shall be mailed no later than five days prior to such final
Distribution Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for payment of
such installment. Notices in connection with redemptions of Notes shall be
mailed to Noteholders as provided in Section 10.02.
(c)
Promptly following the date on which all principal of and interest on the
Notes have been paid in full and the Notes have been surrendered to the
Indenture Trustee, the Indenture Trustee shall, if the Security Insurer has
paid any amount in respect of the Notes under the Policy that has not been
reimbursed to the Security Insurer, deliver such surrendered Notes to the
Security Insurer.
(d)
If the Issuer defaults in a payment of interest on the Notes, the Issuer
shall pay defaulted interest (plus interest on such defaulted interest to the
extent lawful) at the applicable Interest Rate in any lawful manner on the
next Distribution Date.
SECTION 2.09.
Cancellation. Subject to Section 2.08(c), all Notes surrendered for
payment, registration of transfer, exchange or redemption shall, if
surrendered to any Person other than the Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly cancelled by the Indenture
Trustee. Subject to Section 2.08(c), the Issuer may at any time deliver to
the Indenture Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Issuer may have acquired in any manner
whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange
for any Notes cancelled as provided in this Section, except as expressly
permitted by this Indenture. Subject to Section 2.08(c), all cancelled Notes
may be held or disposed of by the Indenture Trustee in accordance with its
standard retention or disposal policy as in effect at the time unless the
Issuer shall direct by an Issuer Order that they be destroyed or returned to
it; provided, that such Issuer Order is timely and the Notes have not been
previously disposed of by the Indenture Trustee.
SECTION 2.10.
Book-Entry Notes. The Notes, upon original issuance, will be issued in the
form of typewritten Notes representing the Book-Entry Notes, to be delivered
to The Depository Trust Company, the initial Clearing Agency, by, or on
behalf of, the Issuer. The Book-Entry Notes shall be registered initially on
the Note Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Owner thereof will receive a definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to such Note Owners pursuant to
Section 2.12:
(i)
the provisions of this Section shall be in full force and effect;
(ii)
the Note Registrar and the Indenture Trustee shall be entitled to deal with
the Clearing Agency for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Note Owners;
(iii)
to the extent that the provisions of this Section conflict with any other
provisions of this Indenture, the provisions of this Section shall control;
(iv)
the rights of Note Owners shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements
between such Note Owners and the Clearing Agency and/or the Clearing Agency
Participants pursuant to the Note Depository Agreement. Unless and until
Definitive Notes are issued pursuant to Section 2.12, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency Participants
and receive and transmit payments of principal of and interest on the Notes
to such Clearing Agency Participants; and
(v)
whenever this Indenture requires or permits actions to be taken based upon
instructions or directions of Holders of Notes evidencing a specified
percentage of the Outstanding Amount of the Notes, the Clearing Agency shall
be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
SECTION 2.11.
Notices to Clearing Agency. Whenever a notice or other communication to
the Noteholders is required under this Indenture, unless and until Definitive
Notes shall have been issued to such Note Owners pursuant to Section 2.12,
the Indenture Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Clearing Agency,
and shall have no obligation to such Note Owners.
SECTION 2.12.
Definitive Notes. If (i) the Administrator advises the Indenture Trustee
in writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Book-Entry Notes and the
Administrator is unable to locate a qualified successor, (ii) the
Administrator at its option advises the Indenture Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency or
(iii) after the occurrence of an Event of Default or a Servicer Default,
Owners of the Book-Entry Notes representing beneficial interests aggregating
at least a majority of the Outstanding Amount of such Notes advise the
Clearing Agency in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interests of such Note
Owners, then the Clearing Agency shall notify all Note Owners and the
Indenture Trustee of the occurrence of any such event and of the availability
of Definitive Notes to Note Owners requesting the same. Upon surrender to
the Indenture Trustee of the typewritten Notes representing the Book-Entry
Notes by the Clearing Agency, accompanied by registration instructions, the
Issuer shall execute and the Indenture Trustee shall authenticate the
Definitive Notes in accordance with the written instructions of the Clearing
Agency. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Indenture Trustee
shall recognize the Holders of the Definitive Notes as Noteholders.
SECTION 2.13.
Tax Treatment. The Issuer has entered into this Indenture, and the Notes
will be issued, with the intention that, for federal, state and local income,
single business and franchise tax purposes, the Notes will qualify as
indebtedness secured by the Trust Estate. The Issuer, by entering into this
Indenture, and each Noteholder, by its acceptance of a Note (and each Note
Owner by its acceptance of an interest in the applicable Book-Entry Note),
agree to treat the Notes for federal, state and local income and franchise
tax purposes as indebtedness.
SECTION 2.14.
Determination of LIBOR. On each LIBOR Determination Date, the Calculation
Agent shall calculate LIBOR for the related Floating Rate Interest Accrual
Period using the following method. If the offered rate for United States
dollar deposits for one month appears on Telerate Page 3750 as of 11:00 A.M.,
London Time, on such LIBOR Determination Date, LIBOR for the related Floating
Interest Accrual Period shall be such rate as it appears on Telerate Page
3750. If such rate does not appear on Telerate Page 3750 on any LIBOR
Determination Date, the Calculation Agent will request each of the reference
banks (which shall be major banks that are engaged in transactions in the
London interbank market selected by the Calculation Agent) to provide the
Calculation Agent with its offered quotation for United States dollar
deposits for one month to prime banks in the London interbank market as of
11:00 A.M., London time, on such date. If at least two reference banks
provide the Calculation Agent with such offered quotations, LIBOR on such
date will be the arithmetic mean, rounded upwards, if necessary, to the
nearest one-sixteenth (1/16) of 1% of all such quotations. If on such date
fewer than two reference banks provide the Calculation Agent with such
offered quotations, LIBOR on such date will be the arithmetic mean, rounded
upwards, if necessary, to the nearest one-sixteenth (1/16) of 1% of the
offered per annum rates that one or more leading banks in the City of New
York selected by the Calculation Agent are quoting as of 11:00 A.M., New York
City time, on such date to leading European banks for United States dollar
deposits for one month. If such banks in the City of New York are not
quoting as provided above, LIBOR for such date will be LIBOR applicable to
the immediately preceding Distribution Date.
SECTION 2.15.
Initial Calculation Agent; Replacement of Calculation Agent. The Indenture
Trustee shall be the initial Calculation Agent. If the Calculation Agent is
unable to perform its obligations under Section 2.14, the Owner Trustee shall
appoint a successor Calculation Agent, which successor Calculation Agent
shall be acceptable to the Indenture Trustee and shall meet the eligibility
requirements hereunder for the Indenture Trustee.
ARTICLE XXX
Covenants
SECTION 3.01.
Payment of Principal and Interest. The Issuer will duly and punctually pay
the principal, if any, of and the interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting
the foregoing, subject to Section 8.02(c), on each Distribution Date the
Issuer will cause to be distributed all amounts deposited pursuant to the
Sale and Servicing Agreement into the Note Distribution Account, (i) for the
benefit of the Class A-1 Notes, to the Class A-1 Noteholders and (ii) for the
benefit of the Class A-2 Notes, to the Class A-2 Noteholders. Amounts
properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been
paid by the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02.
Maintenance of Office or Agency. The Issuer will maintain in the Borough
of Manhattan, the City of New York, an office or agency where Notes may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Issuer in respect of the Notes and this Indenture may
be served. Such office will initially be located at 77 Water Street, 4th -
Floor, New York, New York 10005. The Issuer will give prompt written notice
to the Indenture Trustee and the Security Insurer of the location, and of any
change in the location, of any such office or agency. If at any time the
Issuer shall fail to maintain any such office or agency or shall fail to
furnish the Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and
the Issuer hereby appoints the Indenture Trustee as its agent to receive all
such surrenders, notices and demands.
SECTION 3.03.
Money for Payments To Be Held in Trust. All payments of amounts due and
payable with respect to any Notes that are to be made from amounts withdrawn
from the Collection Account and the Note Distribution Account pursuant to
Section 8.02(c) shall be made on behalf of the Issuer by the Indenture
Trustee or by another Paying Agent, and no amounts so withdrawn from the
Collection Account and the Note Distribution Account for payments of Notes
shall be paid over to the Issuer except as provided in this Section.
On or before the Business Day preceding each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due under the Notes, such sum to be held in trust for the benefit of
the Persons entitled thereto, and (unless the Paying Agent is the Indenture
Trustee) shall promptly notify the Indenture Trustee in writing of its action
or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee to
execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions
of this Section, that such Paying Agent will:
(i)
hold all sums held by it for the payment of amounts due with respect to the
Notes in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein
provided and pay such sums to such Persons as herein provided;
(ii)
give the Indenture Trustee notice of any default by the Issuer (or any
other obligor upon the Notes) of which it has actual knowledge in the making
of any payment required to be made with respect to the Notes;
(iii)
at any time during the continuance of any such default, upon the written
request of the Indenture Trustee, forthwith pay to the Indenture Trustee all
sums so held in trust by such Paying Agent;
(iv)
immediately resign as a Paying Agent and forthwith pay to the Indenture
Trustee all sums held by it in trust for the payment of Notes if at any time
it ceases to meet the standards required to be met by a Paying Agent at the
time of its appointment; and
(v)
comply with all requirements of the Code with respect to the withholding
from any payments made by it on any Notes of any applicable withholding
taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Indenture Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such
trust and be paid either (i) upon Issuer Request and with the consent of the
Security Insurer (if the Security Insurer is at any such time the Controlling
Party) to the Issuer or (ii) if such money or any portion thereof was paid by
the Security Insurer to the Indenture Trustee for the payment of principal of
or interest on such Note to the extent of such unreimbursed amounts, to the
Security Insurer in lieu of the Issuer; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the
Issuer), and all liability of the Indenture Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that
the Indenture Trustee or such Paying Agent, before being required to make any
such repayment, shall at the expense and direction of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be
repaid to the Issuer or the Security Insurer, as applicable. The Indenture
Trustee shall also adopt and employ, at the expense and direction of the
Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption or
whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Indenture Trustee or of any Paying
Agent, at the last address of record for each such Holder).
SECTION 3.04.
Existence. The Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware
(unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of
America, in which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.05.
Protection of Trust Estate. The Issuer will from time to time execute and
deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and
other instruments, and will take such other action necessary or advisable to:
(i)
maintain or preserve the lien and security interest (and the priority
thereof) of this Indenture or carry out more effectively the purposes
hereof;
(ii)
perfect, publish notice of or protect the validity of any Grant made or to
be made by this Indenture;
(iii)
enforce any of the Collateral; or
(iv)
preserve and defend title to the Trust Estate and the rights of the
Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and attorney-in-
fact to execute any financing statement, continuation statement or other
instrument required to be executed pursuant to this Section 3.05.
SECTION 3.06.
Opinions as to Trust Estate. (a) On the Closing Date, the Issuer shall
furnish to the Indenture Trustee and the Security Insurer an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective the
lien and security interest of this Indenture and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective.
(b)
On or before March 31, in each calendar year, beginning in 1998, the Issuer
shall furnish to the Indenture Trustee and the Security Insurer an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling
of this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the lien
and security interest created by this Indenture and reciting the details of
such action, or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of
Counsel shall also describe the recording, filing, re-recording and refiling
of this Indenture, any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be
required to maintain the lien and security interest of this Indenture until
March 31 in the following calendar year.
SECTION 3.07.
Performance of Obligations; Servicing of Receivables. (a) The Issuer will
not take any action and will use its best efforts not to permit any action to
be taken by others that would release any Person from any of such Person's
material covenants or obligations under any instrument or agreement included
in the Trust Estate or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument or agreement, except as expressly
provided in this Indenture, the Sale and Servicing Agreement or such other
instrument or agreement.
