<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                  FORM 10-K/A1

(MARK ONE)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                      FOR THE YEAR ENDED DECEMBER 31, 1996

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

              FOR THE TRANSITION PERIOD FROM ________ TO ________

                         COMMISSION FILE NUMBER 0-24686

                     FIRST MERCHANTS ACCEPTANCE CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)

           DELAWARE                                      36-3759045 
(State or Other Jurisdiction of               (IRS Employer Identification No.)
 Incorporation or Organization

            570 Lake Cook Road
                Suite 126
           Deerfield, Illinois                                   60015 
(Address of Principal Executive Offices)                      (Zip Code)

Registrant's Telephone Number, Including Area Code:          (847) 948-9300

Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities Registered Pursuant to Section 12(g) of the Act   Common Stock, 
                                                             $.01 par value

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such
<PAGE>   2

shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                            Yes   X         No  
                                 ---            ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

     The aggregate market value of the Registrant's voting Common Stock (based
on the closing price of such shares on the Nasdaq Stock Market's National
Market on April 24, 1997) held by non-affiliates was approximately $11,100,000.
Common Stock held by each officer and director and each person who owns 5% or
more of the outstanding Common Stock has been excluded in that such persons may
be deemed affiliates.  This determination of affiliate status is not
necessarily a conclusive determination for other purposes.

     On April 24, 1997, the following number of shares of the Company's capital
stock were outstanding:

                Common Stock               6,396,519
                Class B Common Stock       None

Portions of the Annual Report to Stockholders for the year ended December 31,
1996 are incorporated by reference into Part II in this report.




                                      -2-
<PAGE>   3

     This Annual Report on Form 10-K/A1 is intended to amend certain
information contained in the Annual Report on Form 10-K of First Merchants
Acceptance Corporation (the "Company") for the year ended December 31,1996. As
previously disclosed in a Current Report on Form 8-K dated April 16, 1997, the
Company discovered irregularities involving unauthorized entries made in the
Company's financial records and expects that it will restate its previously
reported results for 1996.  The Company expects to file with the Securities and
Exchange Commission (the "Commission") an additional amendment to this Form
10-K to reflect the results of the restatement.  The Company also anticipates
scheduling the date of its 1997 Annual Meeting of Stockholders in the near
future.

ITEM 3.    LEGAL PROCEEDINGS

     On August 27, 1996, a purported class action entitled Mercedes Hoffman v.
Grossinger Motor Corp. and First Merchants Acceptance Corporation was filed in
the United States District Court for the Northern District of Illinois.  The
complaint, as amended on September 27, 1996 ("Complaint"), alleges violations
of certain Federal and Illinois consumer protection statutes and RICO and seeks
unspecified damages.  The Company believes that certain material allegations in
the Complaint are incorrect and that it has meritorious defenses to the claims
made in the Complaint.  The Company intends to vigorously defend this action.

     Between April 18, 1997 and  April 25, 1997, the Company and certain of its
directors and former officers were named as defendants in seven purported class
actions filed in the United States District Court for the Northern District of 
Illinois, entitled respectively: Milton Castillo, Jr. and Chris Vines v. 
Mitchell C. Kahn, Thomas R. Ehmann, and First Merchants Acceptance Corporation;
Samuel Zucker v. First Merchants Acceptance Corporation and Mitchell C. Kahn; 
Harry Lax v. First Merchants Acceptance Corporation, Mitchell Kahn, Thomas 
Ehmann and Paul Van Eyl; Jared Hershkowitz v. Mitchell Kahn, Thomas Ehmann, 
Paul Van Eyl and First Merchants Acceptance Corporation; Sanders Family 
Partners v. First Merchants Acceptance Corp., Mitchell C. Kahn, Thomas Ehmann 
and Paul Van Eyl; Howard Hertzberg v. First Merchants Acceptance Corp., 
Mitchell C. Kahn, Thomas Ehmann and Paul Van Eyl; and Robert Miller v. First 
Merchants Acceptance Corp., Mitchell Kahn, Thomas Ehmann, Paul Van Eyl, Marcy 
H. Shockey, Solomon A. Weisgal and Stowe W. Wyant.  Each of the lawsuits 
generally alleges that the Company issued false and misleading financial 
statements and press releases concerning the Company's income and earnings in 
violation of Section 10 of the Securities Exchange Act of 1934 and Rule 10b-5 
promulgated thereunder.  The actions seek unspecified damages.  The Company is 
investigating the allegations set forth in the complaints.

     No assurances can be given as to the outcome of the litigation referred to
above or the effects of such litigation on the financial condition or future
results of operations of the Company.  The Company is also involved from time
to time in other litigation incidental to its business.