(b)
The Issuer may contract with other Persons acceptable to the Controlling
Party to assist it in performing its duties under this Indenture, and any
performance of such duties by a Person identified to the Indenture Trustee
and the Security Insurer in an Officer's Certificate of the Issuer shall be
deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture.
(c)
The Issuer will punctually perform and observe all of its obligations and
agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture
and the Sale and Servicing Agreement in accordance with and within the time
periods provided for herein and therein. Except as otherwise expressly
provided therein, the Issuer shall not waive, amend, modify, supplement or
terminate any Basic Document or any provision thereof without the consent of
the Security Insurer (so long as no Security Insurer Default shall have
occurred and be continuing) and either the Indenture Trustee or the Holders
of at least a majority of the Outstanding Amount of the Notes.
(d)
If the Issuer shall have knowledge of the occurrence of a Servicer Default
under the Sale and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee, the Security Insurer (if the Security Insurer is the
Controlling Party at such time) and the Rating Agencies thereof, and shall
specify in such notice the action, if any, the Issuer is taking with respect
to such default. If a Servicer Default shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement with respect to the Receivables, the Issuer shall take
all reasonable steps available to it to remedy such failure.
(e)
As promptly as possible after the giving of notice of termination to the
Servicer of the Servicer's rights and powers pursuant to Section 8.01 of the
Sale and Servicing Agreement, the Issuer or, if the Security Insurer is the
Controlling Party, the Security Insurer shall appoint the Backup Servicer as
the successor servicer (the "Successor Servicer"), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Indenture Trustee and, if the Security Insurer is the
Controlling Party, the Security Insurer. In the event that a Successor
Servicer has not been appointed and accepted its appointment at the time when
the Servicer ceases to act as Servicer, the Indenture Trustee without further
action shall automatically be appointed the Successor Servicer. The
Indenture Trustee may resign as the Successor Servicer by giving written
notice of such resignation to the Security Insurer (if the Security Insurer
is the Controlling Party) and the Issuer and in such event will be released
from such duties and obligations, such release not to be effective until the
date a new servicer enters into a servicing agreement with the Security
Insurer or the Issuer, as applicable, as provided below. Upon delivery of
any such notice to the Security Insurer or the Issuer, the Security Insurer
or the Issuer shall obtain a new servicer as the Successor Servicer under the
Sale and Servicing Agreement. Any Successor Servicer other than the
Indenture Trustee or the Backup Servicer shall (i) be an established
financial institution having a net worth of not less than $100,000,000 and
whose regular business includes the servicing of Contracts and (ii) enter
into a servicing agreement with the Security Insurer or the Issuer having
substantially the same provisions as the provisions of the Sale and Servicing
Agreement applicable to the Servicer. If within 30 days after the delivery
of the notice referred to above, the Security Insurer or the Issuer shall not
have obtained such a new servicer, the Indenture Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, a Successor Servicer.
In connection with any such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor as it and such successor
shall agree, subject to the limitations set forth below and in the Sale and
Servicing Agreement, and in accordance with Section 8.02 of the Sale and
Servicing Agreement, the Security Insurer or the Issuer, as applicable,
shall enter into an agreement with such successor for the servicing of the
Receivables (such agreement to be in form and substance satisfactory to the
Indenture Trustee). If the Indenture Trustee shall succeed to the Servicer's
duties as servicer of the Receivables as provided herein, it shall do so in
its individual capacity and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article VI hereof shall be inapplicable to the
Indenture Trustee in its duties as the successor to the Servicer and the
servicing of the Receivables. In case the Indenture Trustee shall become
successor to the Servicer under the Sale and Servicing Agreement, the
Indenture Trustee shall be entitled to appoint as Servicer any one of its
affiliates, provided that it shall be fully liable for the actions and
omissions of such affiliate in such capacity as Successor Servicer.
(f)
Upon any termination of the Servicer's rights and powers pursuant to the Sale
and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee and, if the Security Insurer is the Controlling Party, the Security
Insurer. As soon as a Successor Servicer is appointed, the Issuer shall
notify the Indenture Trustee in writing and, if the Security Insurer is the
Controlling Party, the Security Insurer of such appointment, specifying in
such notice the name and address of such Successor Servicer.
(g)
Without derogating from the absolute nature of the assignment granted to the
Indenture Trustee under this Indenture or the rights of the Indenture Trustee
hereunder, the Issuer agrees (i) that it will not, without the prior written
consent of the Security Insurer (if the Security Insurer is the Controlling
Party) and either the Indenture Trustee or the Holders of at least a majority
in Outstanding Amount of the Notes, amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any Collateral (except to
the extent otherwise provided in the Sale and Servicing Agreement) or the
Basic Documents, or waive timely performance or observance by the Servicer or
the Seller under the Sale and Servicing Agreement; and (ii) that any such
amendment shall not (A) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders or (B) reduce the aforesaid percentage of
the Notes that is required to consent to any such amendment, without the
consent of the Holders of all the Outstanding Notes. If the Security Insurer
and the Indenture Trustee or such Holders, as applicable, agree to any such
amendment, modification, supplement or waiver, the Issuer agrees, promptly
following a request by the Indenture Trustee or the Security Insurer to do
so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Indenture
Trustee or the Security Insurer may deem necessary or appropriate in the
circumstances.
SECTION 3.08.
Negative Covenants. So long as any Notes are Outstanding, the Issuer shall
not:
(i)
except as expressly permitted by this Indenture, the Receivables Purchase
Agreement or the Sale and Servicing Agreement, sell, transfer, exchange or
otherwise dispose of any of the properties or assets of the Issuer,
including those included in the Trust Estate, unless directed to do so by
the Controlling Party;
(ii)
claim any credit on, or make any deduction from the principal or interest
payable in respect of, the Notes (other than amounts properly withheld from
such payments under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or assessed
upon any part of the Trust Estate; or
(iii)
(A) permit the validity or effectiveness of this Indenture to be impaired,
or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics'
liens and other liens that arise by operation of law, in each case on any of
the Financed Vehicles and arising solely as a result of an action or
omission of the related Obligor) or (C) permit the lien of this Indenture
not to constitute a valid first priority (other than with respect to any
such tax, mechanics' or other lien) security interest in the Trust Estate.
SECTION 3.09.
Annual Statement as to Compliance. The Issuer will deliver to the
Indenture Trustee and the Security Insurer (if the Security Insurer is the
Controlling Party), within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 1997), an Officer's Certificate stating,
as to the Authorized Officer signing such Officer's Certificate, that:
(i)
a review of the activities of the Issuer during such year and of its
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii)
to the best of such Authorized Officer's knowledge, based on such review,
the Issuer has complied with all conditions and covenants under this
Indenture throughout such year or, if there has been a default in its
compliance with any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
SECTION 3.10.
Issuer May Consolidate, etc., Only on Certain Terms. (a) The Issuer shall
not consolidate or merge with or into any other Person, unless:
(i)
the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture
on the part of the Issuer to be performed or observed, all as provided
herein;
(ii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;
(iii)
the Rating Agency Condition shall have been satisfied with respect to such
transaction;
(iv)
the Issuer shall have received an Opinion of Counsel (and shall have
delivered copies thereof to the Indenture Trustee) to the effect that such
transaction will not have any material adverse tax consequence to the
Issuer, any Noteholder or any Certificateholder;
(v)
any action that is necessary to maintain the lien and security interest
created by this Indenture shall have been taken; and
(vi)
the Issuer shall have delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation
or merger and such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
(b)
The Issuer shall not convey or transfer any of its properties or assets,
including those included in the Trust Estate, to any Person, unless:
(i)
the Person that acquires by conveyance or transfer the properties and
assets of the Issuer the conveyance or transfer of which is hereby
restricted (A) shall be a United States citizen or a Person organized and
existing under the laws of the United States of America or any State, (B)
expressly assumes, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every agreement and covenant
of this Indenture on the part of the Issuer to be performed or observed, all
as provided herein, (C) expressly agrees by means of such supplemental
indenture that all right, title and interest so conveyed or transferred
shall be subject and subordinate to the rights of Holders of the Notes, (D)
unless otherwise provided in such supplemental indenture, expressly agrees
to indemnify, defend and hold harmless the Issuer against and from any loss,
liability or expense arising under or related to this Indenture and the
Notes and (E) expressly agrees by means of such supplemental indenture that
such Person (or if a group of Persons, then one specified Person) shall make
all filings with the Commission (and any other appropriate Person) required
by the Exchange Act in connection with the Notes;
(ii)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing;
(iii)
the Rating Agency Condition shall have been satisfied with respect to such
transaction;
(iv)
the Issuer shall have received an Opinion of Counsel (and shall have
delivered copies thereof to the Indenture Trustee) to the effect that such
transaction will not have any material adverse tax consequence to the
Issuer, any Noteholder or any Certificateholder;
(v)
any action that is necessary to maintain the lien and security interest
created by this Indenture shall have been taken; and
(vi)
the Issuer shall have delivered to the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such conveyance or
transfer and such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
SECTION 3.11.
Successor or Transferee. (a) Upon any consolidation or merger of the
Issuer in accordance with Section 3.10(a), the Person formed by or surviving
such consolidation or merger (if other than the Issuer) shall succeed to, and
be substituted for, and may exercise every right and power of, the Issuer
under this Indenture with the same effect as if such Person had been named as
the Issuer herein.
(b)
Upon a conveyance or transfer of all the assets and properties of the Issuer
pursuant to Section 3.10(b), First Merchants Auto Trust 1997-1 will be
released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee stating that
First Merchants Auto Trust 1997-1 is to be so released.
SECTION 3.12.
No Other Business. The Issuer shall not engage in any business other than
financing, purchasing, owning, selling and managing the Receivables in the
manner contemplated by this Indenture and the Basic Documents and activities
incidental thereto.
SECTION 3.13.
No Borrowing. The Issuer shall not issue, incur, assume, guarantee or
otherwise become liable, directly or indirectly, for any indebtedness except
for the Notes.
SECTION 3.14.
Servicer's Obligations. The Issuer shall cause the Servicer to comply with
Sections 4.09, 4.10, 4.11 and Article IX of the Sale and Servicing Agreement.
SECTION 3.15.
Guarantees, Loans, Advances and Other Liabilities. Except as contemplated
by the Trust Agreement, Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing
or otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or
make any capital contribution to, any Person.
SECTION 3.16.
Capital Expenditures. The Issuer shall not make any expenditure (by long-
term or operating lease or otherwise) for capital assets (either realty or
personalty).
SECTION 3.17.
Removal of Administrator. So long as any Notes are Outstanding, the Issuer
shall not remove the Administrator without cause unless the Rating Agency
Condition shall have been satisfied in connection with such removal.
SECTION 3.18.
Restricted Payments. Except with respect to the proceeds from issuance of
the Notes, the Issuer shall not, directly or indirectly, (i) pay any dividend
or make any distribution (by reduction of capital or otherwise), whether in
cash, property, securities or a combination thereof, to the Owner Trustee or
any owner of a beneficial interest in the Issuer or otherwise with respect to
any ownership or equity interest or security in or of the Issuer or to the
Servicer, (ii) redeem, purchase, retire or otherwise acquire for value any
such ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the
Issuer may make, or cause to be made, (x) distributions as contemplated by,
and to the extent funds are available for such purpose under, the Sale and
Servicing Agreement or the Trust Agreement and (y) payments to the Indenture
Trustee pursuant to Section 1(a)(ii) of the Administration Agreement. The
Issuer will not, directly or indirectly, make payments to or distributions
from the Collection Account except in accordance with this Indenture and the
Basic Documents.
SECTION 3.19.
Notice of Events of Default. The Issuer shall give the Indenture Trustee,
the Security Insurer (if the Security Insurer is at such time the Controlling
Party) and the Rating Agencies prompt written notice of each Event of Default
hereunder, and of each default on the part of the Servicer or the Seller of
its obligations under the Sale and Servicing Agreement.
SECTION 3.20.
Further Instruments and Acts. Upon request of the Indenture Trustee, or
the Security Insurer (if the Security Insurer is at such time the Controlling
Party), the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE XXXI
Satisfaction and Discharge
SECTION 4.01.
Satisfaction and Discharge of Indenture. This Indenture shall cease to be
of further effect with respect to the Notes except as to (i) rights of
registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive
payments of principal thereof and interest thereon (including any such right
of the Security Insurer pursuant to Section 2.08(c), Section 5.10 of the Sale
and Servicing Agreement and the proviso to the definition of "Outstanding"),
(iv) Sections 3.03, 3.04, 3.05, 3.08, 3.10, 3.12 and 3.13, (v) the rights,
obligations and immunities of the Indenture Trustee hereunder (including the
rights of the Indenture Trustee under Section 6.07 and the obligations of the
Indenture Trustee under Section 4.02) and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them, and the Indenture Trustee,
on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A)
either
(1)
all Notes theretofore authenticated and delivered (other than (i) Notes that
have been destroyed, lost or stolen and that have been replaced or paid as
provided in Section 2.06 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Indenture Trustee for
cancellation and the Policy has expired and been returned to the Security
Insurer for cancellation; or
(2)
all Notes not theretofore delivered to the Indenture Trustee for
cancellation
a.
have become due and payable,
b.
will become due and payable at the Class A-2 Final Scheduled
Distribution Date within one year, or
c.
are to be called for redemption within one year under arrangements
satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the expense, of
the Issuer,
and the Issuer, in the case of a., b. or c. above, has irrevocably deposited
or caused to be irrevocably deposited with the Indenture Trustee cash or
direct obligations of or obligations guaranteed by the United States of
America (which will mature prior to the date such amounts are payable), in
trust for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on (a) such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the applicable final
scheduled Distribution Date or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.01(a)), as the case may be, and
(b) all amounts due to the Security Insurer pursuant to Section 5.06(b) of
the Sale and Servicing Agreement and as subrogee to the rights of Holders of
the Notes pursuant to Section 5.10 of the Sale and Servicing Agreement;
(B)
the Issuer has paid or caused to be paid all other sums payable hereunder by
the Issuer; and
(C)
the Issuer has delivered to the Indenture Trustee an Officer's Certificate
and, an Opinion of Counsel and (if required by the TIA or the Indenture
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.01(a)
and, subject to Section 11.02, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.02.
Application of Trust Money. All moneys deposited with the Indenture
Trustee pursuant to Section 4.01 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture
Trustee may determine, to the Holders of the particular Notes for the payment
or redemption of which such moneys have been deposited with the Indenture
Trustee, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to
the extent required herein or in the Sale and Servicing Agreement or required
by law.
SECTION 4.03.
Repayment of Moneys Held by Paying Agent. In connection with the
satisfaction and discharge of this Indenture with respect to the Notes, all
moneys then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.03 and thereupon such Paying Agent shall be released
from all further liability with respect to such moneys.
SECTION 4.04.
Release of Collateral. Subject to Section 11.01 and the terms of the Basic
Documents, the Indenture Trustee shall release property from the lien of this
Indenture only upon receipt of an Issuer Request accompanied by an Officer's
Certificate and an Opinion of Counsel and Independent Certificates in
accordance with TIA && 314(c) and 314(d)(1) or an Opinion of Counsel in lieu
of such Independent Certificates to the effect that the TIA does not require
any such Independent Certificates. The Trustee shall surrender the Policy to
the Security Insurer upon the expiration of the term of the Policy (as
defined in Section 1 of the Policy).
ARTICLE XXXII
Remedies
SECTION 5.01.
Events of Default. "Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(i)
default in the payment of any interest on any Note when the same becomes
due and payable, and such default shall continue for a period of five days
(solely for purposes of this clause, a payment on the Notes funded by the
Security Insurer shall be deemed to be a payment made by the Issuer); or
(ii)
default in the payment of the principal of or any installment of the
principal of any Note when the same becomes due and payable (solely for
purposes of this clause, a payment on the Notes funded by the Security
Insurer shall be deemed to be a payment made by the Issuer); or
(iii)
an Insurance Agreement Event of Default shall have occurred at any time
while the Security Insurer is the Controlling Party; provided, however, that
the occurrence of an Insurance Agreement Event of Default may not form the
basis of an Event of Default unless the Security Insurer shall have
delivered to the Issuer and the Trustee a written notice specifying that
such Insurance Agreement Event of Default constitutes an Event of Default
under this Indenture;
(iv)
default in the observance or performance of any covenant or agreement of
the Issuer made in this Indenture (other than a covenant or agreement, a
default in the observance or performance of which is elsewhere in this
Section specifically dealt with), or any representation or warranty of the
Issuer made in this Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured,
for a period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or the Security
Insurer (so long as no Security Insurer Default shall have occurred and be
continuing) or to the Issuer and the Indenture Trustee by the Holders of at
least 25% of the Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a notice of
Default hereunder; or
(v)
the filing of a decree or order for relief by a court having jurisdiction
in the premises in respect of the Issuer or any substantial part of the
Trust Estate in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial part
of the Trust Estate, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(vi)
the commencement by the Issuer of a voluntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to the entry of an order
for relief in an involuntary case under any such law, or the consent by the
Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer
or for any substantial part of the Trust Estate, or the making by the Issuer
of any general assignment for the benefit of creditors, or the failure by
the Issuer generally to pay its debts as such debts become due, or the
taking of any action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee and, if the Security
Insurer is the Controlling Party, the Security Insurer, within five days
after the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of
time would become an Event of Default under clause (iii), its status and what
action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.02.
Acceleration of Maturity; Rescission and Annulment. (a) If an Event of
Default should occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of Notes representing not less than a
majority of the Outstanding Amount of the Notes may declare all the Notes to
be immediately due and payable, by a notice in writing to the Issuer (and to
the Indenture Trustee if given by Noteholders), and upon any such declaration
the unpaid principal amount of such Notes, together with accrued and unpaid
interest thereon through the date of acceleration, shall become immediately
due and payable; provided, however, that, if on the date any such Event of
Default occurs or is continuing, the Security Insurer is the Controlling
Party, then the Security Insurer, in its sole discretion, may determine
whether or not to accelerate payment on the Notes. In the event of any
acceleration of the Notes by operation of this Section 5.02, the Indenture
Trustee shall continue to be entitled to make claims under the Policy
pursuant to Section 5.07 of the Sale and Servicing Agreement for Scheduled
Payments on the Notes. Payments under the Policy following acceleration of
the Notes shall be applied by the Indenture Trustee:
FIRST: to the payment of amounts due and unpaid on the Notes for interest,
ratably, without preference or priority of any kind,
SECOND: to the payment of amounts due and unpaid on the Class A-1 Notes
for principal, ratably, without preference or priority of any kind until the
Class A-1 Notes are paid in full, and
THIRD: to the payment of amounts due and unpaid on the Class A-2 Notes for
principal, ratably, without preference or priority of any kind until the
Class A-2 Notes are paid in full.
(b)
If an Event of Default occurs at any time when the Security Insurer is the
Controlling Party, the Security Insurer shall have the right, but not the
obligation, to make one or more accelerated payments on the Notes and to
prepay the Notes, in whole or in part, on any date or dates following the
occurrence of such Event of Default if the Security Insurer, in its sole
discretion, shall so elect. This right of the Security Insurer to make
accelerated payments on the Notes is in addition to its obligation to pay
Scheduled Payments on the Notes under the Policy, and in no event shall the
Security Insurer make a Scheduled Payment to the Indenture Trustee for
distribution to the Noteholders later than the date on which such amount is
due under the terms of the Notes and the Policy.
(c)
If an Event of Default under this Indenture shall have occurred and be
continuing at any time when the Indenture Trustee is the Controlling Party,
the Indenture Trustee in its discretion may or, if so requested in writing by
Holders of Notes representing at least a majority of the Outstanding Amount
of the Notes, shall declare by written notice to the Issuer all the Notes
immediately due and payable, and upon any such declaration, the unpaid
principal amount of the Notes, together with accrued interest thereon through
the date of acceleration, shall become immediately due and payable.
Notwithstanding anything to the contrary in this paragraph (c), if an Event
of Default specified in clauses (v) and (vi) of Section 5.01 shall have
occurred and be continuing at any time when the Indenture Trustee is the
Controlling Party, the Notes shall become immediately due and payable at par,
together with accrued interest thereon.
(d)
At any time after such declaration of acceleration of maturity has been made
and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided,
either the Security Insurer (so long as a Security Insurer Default has not
occurred and is continuing) or the Holders of Notes representing a majority
of the Outstanding Amount of the Notes (if a Security Insurer Default has
occurred and is continuing), by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(i)
the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(A)
all payments of principal of and interest on all Notes and all other amounts
that would then be due hereunder or upon such Notes if the Event of Default
giving rise to such acceleration had not occurred; and
(B)
all sums paid or advanced by the Indenture Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel; and
(ii)
all Events of Default, other than the nonpayment of the principal of the
Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
(e)
In the event of a sale of the assets of the Trust pursuant to Section 9.01 of
the Trust Agreement
(i)
if, based on offers to purchase the Receivables accepted by the Indenture
Trustee, the Security Insurer would not be reimbursed in full for all
amounts due to it under the Insurance Agreement following the distribution
of the proceeds of such sale pursuant to Section 5.06(b) of the Sale and
Servicing Agreement and (ii) the Certificateholders have been given prior
written notice and five business days to bid thereon, the Security Insurer
shall be permitted to request an assignment of Receivables and all other
assets of the Trust Estate in lieu of such a distribution of such sale
proceeds. In the event that the Security Insurer elects to request such an
assignment, promptly following receipt by the Indenture Trustee of notice of
such request, the Indenture Trustee shall file with the Security Insurer a
Notice of Claim in accordance with the Policy in respect of the principal
amount, if any, of the Notes that are unpaid on the Distribution Date
immediately preceding the date of the receipt by the Indenture Trustee of
such notice plus accrued interest thereon. All amounts received by the
Indenture Trustee from the Security Insurer pursuant to this Section 5.02
shall be distributed to the Noteholders. Immediately upon payment by the
Security Insurer of all amounts required to be paid by the Security Insurer
pursuant to this Section 5.02, the Indenture Trustee shall be deemed to have
assigned the Receivables and all other assets of the Trust Estate to the
Security Insurer or its designee. To effect such deemed assignment, the
Indenture Trustee shall do and perform any reasonable acts and execute any
further instruments resonably requested by the Security Insurer.
SECTION 5.03.
Collection of Indebtedness and Suits for Enforcement by Indenture Trustee;
Authority of the Controlling Party. (a) The Issuer covenants that if (i)
default is made in the payment of any interest on any Note when the same
becomes due and payable, and such default continues for a period of five
days, or (ii) default is made in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable, the Issuer will, upon demand of the Indenture Trustee, pay to it,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on such Notes for principal and interest, with interest on the
overdue principal and, to the extent payment at such rate of interest shall
be legally enforceable, on overdue installments of interest at the rate borne
by the Notes and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel.
(b)
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may (with the consent of the Security Insurer (so long as no Security
Insurer Default shall have occurred and be continuing)) institute a Proceeding
for the collection of the sums so due and unpaid, and may prosecute such
Proceeding to judgment or final decree, and may enforce the same against the
Issuer or other obligor upon such Notes and collect in the manner provided by
law out of the property of the Issuer or other obligor upon such Notes,
wherever situated, the moneys adjudged or decreed to be payable. At any time
when (i) the Security Insurer is the Controlling Party or (ii) (A) the
Security Insurer is the Holder of Notes pursuant to Section 2.08(c) or
Section 5.10 of the Sale and Servicing Agreement and (B) all amounts due to
all other Holders of the Notes pursuant to the Notes and this Indenture have
been paid in full, the Security Insurer may, in its own name, institute any
Proceeding or take any other action permitted under this section to collect
amounts due hereunder from the Issuer or any other obligor on the Notes.