EXECUTIVE OFFICERS OF THE REGISTRANT

    As previously disclosed in a Current Report on Form 8-K dated April 16,
1997, the Board of Directors terminated the employment of Mitchell C. Kahn,
President and Chief Executive Officer, Thomas R. Ehmann, Vice President and
Chief Information Officer (formerly Vice President and Chief Financial
Officer), and Paul M. Van Eyl, Vice President-Strategic Planning, for cause on
April 16, 1997.  The current executive officers of the Company, their ages and
their present positions with the Company are as follows:



                                      -3-
<PAGE>   4


<TABLE>
<CAPTION>

Name                                       Age     Position and Offices Held

<S>                                        <C>    <C>
William N. Plamondon  . . . . . . . .       49     Co-President and Co-Chief Executive
                                                   Officer, Director

Richard J. Uhl  . . . . . . . . . . .       56     Co-President and Co-Chief Executive
                                                   Officer, Director

John R. Griggs  . . . . . . . . . . .       47     Executive Vice President
                                                   and Chief Operating
                                                   Officer--Dealer Financial
                                                   Services Division

Norman Smagley  . . . . . . . . . . .       38     Senior Vice President and Chief Financial Officer

Alan J. Appelman  . . . . . . . . . .       39     Senior Vice President

V. Wayne Carlson  . . . . . . . . . .       49     Senior Vice President

Craig Adams . . . . . . . . . . . . .       37     Vice President

S. Mark Floyd . . . . . . . . . . . .       44     Vice President

Brian W. Hausmann . . . . . . . . . .       41     Vice President

Allen D. Rice . . . . . . . . . . . .       41     Vice President

Richard P. Vogelman . . . . . . . . .       54     Vice President
</TABLE>

         Mr. Plamondon was elected as Co-President and Co-Chief Executive
Officer of the Company on April 16, 1997 on an interim basis and has served as
a director of the Company since March 1995.  From June 1992 to February 1997,
Mr. Plamondon was the President of Budget Rent A Car Corporation and held
various other managerial positions within Budget Rent A Car Corporation from
1978 to 1992.  He serves on the board of directors for the International
Franchise Association, the American Car Rental Association and North Central
College in Lisle, Illinois.

         Mr. Uhl was elected as Co-President and Co-Chief Executive Officer of
the Company on April 16, 1997 on an interim basis and has served as a director
of the Company since May 1991.  Mr. Uhl is the President and a director of
Chicago Holdings, Inc. ("CHI"), having held these positions since December
1985.  CHI is a privately owned company engaged in the management of owned
lease portfolios and investments in operating companies.  Finance Acquisition
Corp. ("FAC"), a wholly-owned subsidiary of CHI, has an ownership interest in
the Company.  Mr. Uhl served as a director of ALC Communications Corporation
from September 1991 until its merger with Frontier Corporation.  Since August
1995, Mr.  Uhl has been a director of Frontier Corporation.  In November 1990,
Mr. Uhl became the Chief Executive Officer and a director of Hurrah Stores,
Inc. and Chairman and Chief Executive Officer of its wholly owned subsidiary,
Retail Holdings Group, Inc. ("RHG"), a retailer of discount woman's clothing.
RHG filed a petition under Chapter 11 of the United States Bankruptcy



                                      -4-
<PAGE>   5

Code on January 14, 1993, and the bankruptcy court approved its plan of
liquidation on July 12, 1995.  Mr. Uhl has also been President of Steiner
Financial Corporation since December 1987.  Since November 1993, he has served
as the Chairman of the Board of Directors of DACC Liquidation Corp. (formerly
known as Dealers Alliance Credit Corp.).  Since August 1995, Mr. Uhl has served
as Chairman of the Board of Directors of Business Alliance Capital Corp., an
asset based lender to small and medium sized businesses.

         Mr. Griggs joined the Company as Executive Vice President and Chief
Operating Officer -- Dealer Financial Services Division in March 1997.  He
served as Senior Vice President and Manager of National Operations of Bank One
Credit Company, a national indirect financing company, primarily of
automobiles, from April 1996 to April 1997.  From 1986 to 1996, Mr. Griggs held
various positions at Household International, a diversified consumer lender,
including Division General Manager and Senior Vice President.  From 1980 to
1986, he worked for Citicorp Acceptance Company, a national indirect financing
company, and last held the title Chief Financial Officer and Vice President of
Operations.

         Mr. Smagley joined the Company in February 1997 as Senior Vice
President and Chief Financial Officer.  He served as Vice President -- Finance
and Chief Financial Officer of Trans Leasing International, Inc., a lessor of
medical and office technology equipment, from 1994 to 1997.  Mr. Smagley was
employed in several financial management positions with firms in the
pharmaceutical, financial services and energy fields from 1981 to 1993.

         Mr. Appelman joined the Company in August 1995 as Vice President --
Operations Development and was named Vice President -- Risk Management in
August 1996 and Senior Vice President and Chief Credit Officer in March 1997.
From October 1990 to August 1995, Mr. Appelman held various operation analysis
positions, including Manager -- Operations and Portfolio Analysis, at Hyundai
Motor Finance Company.  From 1981 to 1988, Mr. Appelman held various positions,
including Staff Vice President, at Citicorp.

         Mr. Carlson joined the Company in April 1997 as Senior Vice President
- Human Resources.  From December 1992 to April 1997, Mr. Carlson was President
of The Carlson Leadership Trust, Inc., an organizational and manpower
development consulting firm.  From February 1989 to January 1994, he held
various managerial positions with Amersham Corporation, a health science
company, and its affiliates, including Vice President of Human Resources and
General Manager/Chief Operating Officer of its diagnostic division.

         Mr. Adams was named Vice President -- Account Services in March 1997.
He joined the Company in August 1996 as Manager -- Portfolio Analysis and was
named Manager -- Account Services in September 1996.  Mr. Adams held several
positions in credit management with Sears, Roebuck and Company from 1986 to
1996.