(c)
If an Event of Default occurs and is continuing, the Indenture Trustee may,
as more particularly provided in Section 5.04, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(d)
In case there shall be pending, relative to the Issuer or any other obligor
upon the Notes or any Person having or claiming an ownership interest in the
Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, or liquidator, sequestrator or similar official shall have
been appointed for or taken possession of the Issuer or its property or such
other obligor or Person, or in case of any other comparable judicial
Proceedings relative to the Issuer or other obligor upon the Notes, or to the
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered
but only at the written direction of the Security Insurer if the Security
Insurer is the Controlling Party, by intervention in such Proceedings or
otherwise:
(i)
to file and prove a claim or claims for the whole amount of principal and
interest owing and unpaid in respect of the Notes and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Indenture Trustee,
except as a result of negligence or bad faith) and of the Noteholders
allowed in such Proceedings;
(ii)
unless prohibited by applicable law and regulations, to vote on behalf of
the Holders of Notes in any election of a trustee, a standby trustee or
Person performing similar functions in any such Proceedings;
(iii)
to collect and receive any moneys or other property payable or deliverable
on any such claims and to distribute all amounts received with respect to
the claims of the Noteholders and of the Indenture Trustee on their behalf;
and
(iv)
to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture Trustee
or the Holders of Notes allowed in any Proceedings relative to the Issuer,
its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture
Trustee shall consent to the making of payments directly to such Noteholders,
to pay to the Indenture Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Indenture Trustee, each predecessor Indenture
Trustee and their respective agents, attorneys and counsel, and all other
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee except as a result of
negligence or bad faith.
(e)
Nothing herein contained shall be deemed to authorize the Indenture Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any Noteholder in any
such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar Person.
(f)
All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any Proceedings
relative thereto, and any such Proceedings instituted by the Indenture
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(g)
In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Holders of the Notes, and it shall not be necessary to
make any Noteholder a party to any such Proceedings.
SECTION 5.04.
Remedies; Priorities. (a) If an Event of Default shall have occurred and
be continuing and either (i) a Security Insurer Default shall also have
occurred or (ii) if the Security Insurer is the Controlling Party and the
Security Insurer so directs the Indenture Trustee in writing, the Indenture
Trustee may do one or more of the following (subject to Section 5.05):
(i)
institute Proceedings in its own name and as trustee of an express trust
for the collection of all amounts then payable on the Notes or under this
Indenture with respect thereto, whether by declaration or otherwise, enforce
any judgment obtained and collect from the Issuer and any other obligor upon
such Notes moneys adjudged due;
(ii)
institute Proceedings from time to time for the complete or partial
foreclosure of this Indenture with respect to the Trust Estate;
(iii)
exercise any remedies of a secured party under the UCC and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee and the Holders of the Notes; and
(iv)
sell the Trust Estate or any portion thereof or rights or interest therein,
at one or more public or private sales called and conducted in any manner
permitted by law;
provided, however, that (x) if a Security Insurer Default shall have
occurred, the Indenture Trustee may not sell or otherwise liquidate the Trust
Estate following an Event of Default, other than an Event of Default
described in Section 5.01(i) or (ii), unless (A) the Holders of 100% of the
Outstanding Amount of the Notes consent thereto, (B) the proceeds of such
sale or liquidation distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid upon such Notes for
principal and interest or (C) the Indenture Trustee determines that the Trust
Estate will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of Holders of a majority of the Outstanding Amount of the
Notes, (y) if the Security Insurer is the Controlling Party, the Security
Insurer may not direct the Indenture Trustee, and the Indenture Trustee shall
not comply with any such direction, to sell or otherwise liquidate the
Collateral following an Event of Default unless (1) the conditions set forth
in clause (x) are met or (2) the Security Insurer has paid the Notes in full
under the Policy. In determining such sufficiency or insufficiency with
respect to clause (B) and (C), the Indenture Trustee may, but need not,
obtain and conclusively rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of
such proposed action and as to the sufficiency of the Trust Estate for such
purpose.
(b)
If the Indenture Trustee collects any money or property pursuant to this
Article V, it shall pay out the money or property in the following order:
FIRST:
to the Indenture Trustee for amounts due under Section 6.07;
SECOND:
to Noteholders for amounts due and unpaid on the Notes for interest
(including any premium), ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for interest
(including any premium);
THIRD:
to Holders of the Class A-1 Notes for amounts due and unpaid on the Class
A-1 Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A-1 Notes for
principal, until the Outstanding Amount of the Class A-1 Notes is reduced to
zero;
FOURTH:
to Holders of the Class A-2 Notes for amounts due and unpaid on the Class
A-2 Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A-2 Notes for
principal, until the Outstanding Amount of the Class A-2 Notes is reduced to
zero;
FIFTH:
to the Security Insurer pursuant to Section 5.06(b) of the Sale and
Servicing Agreement and Section 5.10 of the Sale and Servicing Agreement;
and
SIXTH:
pursuant to Section 5.06 of the Sale and Servicing Agreement.
The Indenture Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Noteholder and the Indenture Trustee a
notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.05.
Optional Preservation of the Receivables. If the Indenture Trustee is the
Controlling Party and the Notes have been declared to be due and payable
under Section 5.02 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Indenture Trustee may,
but need not, elect to maintain possession of the Trust Estate. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the Notes,
and the Indenture Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Indenture
Trustee may, but need not, obtain and conclusively rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
SECTION 5.06.
Limitation of Suits. No Holder of any Note shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i)
such Holder has previously given written notice to the Indenture Trustee of
a continuing Event of Default;
(ii)
the Holders of not less than 25% of the Outstanding Amount of the Notes
have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Indenture
Trustee hereunder;
(iii)
such Holder or Holders have offered to the Indenture Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request;
(iv)
the Indenture Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such Proceedings;
(v)
no direction inconsistent with such written request has been given to the
Indenture Trustee during such 60-day period by the Holders of a majority of
the Outstanding Amount of the Notes; and
(vi)
the Indenture Trustee is the Controlling Party.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Notes or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.07.
Unconditional Rights of Noteholders To Receive Principal and Interest.
Notwithstanding any other provisions in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after
the respective due dates thereof expressed in such Note or in this Indenture
(or, in the case of redemption, on or after the Redemption Date) and to
institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.08.
Restoration of Rights and Remedies. If the Indenture Trustee or any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the
Noteholders shall continue as though no such Proceeding had been instituted.
SECTION 5.09.
Rights and Remedies Cumulative. No right or remedy herein conferred upon
or reserved to the Indenture Trustee or to the Noteholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10.
Delay or Omission Not a Waiver. No delay or omission of the Indenture
Trustee, or any Holder of any Note or the Security Insurer to exercise any
right or remedy accruing upon any Default or Event of Default shall impair
any such right or remedy or constitute a waiver of any such Default or Event
of Default or an acquiescence therein. Every right and remedy given by this
Article V or by law to the Indenture Trustee, to the Noteholders or the
Security Insurer may be exercised from time to time, and as often as may be
deemed expedient, by the Indenture Trustee, the Noteholders or the Security
Insurer as the case may be.
SECTION 5.11.
Control by Noteholders. If the Indenture Trustee is the Controlling Party,
the Holders of a majority of the Outstanding Amount of the Notes shall have
the right to direct the time, method and place of conducting any Proceeding
for any remedy available to the Indenture Trustee with respect to the Notes
or exercising any trust or power conferred on the Indenture Trustee; provided
that:
(i)
such direction shall not be in conflict with any rule of law or with this
Indenture;
(ii)
subject to the express terms of Section 5.04, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate shall be by Holders
of Notes representing not less than 100% of the Outstanding Amount of the
Notes;
(iii)
if the conditions set forth in Section 5.05 have been satisfied and the
Indenture Trustee elects to retain the Trust Estate pursuant to such
Section, then any written direction to the Indenture Trustee by Holders of
Notes representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(iv)
the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject
to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially adversely affect
the rights of any Noteholders not consenting to such action.
SECTION 5.12.
Waiver of Past Defaults. Prior to the declaration of the acceleration of
the maturity of the Notes as provided in Section 5.02, at any time when the
Security Insurer is not the Controlling Party, the Holders of Notes of not
less than a majority of the Outstanding Amount of the Notes may waive any
past Default or Event of Default and its consequences except a Default (a) in
payment of principal of or interest on any of the Notes or (b) in respect of
a covenant or provision hereof which cannot be modified or amended without
the consent of the Holder of each Note. In the case of any such waiver, the
Issuer, the Indenture Trustee and the Holders of the Notes shall be restored
to their former positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right
consequent thereto.
SECTION 5.13.
Undertaking for Costs. All parties to this Indenture agree, and each
Holder of a Note by such Holder's acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on
or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14.
Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, or plead or
in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Issuer (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.15.
Action on Notes. The Indenture Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of
any execution under such judgment upon any portion of the Trust Estate or
upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.04(b).
SECTION 5.16.
Performance and Enforcement of Certain Obligations. (a) Promptly
following a request from the Indenture Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller or the Servicer, as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement or the
Receivables Purchase Agreement, as applicable, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale and Servicing Agreement or the
Receivables Purchase Agreement to the extent and in the manner directed by
the Indenture Trustee, including the transmission of notices of default on
the part of the Seller or the Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure
performance by the Seller or the Servicer of each of their obligations under
the Sale and Servicing Agreement or the Receivables Purchase Agreement.
(b)
If an Event of Default has occurred and is continuing at any time when the
Security Insurer is not the Controlling Party, the Indenture Trustee may, and
at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of not less than
a majority of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller or
the Servicer under or in connection with the Sale and Servicing Agreement and
the Receivables Purchase Agreement including the right or power to take any
action to compel or secure performance or observance by the Seller or the
Servicer, as the case may be, of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement and the
Receivables Purchase Agreement, as the case may be, and any right of the
Issuer to take such action shall be suspended.
ARTICLE XXXIII
The Indenture Trustee
SECTION 6.01.
Duties of Indenture Trustee. (a) If an Event of Default has occurred and
is continuing of which a Responsible Officer of the Indenture Trustee has
actual knowledge, the Indenture Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b)
Except during the continuance of an Event of Default:
(i)
the Indenture Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii)
in the absence of bad faith on its part, the Indenture Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Indenture Trustee and conforming to the requirements of this Indenture;
however, the Indenture Trustee shall examine the certificates and opinions
to determine whether or not they conform to the requirements of this
Indenture.
(c)
The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i)
this paragraph does not limit the effect of paragraph (b) of this Section;
(ii)
the Indenture Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer unless it is proved that the Indenture
Trustee was negligent in ascertaining the pertinent facts; and
(iii)
the Indenture Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 5.11.
(d)
Every provision of this Indenture that in any way relates to the Indenture
Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section.
(e)
The Indenture Trustee shall not be liable for interest on any money received
by it except as the Indenture Trustee may agree in writing with the Issuer.
(f)
Money held in trust by the Indenture Trustee need not be segregated from
other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(g)
No provision of this Indenture shall require the Indenture Trustee to expend
or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(h)
Every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i)
In no event shall the Trustee be required to perform, or be responsible for
the manner of performance of, any of the obligations of the Servicer or any
other party under the Sale and Servicing Agreement, except that Harris Trust
and Savings Bank, solely in its capacity as Backup Servicer, shall perform
and be responsible for such obligations during such time, if any, as the
Backup Servicer shall be the successor to, and be vested with the rights,
powers, duties and privileges of, the Servicer in accordance with the terms
of the Sale and Servicing Agreement.
(j)
The Indenture Trustee shall, and hereby agrees that it will, hold the Policy
in trust, and will hold any proceeds of any claim on the Policy in trust
solely for the use and benefit of the Noteholders. The Indenture Trustee
will deliver to the Rating Agency notice of any change made to the Policy
prior to the Termination Date.
For purposes of this Section 6.01 and Section 8.03(c), the Indenture
Trustee, or a Responsible Officer thereof, shall be charged with actual
knowledge of an Event of Default if the Indenture Trustee receives written
notice of such Event of Default from the Issuer, the Servicer, the Backup
Servicer, the Security Insurer or Noteholders owning Notes aggregating not less
than 10% of the Outstanding Amount of the Notes.
SECTION 6.02.
Rights of Indenture Trustee. (a) The Indenture Trustee may conclusively
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate
any fact or matter stated in the document.
(b)
Before the Indenture Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Indenture Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel.
(c)
The Indenture Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d)
The Indenture Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, that the Indenture Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e)
The Indenture Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
SECTION 6.03.
Individual Rights of Indenture Trustee. The Indenture Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.04.
Indenture Trustee's Disclaimer. The Indenture Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Issuer's use
of the proceeds from the Notes, and it shall not be responsible for any
statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the
Indenture Trustee's certificate of authentication.
SECTION 6.05.
Notice of Defaults. If a Default occurs and is continuing and if it is
known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder and the Security Insurer notice of the
Default within 30 days after it occurs. Except in the case of a Default in
payment of principal of or interest on any Note (including payments pursuant
to the mandatory redemption provisions of such Note), the Indenture Trustee
may withhold the notice to Noteholders if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is
in the interests of Noteholders.
SECTION 6.06.
Reports by Indenture Trustee to Holders. The Indenture Trustee shall
deliver to each Noteholder such information as may be required to enable such
holder to prepare its federal and state income tax returns.
SECTION 6.07.
Compensation and Indemnity. The Issuer shall, or shall cause the
Administrator to, pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust.
The Issuer shall, or shall cause the Administrator to, reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee's agents,
counsel, accountants and experts. The Issuer shall, or shall cause the
Administrator to, indemnify the Indenture Trustee against any and all loss,
liability or expense (including attorneys' fees and expenses) incurred by it
in connection with the administration of this trust and the performance of
its duties hereunder or under the Sale and Servicing Agreement. The
Indenture Trustee shall notify the Issuer and the Administrator promptly of
any claim for which it may seek indemnity. Failure by the Indenture Trustee
to so notify the Issuer and the Administrator shall not relieve the Issuer or
the Administrator of its obligations hereunder. The Issuer shall, or shall
cause the Administrator to, defend any such claim, and the Indenture Trustee
may have separate counsel and the Issuer shall, or shall cause the
Administrator to, pay the fees and expenses of such counsel. Neither the
Issuer nor the Administrator need reimburse any expense or indemnify against
any loss, liability or expense incurred by the Indenture Trustee through the
Indenture Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee and the
Administrator's indemnities to the Indenture Trustee pursuant to this Section
shall survive the discharge of this Indenture or the earlier resignation or
removal of the Indenture Trustee. When the Indenture Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01(iv) or (v) with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.08.
Replacement of Indenture Trustee. No resignation or removal of the
Indenture Trustee and no appointment of a successor Indenture Trustee shall
become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee may
resign at any time by so notifying the Issuer and (if the Security Insurer is
the Controlling Party) the Security Insurer. The Holders of a majority in
Outstanding Amount of the Notes may, with the consent of the Controlling
Party, remove the Indenture Trustee by so notifying the Indenture Trustee and
may appoint a successor Indenture Trustee. The Issuer shall, with the
consent of the Controlling Party, and at the request of the Controlling
Party, remove the Indenture Trustee if:
(i)
the Indenture Trustee fails to comply with Section 6.11;
(ii)
the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii)
a receiver or other public officer takes charge of the Indenture Trustee or
its property; or
(iv)
the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the
office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable (if the
Security Insurer is the Controlling Party) to the Security Insurer. If the
Issuer fails to appoint such a successor Indenture Trustee and the Security
Insurer is the Controlling Party, the Security Insurer may appoint a
successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The
retiring Indenture Trustee shall be paid all amounts owed to it upon its
resignation or removal. The successor Indenture Trustee shall mail a notice
of its succession to Noteholders. The retiring Indenture Trustee shall
promptly transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee. The retiring Indenture Trustee shall not be
liable for the acts or omissions of any Successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Security Insurer (if the Security Insurer is the Controlling
Party), the Issuer or the Holders of a majority in Outstanding Amount of the
Notes may petition any court of competent jurisdiction for the appointment of
a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's and the Administrator's obligations under Section 6.07
shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.09.
Successor Indenture Trustee by Merger. If the Indenture Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Indenture Trustee; provided, that such
corporation or banking association shall be otherwise qualified and eligible
under Section 6.11. The Indenture Trustee shall provide the Rating Agencies
prior written notice of any such transaction.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the
certificate of authentication of any predecessor trustee and deliver such
Notes so authenticated; and in case at that time any of the Notes shall not
have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes
or in this Indenture provided that the certificate of the Indenture Trustee
shall have.
SECTION 6.10.
Appointment of Co-Indenture Trustee or Separate Indenture Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any
part of the Trust Estate may at the time be located, the Indenture Trustee,
with the consent of the Security Insurer (if the Security Insurer is the
Controlling Party), shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or co-
trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Trust Estate, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-
trustee or separate trustee shall be required under Section 6.08 hereof.
(b)
Every separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i)
all rights, powers, duties and obligations conferred or imposed upon the
Indenture Trustee shall be conferred or imposed upon and exercised or
performed by the Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Indenture Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Indenture Trustee shall
be incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of title
to the Trust Estate or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Indenture Trustee;
(ii)
no trustee hereunder shall be personally liable by reason of any act or
omission of any other trustee hereunder; and
(iii)
the Indenture Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c)
Any notice, request or other writing given to the Indenture Trustee shall be
deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article VI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Indenture Trustee or separately, as may be provided therein, subject to
all the provisions of this Indenture, specifically including every provision
of this Indenture relating to the conduct of, affecting the liability of, or
affording protection to, the Indenture Trustee. Every such instrument shall
be filed with the Indenture Trustee.
(d)
Any separate trustee or co-trustee may at any time constitute the Indenture
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
SECTION 6.11.
Eligibility; Disqualification. The Indenture Trustee shall at all times
satisfy the requirements of TIA & 310(a). The Indenture Trustee shall have
a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition, and the time deposits of
the Indenture Trustee shall be rated at least A-1 by Standard & Poor's and P-
1 by Moody's. At any time that the Security Insurer is the Controlling
Party, the Indenture Trustee shall provide copies of such reports to the
Security Insurer upon request. The Indenture Trustee shall comply with TIA
& 310(b), including the optional provision permitted by the second sentence
of TIA & 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA & 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA & 310(b)(1) are met.
SECTION 6.12.
Pennsylvania Motor Vehicle Sales Finance Act Licenses. The Indenture
Trustee shall use its best efforts to maintain the effectiveness of all
licenses required under the Pennsylvania Motor Vehicle Sales Finance Act in
connection with this Indenture and the transactions contemplated hereby until
the lien and security interest of this Indenture shall no longer be in effect
in accordance with the terms hereof.
SECTION 6.13.
Preferential Collection of Claims Against Issuer. The Indenture Trustee
shall comply with TIA & 311(a), excluding any creditor relationship listed in
TIA & 311(b). An Indenture Trustee who has resigned or been removed shall be
subject to TIA & 311(a) to the extent indicated.
ARTICLE XXXIV
Noteholders' Lists and Reports
SECTION 7.01.
Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders.
The Issuer will furnish or cause to be furnished to the Indenture Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as the Indenture
Trustee may reasonably require, of the names and addresses of the Holders of
Notes as of such Record Date, and (b) at such other times as the Indenture
Trustee may request in writing, within 30 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more
than 10 days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list
shall be required to be furnished. The Indenture Trustee or, if the
Indenture Trustee is not the Note Registrar, the Issuer shall furnish to the
Security Insurer (if the Security Insurer is the Controlling Party) in
writing on an annual basis and at such other times as the Security Insurer
may request a copy of the list of Noteholders.
SECTION 7.02.
Preservation of Information; Communications to Noteholders. (a) The
Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Indenture Trustee as provided in
Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee
may destroy any list furnished to it as provided in such Section 7.01 upon
receipt of a new list so furnished. The Indenture Trustee shall make such
list available to the Security Insurer (if the Security Insurer is the
Controlling Party) on request, and to the Noteholders upon written request of
three or more Noteholders or one or more Noteholders evidencing not less than
25% of the Outstanding Amount of the Notes.
(b)
Noteholders may communicate pursuant to TIA & 312(b) with other Noteholders
with respect to their rights under this Indenture or under the Notes.
(c)
The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA & 312(c).
SECTION 7.03.
Reports by Issuer. (a) The Issuer shall:
(i)
file with the Indenture Trustee, within 15 days after the Issuer is required
(if at all) to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) that the Issuer may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii)
file with the Indenture Trustee and the Commission in accordance with rules
and regulations prescribed from time to time by the Commission such
additional information, documents and reports with respect to compliance by
the Issuer with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(iii)
supply to the Indenture Trustee (and the Indenture Trustee shall transmit by
mail to all Noteholders described in TIA & 313(c)) such summaries of any
information, documents and reports required to be filed by the Issuer
pursuant to clauses (i) and (ii) of this Section 7.03(a) and by rules and
regulations prescribed from time to time by the Commission.
(b)
Unless the Issuer otherwise determines, the fiscal year of the Issuer shall
end on December 31 of each year.
SECTION 7.04.
Reports by Indenture Trustee. If required by TIA & 313(a), within 60 days
after each February 1 beginning with February 1, 1997, the Indenture Trustee
shall mail to each Noteholder as required by TIA & 313(c) a brief report
dated as of such date that complies with TIA & 313(a). The Indenture Trustee
also shall comply with TIA & 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE XXXV
Accounts, Disbursements and Releases
SECTION 8.01.
Collection of Money. Except as otherwise expressly provided herein, the
Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent
or other intermediary, all money and other property payable to or receivable
by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee
shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default
occurs in the making of any payment or performance under any agreement or
instrument that is part of the Trust Estate, the Indenture Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any
such action shall be without prejudice to any right to claim a Default or
Event of Default under this Indenture and any right to proceed thereafter as
provided in Article V.
SECTION 8.02.
Trust Accounts. (a) On or prior to the Closing Date, the Issuer shall
cause the Servicer to establish and maintain, in the name of the Indenture
Trustee, for the benefit of the Noteholders and the Certificateholders, the
Trust Accounts as provided in Section 5.02 of the Sale and Servicing
Agreement.
(b)
On or before each Distribution Date, the Total Distribution Amount with
respect to the preceding Collection Period will be deposited in the
Collection Account as provided in Section 5.02 of the Sale and Servicing
Agreement. On or before each Distribution Date, all amounts required to be
deposited in the Note Distribution Account with respect to the preceding
Collection Period pursuant to Section 5.05 of the Sale and Servicing
Agreement will be transferred from the Collection Account and/or the Spread
Account to the Note Distribution Account.