         Mr. Floyd joined the Company in June 1996 as Vice President --
Financial Institutions Group.  From April 1990 to June 1996, Mr. Floyd was
President and Principal of National Asset Placement Corporation, a private
company engaged in purchasing and servicing loan portfolios.  From April 1979



                                      -5-
<PAGE>   6

to April 1990, he was employed in various management positions with several
banks in Texas.

         Mr. Hausmann joined the Company in June 1991 as Vice President --
Operations and was named Vice President -- Automotive Credit Group in August
1996.  From March 1989 to March 1991, Mr. Hausmann served as Vice President and
Chief Operating Officer of First Credit Corporation, a consumer finance company
specializing in the purchase of home improvement sales finance receivables.

         Mr. Rice joined the Company in March 1995 as Vice President -- Sales
and Marketing and was named Vice President -- First Merchants Capital Ltd. in
March 1997.  From January 1990 to March 1995, Mr. Rice was founder and
President of Aegis International, an international consulting firm specializing
in marketing and sales.

         Mr. Vogelman has served as Vice President, General Counsel and
Secretary of the Company since July 1995.  From June 1969 to March 1995, Mr.
Vogelman held various positions in the Investment Law Division of Allstate
Insurance Company, including Assistant Vice President and Assistant General
Counsel during the period from January 1987 to March 1995.

                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by Item 401 of Regulation S-K relating to the
directors of the Company is set forth below.  The information required by Item
401 of Regulation S-K relating to the executive officers of the Company is
furnished in a separate item captioned "Executive Officers of the Registrant"
in Part I of this report.

BOARD OF DIRECTORS OF THE REGISTRANT

         On April 16, 1997, the Board of Directors terminated the employment of
Mitchell C. Kahn, President and Chief Executive Officer, for cause and Mr. Kahn
resigned as a member of the Board of Directors of the Company.  On April 16,
1997, the Board of Directors amended the bylaws of the Company to, among other
things, reduce the number of directors from seven to six.  The current
directors of the Company, their ages and their present positions with the
Company are as follows:


Name                                    Age         Positions and Offices Held

William N. Plamondon  . . . . .          49         Co-President and Co-Chief
                                                    Executive Officer, Director

Richard J. Uhl  . . . . . . . .          56         Co-President and Co-Chief
                                                    Executive Officer, Director

Thomas A. Hiatt . . . . . . . .          49         Director

Marcy H. Shockey  . . . . . . .          44         Director



                                      -6-
<PAGE>   7

Name                                    Age         Positions and Offices Held

Solomon A. Weisgal  . . . . . .          70         Director

Stowe W. Wyant  . . . . . . . .          72         Director

         Mr. Plamondon was elected as Co-President and Co-Chief Executive
Officer of the Company on April 16, 1997 on an interim basis and has served as
a director of the Company since March 1995.  From June 1992 to February 1997,
Mr. Plamondon was the President of Budget Rent A Car Corporation and held
various other managerial positions within Budget Rent A Car Corporation from
1978 to 1992.  He serves on the board of directors for the International
Franchise Association, the American Car Rental Association and North Central
College in Lisle, Illinois.

         Mr. Uhl was elected as Co-President and Co-Chief Executive Officer of
the Company on April 16, 1997 on an interim basis and has served as a director
of the Company since May 1991.  Mr. Uhl is the President and a director of CHI,
having held these positions since December 1985.  CHI is a privately owned
company engaged in the management of owned lease portfolios and investments in
operating companies.  FAC, a wholly- owned subsidiary of CHI, has an ownership
interest in the Company.  Mr. Uhl served as a director of ALC Communications
Corporation from September 1991 until its merger with Frontier Corporation.
Since August 1995, Mr. Uhl has been a director of Frontier Corporation.  In
November 1990, Mr. Uhl became the Chief Executive Officer and a director of
Hurrah Stores, Inc. and Chairman and Chief Executive Officer of its wholly
owned subsidiary, RHG, a retailer of discount woman's clothing.  RHG filed a
petition under Chapter 11 of the United States Bankruptcy Code on January 14,
1993, and the bankruptcy court approved its plan of liquidation on July 12,
1995.  Mr. Uhl has also been President of Steiner Financial Corporation since
December 1987.  Since November 1993, he has served as the Chairman of the Board
of Directors of DACC Liquidation Corp. (formerly known as Dealers Alliance
Credit Corp.).  Since August 1995, Mr. Uhl has served as Chairman of the Board
of Directors of Business Alliance Capital Corp., an asset based lender to small
and medium sized businesses.

         Mr. Hiatt has served as a director of the Company since May 1991.
Since 1988, Mr. Hiatt has been a general partner of Middlewest Management
Company L.P. ("MMC").  MMC is the general partner of Middlewest Ventures II,
L.P. ("MW"), a provider of venture capital that manages risk capital for a
number of institutional investors.  Mr. Hiatt is also a general partner of
Middlewest Partners, the general partner of Middlewest Ventures, L.P., a
venture capital firm with similar investment objectives as MW, which he
co-founded in 1985.  Mr. Hiatt has served as a director of PowerWay, Inc., a
software company, since May 1987 and as a director of Fifth Third Bank of
Central Indiana since August 1990.  In addition, Mr. Hiatt has served as a
director of Express Shipping Centers, Inc., a provider of UPS shipping services
through supermarkets, since February 1992 and as a director of Bioanalytical
Systems, Inc., a provider of advanced instrumentation and research services,
since December 1994.