(c)
On each Distribution Date and Redemption Date, the Indenture Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid
on the Notes for principal and interest (including any premium) in the
following amounts and in the following order of priority (except as otherwise
provided in Section 5.04(b)):
(i)
accrued and unpaid interest on the Notes; provided, that if there are not
sufficient funds in the Note Distribution Account to pay the entire amount
of accrued and unpaid interest then due on the Notes, the amount in the Note
Distribution Account shall be applied to the payment of such interest on the
Notes pro rata on the basis of the total such interest due on the Notes;
(ii)
to the Holders of the Class A-1 Notes on account of principal until the
Outstanding Amount of the Class A-1 Notes is reduced to zero; and
(iii)
to the Holders of the Class A-2 Notes on account of principal until the
Outstanding Amount of the Class A-2 Notes is reduced to zero.
SECTION 8.03.
General Provisions Regarding Accounts. (a) So long as no Default or
Event of Default shall have occurred and be continuing, all or a portion of the
funds in the Trust Accounts shall be invested in Eligible Investments and
reinvested by the Indenture Trustee (or the investment manager referred to in
the definition of "Eligible Investments" in the Sale and Servicing Agreement)
upon Issuer Order, subject to the provisions of Section 5.02 of the Sale and
Servicing Agreement. All income or other gain from investments of moneys
deposited in the Trust Accounts shall be deposited by the Indenture Trustee
in the Collection Account, and any loss resulting from such investments shall
be charged to such account. The Issuer will not direct the Indenture Trustee
to make any investment of any funds or to sell any investment held in any of
the Trust Accounts unless the security interest Granted and perfected in such
account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b)
Subject to Section 6.01(c), the Indenture Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except
for losses attributable to the Indenture Trustee's failure to make payments
on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance
with their terms.
(c)
If (i) the Issuer (or the Servicer or any investment manager pursuant to
Section 5.02 of the Sale and Servicing Agreement) shall have failed to give
investment directions for any funds on deposit in the Trust Accounts to the
Indenture Trustee by 11:00 a.m. Eastern Time (or such other time as may be
agreed by the Issuer and Indenture Trustee) on any Business Day or (ii) a
Default or Event of Default shall have occurred and be continuing of which a
Responsible Officer of the Indenture Trustee has actual knowledge with
respect to the Notes but the Notes shall not have been declared due and
payable pursuant to Section 5.02 or (iii) if such Notes shall have been
declared due and payable following an Event of Default but amounts collected
or receivable from the Trust Estate are being applied in accordance with
Section 5.05 as if there had not been such a declaration, then the
Controlling Party shall, to the fullest extent practicable, invest and
reinvest funds in the Trust Accounts in one or more Eligible Investments.
SECTION 8.04.
Release of Trust Estate. (a) Subject to the payment of its fees and
expenses pursuant to Section 6.07, the Indenture Trustee may, and when
required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are
not inconsistent with the provisions of this Indenture. No party relying
upon an instrument executed by the Indenture Trustee as provided in this
Article VIII shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any moneys.
(b)
The Indenture Trustee shall, at such time as there are no Notes Outstanding
and all sums due the Indenture Trustee pursuant to Section 6.07 have been
paid and all amounts due to the Security Insurer have been paid, release any
remaining portion of the Trust Estate that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Indenture Trustee shall
release property from the lien of this Indenture pursuant to this
Section 8.04(b) only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA && 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.01.
The Issuer agrees, upon request by the Servicer and representation by the
Servicer that it has complied with the procedure in Section 9.01 of the Sale
and Servicing Agreement, to render the Issuer Request to the Indenture
Trustee in accordance with Section 4.04, and take such other actions as are
required in that Section.
SECTION 8.05.
Opinion of Counsel. The Indenture Trustee shall receive at least seven
days prior written notice when requested by the Issuer to take any action
pursuant to Section 8.04(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture
Trustee, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent
to the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Notes or the rights of
the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to
express an opinion as to the fair value of the Trust Estate. Counsel
rendering any such opinion may rely, without independent investigation, on
the accuracy and validity of any certificate or other instrument delivered to
the Indenture Trustee in connection with any such action.
ARTICLE XXXVI
Supplemental Indentures
SECTION 9.01.
Supplemental Indentures Without Consent of Noteholders. (a) Without the
consent of the Holders of any Notes but with the consent of the Security
Insurer (if the Security Insurer is the Controlling Party) and prior notice
to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized
by an Issuer Order, at any time and from time to time, may enter into one or
more indentures supplemental hereto (which shall conform to the provisions of
the Trust Indenture Act as in force at the date of the execution thereof), in
form satisfactory to the Indenture Trustee, for any of the following
purposes:
(i)
to correct or amplify the description of any property at any time subject
to the lien of this Indenture, or better to assure, convey and confirm unto
the Indenture Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of this Indenture
additional property;
(ii)
to evidence the succession, in compliance with the applicable provisions
hereof, of another person to the Issuer, and the assumption by any such
successor of the covenants of the Issuer herein and in the Notes contained;
(iii)
to add to the covenants of the Issuer, for the benefit of the Holders of
the Notes, or to surrender any right or power herein conferred upon the
Issuer;
(iv)
to convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee;
(v)
to cure any ambiguity, to correct or supplement any provision herein or in
any supplemental indenture that may be inconsistent with any other provision
herein or in any supplemental indenture or to make any other provisions with
respect to matters or questions arising under this Indenture or in any
supplemental indenture; provided, that such action shall not adversely
affect the interests of the Holders of the Notes;
(vi)
to evidence and provide for the acceptance of the appointment hereunder
by a successor trustee with respect to the Notes and to add to or change any
of the provisions of this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to
the requirements of Article VI; or
(vii)
to modify, eliminate or add to the provisions of this Indenture to such
extent as shall be necessary to effect the qualification of this Indenture
under the TIA or under any similar federal statute hereafter enacted and to
add to this Indenture such other provisions as may be expressly required by
the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b)
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with the
consent of the Security Insurer (if the Security Insurer is the Controlling
Party) and prior notice to the Rating Agencies, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the
Notes under this Indenture; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder (including the interests of the Security
Insurer to the extent it is, or will become, upon payment in full of all
amounts due to any other Noteholder hereunder or pursuant to a Note, a
Noteholder pursuant to Section 2.08(c) or Section 5.10 or the Sale and
Servicing Agreement.
SECTION 9.02.
Supplemental Indentures with Consent of Noteholders. The Issuer and the
Indenture Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies and with the consent of (i) the Security
Insurer (if the Security Insurer is the Controlling Party) or (ii) of the
Holders of not less than a majority of the Outstanding Amount of the Notes
(if the Security Insurer is not the Controlling Party), by Act of such
Holders delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(i)
change the date of payment of any installment of principal of or interest
on any Note, or reduce the principal amount thereof, the interest rate
thereon or the Redemption Price with respect thereto, change the provisions
of this Indenture relating to the application of collections on, or the
proceeds of the sale of, the Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair
the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided
in Article V, to the payment of any such amount due on the Notes on or after
the respective due dates thereof (or, in the case of redemption, on or after
the Redemption Date);
(ii)
reduce the percentage of the Outstanding Amount of the Notes, the consent
of the Holders of which is required for any such supplemental indenture, or
the consent of the Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(iii)
modify or alter the provisions of the proviso to the definition of the term
"Outstanding";
(iv)
reduce the percentage of the Outstanding Amount of the Notes required to
direct the Indenture Trustee to direct the Issuer to sell or liquidate the
Trust Estate pursuant to Section 5.04;
(v)
modify any provision of this Section except to increase any percentage
specified herein or to provide that certain additional provisions of this
Indenture or the Basic Documents cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby;
(vi)
modify any of the provisions of this Indenture in such manner as to affect
the calculation of the amount of any payment of interest or principal due on
any Note on any Distribution Date (including the calculation of any of the
individual components of such calculation) or to affect the rights of the
Holders of Notes to the benefit of any provisions for the mandatory
redemption of the Notes contained herein; or
(vii)
permit the creation of any lien ranking prior to or on a parity with the
lien of this Indenture with respect to any part of the Trust Estate or,
except as otherwise permitted or contemplated herein, terminate the lien of
this Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The
Indenture Trustee shall not be liable for any such determination made in good
faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of
such supplemental indenture. Any failure of the Indenture Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
SECTION 9.03.
Execution of Supplemental Indentures. In executing, or permitting the
additional trusts created by, any supplemental indenture permitted by this
Article IX or the modification thereby of the trusts created by this
Indenture, the Indenture Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02, shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but
shall not be obligated to, enter into any such supplemental indenture that
affects the Indenture Trustee's own rights, duties, liabilities or immunities
under this Indenture or otherwise.
SECTION 9.04.
Effect of Supplemental Indenture. Upon the execution of any supplemental
indenture pursuant to the provisions hereof, this Indenture shall be and
shall be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations
of rights, obligations, duties, liabilities and immunities under this
Indenture of the Indenture Trustee, the Issuer and the Holders of the Notes
shall thereafter be determined, exercised and enforced hereunder subject in
all respects to such modifications and amendments, and all the terms and
conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
SECTION 9.05.
Reference in Notes to Supplemental Indentures. Notes authenticated and
delivered after the execution of any supplemental indenture pursuant to this
Article IX may, and if required by the Indenture Trustee shall, bear a
notation in form approved by the Indenture Trustee as to any matter provided
for in such supplemental indenture. If the Issuer or the Indenture Trustee
shall so determine, new Notes so modified as to conform, in the opinion of
the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
SECTION 9.06.
Conformity with Trust Indenture Act. Every amendment of this Indenture and
every supplemental indenture executed pursuant to this Article IX shall
conform to the requirements of the Trust Indenture Act as then in effect so
long as this Indenture shall then be qualified under the Trust Indenture Act.
ARTICLE XXXVII
Redemption of Notes
SECTION 10.01.
Redemption. (a) The Class A-2 Notes are subject to redemption in whole,
but not in part, at the direction of the Servicer pursuant to Section 9.01(a)
of the Sale and Servicing Agreement, on any Distribution Date on which the
Servicer exercises its option to purchase the Trust Estate pursuant to said
Section 9.01(a), for a purchase price equal to the Redemption Price;
provided, that the Issuer has available funds sufficient to pay the
Redemption Price. The Servicer or the Issuer shall furnish the Security
Insurer (if the Security Insurer is the Controlling Party) and the Rating
Agencies notice of such redemption. If the Class A-2 Notes are to be
redeemed pursuant to this Section 10.01(a), the Servicer or the Issuer shall
furnish notice of such election to the Indenture Trustee not later than
20 days prior to the Redemption Date and the Issuer shall deposit by 10:00
A.M. New York City time on the Redemption Date with the Indenture Trustee in
the Note Distribution Account the Redemption Price of the Class A-2 Notes to
be redeemed, whereupon all such Class A-2 Notes shall be due and payable on
the Redemption Date upon the furnishing of a notice complying with
Section 10.02 to each Holder of the Notes.
(b)
In the event that the assets of the Trust are sold pursuant to Section 9.02
of the Trust Agreement, all amounts on deposit in the Note Distribution
Account shall be paid to the Noteholders up to the Outstanding Amount of the
Notes and all accrued and unpaid interest thereon. If amounts are to be paid
to Noteholders pursuant to this Section 10.01(b), the Servicer or the Issuer
shall, to the extent practicable, furnish notice of such event to the
Indenture Trustee not later than 20 days prior to the Redemption Date,
whereupon all such amounts shall be payable on the Redemption Date.
SECTION 10.02.
Form of Redemption Notice. (a) Notice of redemption under
Section 10.01(a) shall be given by the Indenture Trustee by first-class mail,
postage prepaid, or by facsimile mailed or transmitted not later than 10 days
prior to the applicable Redemption Date to each Holder of Notes, as of the
close of business on the Record Date preceding the applicable Redemption
Date, at such Holder's address or facsimile number appearing in the Note
Register.
All notices of redemption shall state:
(i)
the Redemption Date;
(ii)
the Redemption Price; and
(iii)
the place where such Notes are to be surrendered for payment of the
Redemption Price (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture Trustee in
the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair
or affect the validity of the redemption of any other Note.