         Ms. Shockey has served as a director of the Company since May 1991.
Ms. Shockey has been



                                      -7-
<PAGE>   8

a general partner of MMC, which is the general partner of MW, since February
1988.  Ms. Shockey has served as a director of Impath Laboratories, Inc. since
May 1994 and has served as a director of LNS Group, Inc. since August 1991.  In
addition, Ms. Shockey has served as a director of West-tech Corporation since
September 1990.  From February 1981 until February 1988, Ms. Shockey was an
investment manager specializing in early stage investments for the venture
capital division of Allstate Insurance Company.

         Mr. Weisgal has served as a director of the Company since February
1993.  Mr. Weisgal is a Certified Public Accountant and has been the President
of Solomon A. Weisgal, Ltd., a financial consulting firm, since its inception
in August 1979.  Mr. Weisgal has served as a director of CHI since its
inception in December 1985.  Mr. Weisgal has served as a director of Walnut
Capital Corp., a small business investment corporation specializing in early
stage venture capital investments, since its inception in March 1984 and has
served as a director of Walnut Financial Services, Inc., a publicly held
financial service company, since February 1995.  From June 1985 until March
1994, Mr. Weisgal served as a director of Oxford Consolidated, Inc.

         Mr. Wyant has served as a director of the Company since May 1994.
From May 1982 to July 1986, Mr. Wyant was the Director of Diversified
Operations of BA Financial, a division of Barclays American Corporation, a
diversified finance company.  Mr. Wyant retired from BA Financial in July 1986.
From June 1973 to April 1982, Mr. Wyant served in various positions for
American Credit Corporation and its successor, Barclays American Corporation,
including Division Manager and Senior Vice President, and Area Director and
Corporate Vice President.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and beneficial owners (collectively,
the "Reporting Persons") of more than ten percent of the Company's common
stock, par value $.01 per share ("Common Stock"), to file reports of ownership
and changes in ownership with the Commission and the Nasdaq Stock Market.  The
Company believes that during 1996 the Reporting Persons complied with all
applicable Section 16(a) filing requirements.  This conclusion is based solely
upon a review of copies of such forms furnished to the Company in accordance
with regulations of the Commission and certain written representations received
by the Company.

ITEM 11:         EXECUTIVE COMPENSATION

         The following table sets forth certain summary information for the
years indicated concerning the compensation awarded to, earned by, or paid to
the Chief Executive Officer and the other four most highly compensated
executive officers of the Company (based on combined salary and bonus for 1996)
(collectively, the "Named Executives").



                                      -8-
<PAGE>   9
                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                                                            LONG TERM 
                                                                                                         COMPENSATION
                                                                                                               AWARDS
                                                             ANNUAL COMPENSATION                           SECURITIES
                                                             --------------------        OTHER ANNUAL      UNDERLYING
NAME AND PRINCIPAL POSITIONS                    YEAR         SALARY($)    BONUS($)(a) COMPENSATION($)(b)   OPTIONS(#)
----------------------------                    ----         -------      -------     -----------------    ---------
<S>                                            <C>          <C>           <C>           <C>                <C> 
Alan J. Appelman  . . . . . . . . . . . . .     1996         149,492       35,000                             5,000 
   Senior Vice President and                    1995          35,597(c)    18,000(c)                             --
   Chief Credit Officer                         1994              --           --                                --

Brian W. Hausmann   . . . . . . . . . . . .     1996         140,230       20,000                             8,000 
   Vice President -- Automotive                 1995         123,333       40,000                             8,000
   Credit Group                                 1994         109,833       50,000                                --

Allen D. Rice   . . . . . . . . . . . . . .     1996         157,183       35,000                             7,000 
   Vice President -- First Merchants Capital    1995          92,244(c)    32,000                             4,000 
   Ltd.                                         1994              --           --                                --

Mitchell C. Kahn (d)  . . . . . . . . . . .     1996         236,193       80,000                           200,000(e) 
   President and Chief Executive Officer        1995         187,500       70,000          56,672(f)             --
                                                1994         159,583       75,225                            23,648(g)

Thomas R. Ehmann (h)  . . . . . . . . . . .     1996         139,484       16,500                             8,000 
   Vice President and Chief                     1995         123,333       40,000                             8,000
   Information Officer                          1994         109,833       50,000                            30,140
</TABLE>


(a)  The annual bonus amounts shown for 1994 were earned and accrued during the
     Company's previous fiscal year which ended on May 31, 1995 and were paid
     prior to December 31, 1995.  With the change in the Company's fiscal year
     to a calendar year, for the year ended December 31, 1995, pro-rated
     bonuses were earned and accrued for the seven month period from June 1,
     1995 through December 31, 1995.  Bonus amounts shown for 1996 were earned
     and accrued during the calendar year ended December 31, 1996.  These
     bonuses were paid to eligible management employees, including the
     executive officers listed above, in March 1996 and March 1997,
     respectively.

(b)  Does not include the cost to the Company of certain perquisites and other
     personal benefits.  The aggregate amount of such benefits, as to each
     executive officer, other than Mr. Kahn, did not exceed the lesser of
     $50,000 or 10% of his total annual salary and bonus.

(c)  Mr. Appelman and Mr. Rice joined the Company in August 1995 and March
     1995, respectively.  Thus, their 1995 compensation does not cover a full
     year.

(d)  The Board of Directors of the Company terminated the employment of Mr. Kahn
     for cause on April 16, 1997.

(e)  As of June 1, 1996, in connection with the Company entering into an
     employment agreement with Mr. Kahn, the Company also entered into the 1996
     Kahn Option, as defined in "Stock Option Agreements".  Pursuant to the
     1996 Kahn



                                      -9-
<PAGE>   10

     Option, Mr. Kahn was granted an option to purchase 100,000 shares of Common
     Stock on each of June 3, 1996 and December 31, 1996 at exercise prices of
     $21.875 and $19.125, respectively.  As of the date of Mr. Kahn's
     termination of employment with the Company, 20,000 of such options had
     vested and the remainder of such options expired.  See "Stock Option
     Agreements."

(f)  Other annual compensation for Mr. Kahn for 1995 included non-cash
     compensation that was used to extinguish indebtedness incurred by Mr. Kahn
     to the Company pursuant to the Management Purchase Agreement dated May 23,
     1991 between Mr. Kahn and the Company.

(g)  In April 1994, the Company entered into a stock option agreement with Mr.
     Kahn for up to 23,648 shares of Common Stock at an exercise price of
     $11.00 per share.  Based upon the level of pre-tax earnings and return on
     equity achieved by the Company for the 12 months ended May 31, 1995 and
     May 31, 1996, Mr. Kahn has the immediate right to exercise options with
     respect to 20,541 shares of Common Stock.

(h)  The Board of Directors of the Company terminated the employment of Mr.
     Ehmann for cause on April 16, 1997.  All of the options granted to Mr.
     Ehmann in 1994 were granted under the Company's Incentive Stock Option
     Plan (the "Incentive Stock Option Plan") at an exercise price of $4.40 per
     share.  As of April 16, 1997, 25,817 of such options had vested and the
     remainder of such options expired.  Vested options under the Incentive
     Stock Option Plan may be exercised by Mr. Ehmann for a period of three
     months following the date of Mr. Ehmann's termination of employment with
     the Company.  All of the options granted to Mr. Ehmann in 1995 and 1996
     were granted under the Company's 1994 Equity Incentive Plan, as amended
     and restated (the "Equity Incentive Plan"), and all of such options
     expired upon Mr. Ehmann's termination of employment with the Company.




                                      -10-
<PAGE>   11

                       OPTION GRANTS IN LAST FISCAL YEAR

         The following table sets forth details regarding stock options granted
to the Named Executives during 1996.  The Company granted no SARs in during
1996.

<TABLE>
<CAPTION>
                               
                                                INDIVIDUAL GRANTS                                              
                               ----------------------------------------------------                            
                                NUMBER OF                                            POTENTIAL REALIZABLE VALUE AT
                               SECURITIES    PERCENT OF                                 ASSUMED ANNUAL RATES OF
                               UNDERLYING  TOTAL OPTIONS                              STOCK PRICE APPRECIATION FOR
                                OPTIONS      GRANTED TO     EXERCISE OR                      OPTION TERM(C)    
                                GRANTED     EMPLOYEES IN    BASE PRICE   EXPIRATION   ---------------------------
       Name                      (#)(A)    FISCAL YEAR(B)     ($/SH)        DATE          5%($)          10%($)
       ----                    ----------  --------------   ----------   ----------   -----------      ----------
<S>                            <C>           <C>             <C>          <C>         <C>             <C>
Alan J. Appelman  . . . . .      5,000          1.3%          $19.50       3/06/06    $    61,300      $  155,400 
Brian W. Hausmann . . . . .      8,000          2.0%          $19.50       3/06/06    $    98,080      $  248,640 
Allen D. Rice . . . . . . .      7,000          1.8%          $19.50       3/06/06    $    85,820      $  217,560 
Mitchell C. Kahn  . . . . .    100,000         25.0%          $21.875      6/03/06    $ 1,375,500      $3,486,500
                               100,000         25.0%          $19.125     12/31/06    $ 1,202,500      $3,048,500 
Thomas R. Ehmann  . . . . .      8,000          2.0%          $19.50       3/06/06    $    98,080      $  248,640
</TABLE>

----------------

(a)  All options in this table have exercise prices equal to the fair market
     value on the date of grant.  The options, except those granted to Mr. Kahn
     and Mr. Ehmann, become exercisable as to 25% of the shares subject to the
     award on each of the first four anniversaries of the date of grant and
     expire ten years from the original date of grant.  These options were
     granted under the Equity Incentive Plan.  See "1994 Equity Incentive
     Plan".  The Board of Directors of the Company terminated the employment of
     Mr. Kahn and Mr. Ehmann for cause on April 16, 1997.  Mr. Kahn's options
     were to become exercisable as to 20,000, 30,000 and 50,000 shares on the
     first, second and third December 31 following the grant, respectively, and
     were granted under the 1996 Kahn Option.  As of the date of Mr. Kahn's
     termination of employment with the Company, 20,000 of such options had
     vested and the remainder of such options expired.  See "Stock Option
     Agreements".  Mr. Ehmann's options were granted under the Equity Incentive
     Plan, and all of such options expired upon Mr. Ehmann's termination of
     employment with the Company.

(b)  The Company granted options for 199,400 shares to employees in 1996 under
     the Equity Incentive Plan and 200,000 shares to Mr. Kahn under the 1996
     Kahn Option.