(b)
Prior notice of redemption under Section 10.01(b) is not required to be
given to Noteholders.
SECTION 10.03.
Notes Payable on Redemption Date. The Notes or portions thereof to be
redeemed shall, following notice of redemption as required by Section 10.02
(in the case of redemption pursuant to Section 10.01(a)), on the Redemption
Date become due and payable at the Redemption Price and (unless the Issuer
shall default in the payment of the Redemption Price) no interest shall
accrue on the Redemption Price for any period after the date to which accrued
interest is calculated for purposes of calculating the Redemption Price.
ARTICLE XXXVIII
Miscellaneous
SECTION 11.01.
Compliance Certificates and Opinions, etc. (a) Upon any application or
request by the Issuer to the Indenture Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (i) an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have
been complied with and (ii) an Opinion of Counsel stating that in the opinion
of such counsel all such conditions precedent, if any, have been complied
with and (iii) (if required by the TIA) an Independent Certificate from a
firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as
to which the furnishing of such documents is specifically required by any
provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1)
a statement that each signatory of such certificate or opinion has read or
has caused to be read such covenant or condition and the definitions herein
relating thereto;
(2)
a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3)
a statement that, in the opinion of each such signatory, such signatory has
made such examination or investigation as is necessary to enable such
signatory to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4)
a statement as to whether, in the opinion of each such signatory, such
condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture,
the Issuer shall, in addition to any obligation imposed in Section 11.01(a)
or elsewhere in this Indenture, furnish to the Indenture Trustee and the
Security Insurer (if the Security Insurer is the Controlling Party) an
Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such
deposit) to the Issuer of the Collateral or other property or securities to
be so deposited.
(ii)
Whenever the Issuer is required to furnish to the Indenture Trustee
and the Security Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Indenture Trustee and the
Security Insurer an Independent Certificate as to the same matters, if the
fair value to the Issuer of the securities to be so deposited and of all
other such securities made the basis of any such withdrawal or release since
the commencement of the then-current fiscal year of the Issuer, as set forth
in the certificates delivered pursuant to clause (i) above and this clause
(ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Issuer as set forth in the
related Officer's Certificate is less than $25,000 or less than one percent
of the Outstanding Amount of the Notes.
(iii)
Whenever any property or securities are to be released from the lien
of this Indenture, the Issuer shall also furnish to the Indenture Trustee
and the Security Insurer (if the Security Insurer is the Controlling Party)
an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and stating
that in the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions hereof.
(iv)
Whenever the Issuer is required to furnish to the Indenture Trustee
and the Security Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Trustee and the
Security Insurer an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property, other
than property as contemplated by clause (v) below or securities released
from the lien of this Indenture since the commencement of the then-current
calendar year, as set forth in the certificates required by clause (iii)
above and this clause (iv), equals 10% or more of the Outstanding Amount of
the Notes, but such certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set forth in
the related Officer's Certificate is less than $25,000 or less than one
percent of the then Out standing Amount of the Notes.
(v)
Notwithstanding Section 4.04 or any other provision of this Section,
the Issuer may, without compliance with the requirements of the other
provisions of this Section, (A) collect, liquidate, sell or otherwise
dispose of Receivables and Financed Vehicles as and to the extent permitted
or required by the Basic Documents and (B) make cash payments out of the
Trust Accounts as and to the extent permitted or required by the Basic
Documents, so long as the Issuer shall deliver to the Indenture Trustee
every six months, commencing December 15, 1997, an Officer's Certificate of
the Issuer stating that all the dispositions of Collateral described in
clauses (A) or (B) above that occurred during the preceding six calendar
months were in the ordinary course of the Issuer's business and that the
proceeds thereof were applied in accordance with the Basic Documents.
SECTION 11.02.
Form of Documents Delivered to Indenture Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or representations by,
an officer or officers of the Servicer, the Seller, the Issuer or the
Administrator, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Seller, the Issuer or the
Administrator, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application
or at the effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application
granted or to the sufficiency of such certificate or report. The foregoing
shall not, however, be construed to affect the Indenture Trustee's right to
rely upon the truth and accuracy of any statement or opinion contained in any
such document as provided in Article VI.
SECTION 11.03.
Acts of Noteholders. (a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be
given or taken by Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in
person or by agents duly appointed in writing; and except as herein otherwise
expressly provided such action shall become effective when such instrument or
instruments are delivered to the Indenture Trustee and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 6.01) conclusive in favor of the Indenture Trustee and the Issuer, if
made in the manner provided in this Section.
(b)
The fact and date of the execution by any person of any such instrument or
writing may be proved in any manner that the Indenture Trustee deems
sufficient.
(c)
The ownership of Notes shall be proved by the Note Register.
(d)
Any request, demand, authorization, direction, notice, consent, waiver or
other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation
of such action is made upon such Note.
SECTION 11.04.
Notices, etc., to Indenture Trustee, Issuer and Rating Agencies. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture shall
be in writing and, if such request, demand, authorization, direction, notice,
consent, waiver or act of Noteholders is to be made upon, given or furnished
to or filed with:
(i)
the Indenture Trustee by any Noteholder or by the Issuer, shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Indenture Trustee at its Corporate Trust Office; or
(ii)
the Issuer by the Indenture Trustee or by any Noteholder, shall be
sufficient for every purpose hereunder if in writing and mailed first-class,
postage prepaid to the Issuer addressed to: First Merchants Auto Trust
1997-1, in care of Chase Manhattan Bank Delaware, 1201 Market Street,
Wilmington, Delaware 19801, Attention of Corporate Trustee Administration
Department, or at any other address previously furnished in writing to the
Indenture Trustee by the Issuer or the Administrator. The Issuer shall
promptly transmit any notice received by it from the Noteholders to the
Indenture Trustee;
(iii)
the Security Insurer shall be sufficient for any purpose hereunder if in
writing and mailed by registered mail or personally delivered or telexed or
faxed to the Security Insurer at: Financial Security Assurance Inc., 350
Park Avenue, New York, New York 10022, Attention: Surveillance Department;
Telex No.: (212) 688-3101, Confirmation: (212) 826-0100; Facsimile Nos.:
(212) 339-3518, (212) 339-3529. (In each case in which notice or other
communication to the Security Insurer refers to an Event of Default, a claim
on the Policy or with respect to which failure on the part of the Security
Insurer to respond shall be deemed to constitute consent or acceptance, then
a copy of such notice or other communication should also be sent to the
attention of the General Counsel and the Head Financial Guaranty Group
"URGENT MATERIAL ENCLOSED".)
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to (i) in
the case of Moody's, at the following address: Moody's Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007
and (ii) in the case of Standard & Poor's, at the following address:
Standard & Poor's Ratings Services, a Division of The McGraw Hill Companies,
Inc., 25 Broadway (15th Floor), New York, New York 10004, Attention of Asset
Backed Surveillance Department; or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
SECTION 11.05.
Notices to Noteholders; Waiver. Where this Indenture provides for notice
to Noteholders of any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class,
postage prepaid to each Noteholder affected by such event, at such Holder's
address as it appears on the Note Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Noteholders is given by mail, neither
the failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event
of Default.
SECTION 11.06.
Alternate Payment and Notice Provisions. Notwithstanding any provision of
this Indenture or any of the Notes to the contrary, the Issuer may enter into
any agreement with any Holder of a Note providing for a method of payment, or
notice by the Indenture Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments
or notices. The Issuer will furnish to the Indenture Trustee a copy of each
such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 11.07.
Effect of Headings and Table of Contents. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 11.08.
Successors and Assigns. All covenants and agreements in this Indenture and
the Notes by the Issuer shall bind its successors and assigns, whether so
expressed or not. All agreements of the Indenture Trustee in this Indenture
shall bind its successors, co-trustees and agents.
SECTION 11.09.
Separability. In case any provision in this Indenture or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.10.
Benefits of Indenture. The Security Insurer and its successors and assigns
shall be third-party beneficiaries to the provisions of this Indenture, and
shall be entitled to rely upon and directly to enforce the provisions of this
Indenture so long as the Security Insurer is the Controlling Party. Nothing
in this Indenture or in the Notes, express or implied, shall give to any
Person, other than the parties hereto, the Security Insurer and their
successors hereunder, and the Noteholders, and any other party secured
hereunder, and any other Person with an ownership interest in any part of the
Trust Estate, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
SECTION 11.11.
Legal Holidays. In any case where the date on which any payment is due
shall not be a Business Day, then (notwithstanding any other provision of the
Notes or this Indenture) payment need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date on which nominally due, and no interest shall accrue for the
period from and after any such nominal date.
SECTION 11.12.
GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13.
Counterparts. This Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
SECTION 11.14.
Recording of Indenture. If this Indenture is subject to recording in any
appropriate public recording offices, such recording is to be effected by the
Issuer and at its expense accompanied by an Opinion of Counsel (which may be
counsel to the Indenture Trustee or any other counsel reasonably acceptable
to the Indenture Trustee) to the effect that such recording is necessary
either for the protection of the Noteholders or any other Person secured
hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
SECTION 11.15.
Trust Obligation. No recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner Trustee or the Indenture
Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer, including the Seller, or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Article VI, VII and VIII of the
Trust Agreement.
SECTION 11.16.
No Petition. The Indenture Trustee, by entering into this Indenture, and
each Noteholder, by accepting a Note, hereby covenant and agree that they
will not at any time institute against the Seller or the Issuer, or join in
any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar
law in connection with any obligations relating to the Notes, this Indenture
or any of the Basic Documents.
SECTION 11.17.
Inspection. The Issuer agrees that, on reasonable prior notice, it will
permit any representative of the Indenture Trustee or of the Security Insurer
(if the Security Insurer is the Controlling Party), during the Issuer's
normal business hours, to examine all the books of account, records, reports
and other papers of the Issuer, to make copies and extracts therefrom, to
cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall, and shall cause its representatives to, hold in confidence all
such information except to the extent disclosure may be required by law (and
all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Indenture Trustee may reasonably determine that
such disclosure is consistent with its obligations hereunder.
SECTION 11.18.
Conflict with Trust Indenture Act. If any provision hereof limits,
qualifies or conflicts with another provision hereof that is required to be
included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA && 310 through 317 that impose duties on any person
(including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
FIRST MERCHANTS AUTO TRUST 1997-1,
by:
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee,
by:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity but solely as
Indenture Trustee,
by:
Name:
Title:
STATE OF NEW YORK
}
} ss.:
COUNTY OF NEW YORK
}
BEFORE ME, the undersigned authority, a Notary Public in and for said county
and state, on this day personally appeared John J. Cashin, known to me to be
the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said FIRST MERCHANTS
AUTO TRUST 1997-1, a Delaware business trust, and that s/he executed the same
as the act of said business trust for the purpose and consideration therein
expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 31st
day of March, 1997.
Notary Public in and for the State of New York.
My commission expires:
________________________________________________
STATE OF NEW YORK
}
} ss.:
COUNTY OF NEW YORK
}
BEFORE ME, the undersigned authority, a Notary Public in and for said county
and state, on this day personally appeared ______________________, known to
me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of HARRIS TRUST
AND SAVINGS BANK, an Illinois banking corporation, and that s/he executed the
same as the act of said corporation for the purpose and consideration therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _____ day of March, 1997.
Notary Public in and for the State of New York.