(c)  Potential realizable value assumes that the stock price increases from the
     date of grant until the end of the option term at the annual rate specified
     (5% and 10%).  Annual compounding results in total appreciation of 63% (at
     5% per year) and 159% (at 10% per year) for options with a ten year term.
     The assumed annual rates of appreciation are specified in Commission rules
     and do not represent the Company's estimate or projection of future stock
     price growth.  The Company does not necessarily agree that this method can
     properly determine the value of an option.



                                      -11-
<PAGE>   12
         The following table sets forth certain information with respect to
stock options granted to each of the Named Executives that were outstanding at
December 31, 1996:

                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR-END OPTION VALUES


<TABLE>
<CAPTION>
                                                                      NUMBER OF SECURITIES
                                                                     UNEXERCISED UNDERLYING        VALUE OF UNEXERCISED
                                                                          OPTIONS AT             IN-THE-MONEY OPTIONS AT
                                                                       FISCAL YEAR-END(#)         FISCAL YEAR-END($)(a)
                             SHARES ACQUIRED                      ----------------------------  -------------------------- 
NAME                         ON EXERCISE(#)    VALUE REALIZED($)  EXERCISABLE    UNEXERCISABLE  EXERCISABLE  UNEXERCISABLE
----                         ---------------   -----------------  -----------    -------------  -----------  -------------
<S>                             <C>              <C>               <C>             <C>         <C>            <C>
Alan J. Appelman  . . . . .        --               --                   --           5,000             --           --
Brian W. Hausmann . . . . .        --               --               31,213          14,000     $  558,280     $  2,250
Allen D. Rice . . . . . . .        --               --                1,000          10,000            375        1,125
Mitchell C. Kahn(b) . . . .        --               --              123,657         191,824      1,882,756       96,070
Thomas R. Ehmann(c) . . . .        --               --               26,971          19,169        368,448       78,364
</TABLE>


(a)  Values are based on the difference between the December 31, 1996 closing
     price of $19.125 per share on the Nasdaq National Market and the option
     exercise price.

(b)  The Board of Directors of the Company terminated the employment of Mr.
     Kahn for cause on April 16, 1997.  On such date, unexercisable options to
     acquire 180,000 shares of Common Stock previously granted to Mr. Kahn
     expired.

(c)  The Board of Directors of the Company terminated the employment of Mr.
     Ehmann for cause on April 16, 1997.  On such date, exercisable options to
     acquire 4,000 shares of Common Stock and unexercisable options to acquire
     16,323 shares of Common Stock previously granted to Mr. Ehmann expired.

EMPLOYMENT AGREEMENT

     The Company entered into an employment agreement (the "Employment
Agreement") with Mitchell C. Kahn effective as of June 1, 1996 to perform the
duties of the Company's President and Chief Executive Officer.  The Employment
Agreement replaced the previous employment agreement between the Company and Mr.
Kahn which commenced June 1, 1991 and terminated on May 31, 1996 after the
expiration of the initial term and three one- year renewal periods.  The
Employment Agreement had an original termination date of December 31, 1998 and
provided for two one-year renewal periods at the option of the Company.  The
Board of Directors of the Company terminated Mr. Kahn's employment with the
Company on April 16, 1997 for Cause (as defined in the Employment Agreement). A
summary of the material terms of the Employment Agreement is set forth below.

     Pursuant to the Employment Agreement, the Company agreed to pay Mr. Kahn an
annualized base salary of $250,000 per annum from June 1, 1996 through December
31, 1996 and $275,000 and $302,000 per annum for calendar years 1997 and 1998,
respectively.  In addition, on or before April 1,


                                      -12-
<PAGE>   13

1997, 1998 and 1999, Mr. Kahn was eligible to receive a bonus payment of up to
100% of his base compensation in effect on the previous December 31 upon the
Company's achievement of certain strategic plans and goals established each
year by the Board of Directors.  Mr. Kahn was also reimbursed for all
reasonable and necessary business expenses and provided with the employee group
health, life and disability benefits that the Company provides to its other
employees.  Additionally, Mr. Kahn was furnished with an automobile allowance
of $800 per month and was eligible for reimbursement for up to $55,000 for a
country club membership initial fee.  Because Mr. Kahn's employment was
terminated by the Company for Cause, the Company was required to pay Mr. Kahn
only those amounts earned or accrued under the Employment Agreement through the
date of termination.  In accordance with the Employment Agreement, the Company
entered into a stock agreement with Mr. Kahn for a total of 300,000 shares of
Common Stock.  See "Stock Option Agreements."

     The Employment Agreement included a restrictive covenant by which Mr. Kahn
agreed not to compete with the Company for a period of two years after the
termination of the Employment Agreement, except in certain circumstances,
including the failure of the Company to renew the Employment Agreement for at
least one renewal period.  The Employment Agreement also prohibited Mr. Kahn
from recruiting, soliciting, offering employment to or hiring any of the
Company's employees for a period of two years after the termination of the
Employment Agreement and included a confidentiality provision with respect to
information about the Company and its business.

MANAGEMENT PURCHASE AGREEMENTS

     The Company has entered into Management Purchase Agreements, dated as of
May 23, 1991 (the "Management Purchase Agreements"), with Mitchell C. Kahn,
Brian W. Hausmann and certain employees of the Company.  Pursuant to such
agreements, Messrs. Kahn and Hausmann purchased 117,126 and 36,028 shares of
Common Stock, respectively.  The agreements entered into by Messrs. Kahn and
Hausmann provide that if the employment of either Mr. Kahn or Mr. Hausmann is
terminated by the Company for cause, the Company will be able to purchase the
shares held by such party at the fair market value of the shares upon
termination.  Additionally, in the event of the death of either Mr. Kahn or Mr.
Hausmann, the legal representative of such party will have the right to require
that the Company purchase the shares held by such party at the fair market value
of the shares on the date of death.  This repurchase obligation of the Company
does not apply if the shares held by such party prior to death have been
registered under the Securities Act of 1933, as amended (the "Securities Act").

1994 EQUITY INCENTIVE PLAN

     On March 27, 1996, the Board of Directors adopted, and on May 14, 1996 the
stockholders of the Company approved, an amendment and restatement of the Equity
Incentive Plan.  The Equity Incentive Plan became effective on September 30,
1994.  Under the Equity Incentive Plan, the Compensation Committee is authorized
to award stock options, stock appreciation rights ("SARs"), limited stock
appreciation rights, restricted stock, performance shares, performance units and
bonus stock.  The Equity Incentive Plan has a 10-year term and, subject to anti-
dilution adjustments, a



                                      -13-
<PAGE>   14

maximum of 750,000 shares of Common Stock may be delivered pursuant to awards
under the Equity Incentive Plan (of which no more than 100,000 shares may be
used for awards of restricted stock or bonus stock).  All full-time employees
of the Company or any of its subsidiaries are eligible to receive awards.
Subject to anti-dilution adjustments, the number of shares for which options or
SARs may be granted to any one grantee in a calendar year cannot exceed 60,000.

     The Compensation Committee has the discretion to determine the persons to
whom awards shall be made and, subject to the terms of the Equity Incentive
Plan, the terms and conditions of each award.  The Compensation Committee may,
among other things, cancel outstanding awards and grant substitute awards with
an exercise price (or for SARs, base price) determined by reference to the value
of the Common Stock on the date of the substitute award, accelerate vesting and
waive terms and conditions of outstanding awards and permit eligible employees
to elect, prior to earning compensation, to acquire options in lieu of receiving
such compensation.  All awards will be fully vested upon a change of control (as
defined in the Equity Incentive Plan) of the Company.

INCENTIVE STOCK OPTION PLAN

     On June 17, 1993, the Board of Directors adopted and obtained stockholder
approval of the Incentive Stock Option Plan pursuant to which certain employees
of the Company were granted options to purchase shares of Common Stock. Options
with respect to 63,809 shares of Common Stock have been granted to key employees
and officers of the Company under the Incentive Stock Option Plan. As of
December 31, 1996, options with respect to 39,559, 4,065 and 9,871 shares of
Common Stock were vested, repurchased by the Company and canceled, respectively.
On July 27, 1994, the Board of Directors discontinued the Incentive Stock Option
Plan, effective as of September 23, 1994, and no future grants of options will
be made under such plan.  Options previously granted under the Incentive Stock
Option Plan will remain exercisable in accordance with their terms.

     Pursuant to the Incentive Stock Option Plan, upon the death, disability or
termination of employment of an optionee, the Company has the right for a period
of 30 days to repurchase the optionee's vested but unexercised options at the
fair market value of the underlying Common Stock as of the date of such event
less the option price for such shares.  Upon the death or termination of
employment of an optionee, the optionee or his or her successor in interest may,
within three months after such event, exercise options to the extent the options
were exercisable at the time of such event, provided that the Company has
elected not to repurchase the options as describe above.  Upon the permanent
disability or retirement of an optionee, the optionee may, within twelve months
after such event, exercise options to the extent the options were exercisable at
the time of such event, provided that the Company has elected not to repurchase
the options as set forth above.

STOCK OPTION AGREEMENTS

     In May 1991, the Company entered into stock option agreements with Mitchell
C. Kahn, Brian W. Hausmann and certain employees of the Company for a total of
193,448 shares of Common Stock.  Such agreements were amended and restated in
November 1993 (as amended and restated, the "Stock Option Agreements") to reduce
the number of options exercisable pursuant to such agreements.


                                      -14-
<PAGE>   15

The Stock Option Agreements currently provide Mitchell C. Kahn, Brain W.
Hausmann and certain employees of the Company with the option to purchase a
total of 141,064 shares of Common Stock, all of which are vested, for a
purchase price of $.04 per share.  With limited exceptions, the options must be
exercised within ten years of the date of vesting.  Shares issued pursuant to
the Stock Option Agreements are subject to certain provisions of the Management
Purchase Agreements.  See "Management Purchase Agreements".

     On April 5, 1994, the Company entered into a second stock option agreement
(the "Second Stock Option Agreement") with Mitchell C. Kahn for up to a total of
23,648 shares of Common Stock, subject to adjustment in accordance with the
agreement.  The Second Stock Option Agreement permits the exercise of options
with respect to the shares of Common Stock for which they are vested, for a
purchase price of $11.00 per share.  Based upon the level of pre-tax earnings
and return on equity achieved by the Company for the applicable time periods,
Mr. Kahn has the immediate right to exercise options with respect to 20,541
shares of Common Stock.  Such options must be exercised within five years after
the applicable vesting date.