My commission expires:
________________________________________
SCHEDULE A
[To be Provided on the Closing Date]
EXHIBIT A-1
[FORM OF CLASS A-1 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK,
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.<PAGE>
REGISTERED$
No. R- CUSIP NO. 32081YAL4
FIRST MERCHANTS AUTO TRUST 1997-1
FLOATING RATE ASSET BACKED NOTE, CLASS A-1
FIRST MERCHANTS AUTO TRUST 1997-1, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to ______________________, or
registered assigns, the principal sum of [ ] DOLLARS, payable on
each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $ [INSERT INITIAL
PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $68,000,000 by
(ii) the aggregate amount, if any, payable from the Note Distribution Account
in respect of principal on the Class A-1 Notes pursuant to Section 3.01 of
the Indenture dated as of March 1, 1997 (the "Indenture"), between the Issuer
and Harris Trust and Savings Bank, an Illinois banking corporation, as
Indenture Trustee (the "Indenture Trustee"); provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on
aUGUST 15, 2000 (the "Class A-1 Final Scheduled Distribution Date").
Capitalized terms used but not defined herein are defined in the Indenture,
which also contains rules as to construction that shall be applicable herein.
The Issuer will pay interest on this Note at a rate per annum equal to LIBOR
plus 0.13%, subject to a maximum rate of 11.0% per annum, on each
Distribution Date until the principal of this Note is paid or made available
for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), subject to certain limitations
contained in Section 3.01 of the Indenture. LIBOR for each Floating Rate
Interest Accrual Period and related Distribution Date will be determined on
the related LIBOR Determination Date by the Calculation Agent as set forth in
Section 2.14 of the Indenture. All determinations of LIBOR by the
Calculation Agent shall, in the absence of manifest error, be conclusive for
all purposes, and each Holder of this Note, by accepting a Class A-1 Note,
agrees to be bound by such determination. Interest on this Note will accrue
for each Distribution Date from the Closing Date (in the case of the first
Distribution Date) or from the most recent Distribution Date on which
interest has been paid to but excluding such Distribution Date. Interest
will be computed on the basis of the actual number of days in each Floating
Rate Interest Accrual Period divided by 360. Such principal of and interest
on this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of
this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Policy") issued by Financial Security Assurance, Inc. ("the
Security Insurer"), pursuant to which the Security Insurer has
unconditionally guaranteed payments of the Noteholders' Interest
Distributable Amount and the Noteholders' Principal Distributable Amount on
each Distribution Date (collectively, the "Scheduled Payment"), all as more
fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date:
FIRST MERCHANTS AUTO TRUST 1997-1,
by:
CHASE MANHATTAN BANK DELAWARE, not in its individual
capacity but solely as Owner
Trustee under the Trust Agreement,
by: _________________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date:
HARRIS TRUST AND SAVINGS BANK, not in its individual capacity but solely as
Indenture Trustee,
by: _________________________________
Authorized Signatory REVERSE OF CLASS A-1 NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Asset Backed Notes, Class A-1 (herein called
the "Class A-1 Notes"), all issued under the Indenture, to which Indenture
and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer,
the Indenture Trustee and the Holders of the Notes. The Class A-1 Notes are
subject to all terms of the Indenture.
The Class A-1 Notes and the Class A-2 Notes (collectively, the "Notes") are
and will be secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Distribution Date in
an amount described on the face hereof. "Distribution Date" means the 15th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing April 15, 1997.
As described above, the entire unpaid principal amount of this Note shall be
due and payable on the Class A-1 Final Scheduled Distribution Date. Notwith-
standing the foregoing, (i) if an Event of Default occurs at a time when no
Security Insurer Default has occurred under the Policy, the Security Insurer
may elect either to continue to make Scheduled Payments on the Notes or to
make one or more accelerated payments on the Notes and (ii) if an Event of
Default occurs at any time after a Security Insurer Default has occurred
under the Policy, the Indenture Trustee or the Holders of Notes representing
not less than a majority of the Outstanding Amount of the Notes have declared
the Notes to be immediately due and payable in the manner provided in
Section 5.02 of the Indenture. All principal payments on the Class A-1 Notes
shall be made pro rata to the Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds
to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on
the Note Register as of the applicable Record Date without requiring that
this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected
by any payments made on any Distribution Date shall be binding upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture,
for payment in full of the then remaining unpaid principal amount of this
Note on a Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Distribution Date by notice
mailed or transmitted by facsimile prior to such Distribution Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-1 Rate to the extent lawful.
As provided in the Indenture and subject to the limitations set forth therein
and on the face hereof, the transfer of this Note may be registered on the
Note Register upon surrender of this Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating
to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Security Insurer and any agent of the
Issuer, the Indenture Trustee or the Security Insurer may treat the Person in
whose name this Note (as of the day of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and none of the Issuer,
the Indenture Trustee, the Security Insurer or any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Security Insurer and the Holders
of Notes representing a majority of the Outstanding Amount of all Notes at
the time Outstanding. The Indenture also contains provisions permitting the
Holders of Notes representing specified percentages of the Outstanding Amount
of the Notes, on behalf of the Holders of all the Notes, to waive compliance
by the Issuer with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one or more Predecessor Notes)
shall be conclusive and binding upon such Holder and upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof
or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture with the consent of the Security Insurer but without the
consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws of
the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly provided
in the Basic Documents, none of Chase Manhattan Bank Delaware in its
individual capacity, Harris Trust and Savings Bank in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal of or interest on this Note
or performance of, or omission to perform, any of the covenants, obligations
or indemnifications contained in the Indenture. The Holder of this Note by
its acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.
<PAGE> ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
__________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
___________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________________________, attorney, to
transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:
*/
Signature Guaranteed:
*/
________________________
*/
NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
EXHIBIT A-2
[FORM OF CLASS A-2 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK,
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.<PAGE>REGISTERED$
No. R- CUSIP NO. 32081YAM2
FIRST MERCHANTS AUTO TRUST 1997-1
6.75% ASSET BACKED NOTE, CLASS A-2
FIRST MERCHANTS AUTO TRUST 1997-1, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to ______________________, or
registered assigns, the principal sum of [ ] DOLLARS, payable on
each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $ [INSERT INITIAL
PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $29,595,000 by
(ii) the aggregate amount, if any, payable from the Note Distribution Account
in respect of principal on the Class A-2 Notes pursuant to Section 3.01 of
the Indenture dated as of March 1, 1997 (the "Indenture"), between the Issuer
and Harris Trust and Savings Bank, an Illinois banking corporation, as
Indenture Trustee (the "Indenture Trustee"); provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on the
earlier of December 17, 2001 (the "Class A-2 Final Scheduled Distribution
Date") and the Redemption Date, if any, pursuant to Section 10.01(a) of the
Indenture. No payments of principal of the Class A-2 Notes shall be made
until the Class A-1 Notes have been paid in full. Capitalized terms used but
not defined herein are defined in the Indenture, which also contains rules as
to construction that shall be applicable herein.
The Issuer will pay interest on this Note at the rate per annum set forth
above, on each Distribution Date until the principal of this Note is paid or
made available for payment, on the principal amount of this Note outstanding
on the preceding Distribution Date (after giving effect to all payments of
principal made on the preceding Distribution Date), subject to certain
limitations contained in Section 3.01 of the Indenture. Interest on this Note
will accrue for each Distribution Date from and including the 15th day of the
month preceding the month of such Distribution Date (in the case of the first
Distribution Date, from the Closing Date) to but excluding the 15th day of
the month of such Distribution Date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Such principal of and interest on
this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of
this Note.
The Notes are entitled to the benefits of a financial guaranty insurance
policy (the "Policy") issued by Financial Security Assurance, Inc. ("the
Security Insurer"), pursuant to which the Security Insurer has
unconditionally guaranteed payments of the Noteholders' Interest
Distributable Amount and the Noteholders' Principal Distributable Amount on
each Distribution Date (collectively, the "Scheduled Payment"), all as more
fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
<PAGE> IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer, as of the date set forth
below.
Date:
FIRST MERCHANTS AUTO TRUST 1997-1,
by:
CHASE MANHATTAN BANK DELAWARE, not in its individual
capacity but solely as Owner
Trustee under the Trust Agreement,
by: _________________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
Date:
HARRIS TRUST AND SAVINGS BANK, not in its individual capacity but solely as
Indenture Trustee,
by: _________________________________
Authorized Signatory <PAGE> REVERSE OF CLASS A-2 NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 6.75% Asset Backed Notes, Class A-2 (herein called the
"Class A-2 Notes"), all issued under the Indenture, to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Holders of the Notes. The Class A-2 Notes are
subject to all terms of the Indenture.
The Class A-1 Notes and the Class A-2 Notes (collectively, the "Notes") are
and will be secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Distribution Date in
an amount described on the face hereof. "Distribution Date" means the 15th
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing April 15, 1997.
As described above, the entire unpaid principal amount of this Note shall be
due and payable on the earlier of the Class A-2 Final Scheduled Distribution
Date and the Redemption Date, if any, pursuant to Section 10.01(a) of the
Indenture. Section 10.01(a) of the Indenture provides that the Class A-2
Notes may be redeemed in whole, but not in part, at the option of the
Servicer (with the consent of the Security Insurer under certain
circumstances), on any Distribution Date on or after the date on which the
Outstanding Amount of the Notes is less than or equal to 10% of the original
Outstanding Amount of the Notes. Notwithstanding the foregoing, (i) if an
Event of Default occurs at a time when no Security Insurer Default has
occurred under the Policy, the Security Insurer may elect either to continue
to make Scheduled Payments on the Notes or to make one or more accelerated
payments on the Notes and (ii) if an Event of Default occurs at any time
after a Security Insurer Default has occurred under the Policy, the Indenture
Trustee or the Holders of Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.02 of the Indenture. All
principal payments on the Class A-1 Notes shall be made pro rata to the
Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds
to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on
the Note Register as of the applicable Record Date without requiring that
this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected
by any payments made on any Distribution Date shall be binding upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture,
for payment in full of the then remaining unpaid principal amount of this
Note on a Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, will notify the Person who was the Registered Holder
hereof as of the Record Date preceding such Distribution Date by notice
mailed or transmitted by facsimile prior to such Distribution Date, and the
amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Rate to the extent lawful.
As provided in the Indenture and subject to the limitations set forth therein
and on the face hereof, the transfer of this Note may be registered on the
Note Register upon surrender of this Note for registration of transfer at the
office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under the Indenture or any certificate or other writing delivered in
connection therewith, against (i) the Indenture Trustee or the Owner Trustee
in its individual capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Indenture Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees by
accepting the benefits of the Indenture that such Noteholder or Note Owner
will not at any time institute against the Issuer, or join in any institution
against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating
to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note is issued with the
intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and
each Note Owner by acceptance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee, the Security Insurer and any agent of the
Issuer, the Indenture Trustee or the Security Insurer may treat the Person in
whose name this Note (as of the day of determination or as of such other date
as may be specified in the Indenture) is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and none of the Issuer,
the Indenture Trustee, the Security Insurer or any such agent shall be
affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Security Insurer and the Holders
of Notes representing a majority of the Outstanding Amount of all Notes at
the time Outstanding. The Indenture also contains provisions permitting the
Holders of Notes representing specified percentages of the Outstanding Amount
of the Notes, on behalf of the Holders of all the Notes, to waive compliance
by the Issuer with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note (or any one or more Predecessor Notes)
shall be conclusive and binding upon such Holder and upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof
or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture with the consent of the Security Insurer but without the
consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws of
the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and
thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly provided
in the Basic Documents, none of Chase Manhattan Bank Delaware in its
individual capacity, Harris Trust and Savings Bank in its individual
capacity, any owner of a beneficial interest in the Issuer, or any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal of or interest on this Note
or performance of, or omission to perform, any of the covenants, obligations
or indemnifications contained in the Indenture. The Holder of this Note by
its acceptance hereof agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be
taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.<PAGE> ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
__________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
___________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________________________________, attorney, to
transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:
*/
Signature Guaranteed:
*/
________________________
*/
NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee program" as may
be determined by the Note Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.<PAGE>
EXHIBIT B
FORM OF NOTE DEPOSITORY AGREEMENT