     As of June 1, 1996 in connection with the Company entering into the
Employment Agreement with Mitchell C. Kahn, the Company also entered into a
stock option agreement with Mr. Kahn (the "1996 Kahn Option").  The 1996 Kahn
Option provided for the grant of options for 300,000 shares of Common Stock on a
schedule consisting of 100,000 shares on each of June 3, 1996, December 31, 1996
and December 31, 1997, provided Mr. Kahn was employed by the Company on the
applicable grant date.  The exercise price for the options was the fair market
value of the Common Stock on the respective grant dates.  As of December 31,
1996, the first two grants for 100,000 shares each became effective at an
exercise price of $21.875 per share for the June 3, 1996 grant and $19.125 per
share for the December 31, 1996 grant.  The Board of Directors of the Company
terminated the employment of Mr. Kahn for cause on April 16, 1997.  As of April
16, 1997, options for 20,000 shares of Common Stock had vested under the 1996
Kahn Option and the remainder of such options expired.  Vested options must be
exercised no later than the tenth anniversary of the grant date.

COMPENSATION OF DIRECTORS

     The Company pays each of its directors who are not also employees of the
Company an annual retainer of $10,000 and an annual retainer of $2,000 ($3,000
for the chair) with respect to each committee on which such director serves.
Each non-employee director is paid a fee of $1,500 for each meeting of the Board
of Directors attended.  The Company reimburses each director for out-of-pocket
expenses incurred in attending meetings of the Board of Directors and any of its
committees.  On May 26, 1994, pursuant to an agreement with RFE Investment
Partners IV, L.P., the Company granted Mr. Wyant an option to purchase up to
5,982 shares of Common Stock at an exercise price of $5.18 per share,
exercisable at any time.  In the event of the death of Mr. Wyant or in the event
that Mr. Wyant shall, for any reason, not be reelected or refuse to serve as a
director of the Company, the unexercised portion of the option granted to Mr.
Wyant will terminate unless it is exercised by Mr. Wyant or his administrator,
guardian, executor or heirs within 60 days of the date of Mr. Wyant's death or
termination of service as a director.



                                      -15-
<PAGE>   16
1994 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

     On July 27, 1994, the Board of Directors adopted, and the Company's
stockholders approved, the First Merchants Acceptance Corporation 1994
Non-Employee Directors Stock Option Plan (the "Directors Plan") under which
eligible directors of the Company are granted options to purchase Common Stock.
The Directors Plan became effective on September 30, 1994.  Eligible directors
under the Directors Plan are directors who are not employees of the Company or
any of its subsidiaries at the time of the grant of an option.  As of December
31, 1996, Ms. Shockey and Messrs. Hiatt, Plamondon, Uhl, Weisgal and Wyant were
eligible directors under the Directors Plan.

     On the date of the 1997 annual meeting of stockholders and every third
annual meeting thereafter, each eligible director who is elected or reelected to
the Board of Directors will be granted an option to purchase 3,000 shares of
Common Stock, subject to antidilution adjustments.  An eligible director who is
appointed by the Board of Directors shall be granted an option on the date of
such appointment to purchase a pro- rated number of shares based on the number
of months remaining until the next option grant under the Directors Plan.  The
exercise price of each such option shall be 100% of the fair market value of the
Common Stock on the grant date.

     Each option will have a term of 10 years from its grant date and will
become exercisable as to 1,000 shares each year on the first to occur of the
annual anniversary of the grant date of such option or the annual meeting of
stockholders.  All options will be fully vested upon a change of control (as
defined in the Directors Plan) of the Company.  Any option that has become
exercisable will remain exercisable for 90 days after a grantee ceases to be a
director (180 days in the event of death), but not beyond the 10-year term of
the option.  The Directors Plan has a 10-year term, and a maximum of 60,000
shares of Common Stock are available for awards under the Directors Plan,
subject to anti- dilution adjustments.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Prior to September 23, 1994, the Board of Directors had no Compensation
Committee.  Decisions concerning compensation of executive officers prior to
September 23, 1994 were made by the Chief Executive Officer.  The Chief
Executive Officer's compensation was established pursuant to employment
agreements with the Company, the terms of which were ratified by the Board of
Directors.  On September 23, 1994, the Board of Directors established a
Compensation Committee which, as of December 31, 1996, was comprised of Messrs.
Plamondon, Uhl and Wyant and Ms.  Shockey.

ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                           COMMON STOCK OWNERSHIP OF
                    CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of April 25, 1997 by (i) all those known by the
Company to be beneficial owners of more than


                                      -16-
<PAGE>   17

5% of its outstanding Common Stock, (ii) each director of the Company and each
nominee for director, (iii) each of the executive officers named in the Summary
Compensation Table (the "Named Executives") and (iv) all Named Executives,
directors and nominees for director as a group.

<TABLE>
<CAPTION>
                                                               Amount and Nature of    Percent of 
                              Name                             Beneficial Ownership     Class(l)
                              ----                             --------------------    ----------
<S>                                                                 <C>                  <C>
Thomas A. Hiatt(2)  . . . . . . . . . . . . . . . . . . . . .        880,533              13.8%

Marcy H. Shockey(3) . . . . . . . . . . . . . . . . . . . . .        880,533              13.8

Middlewest Ventures II, L.P.(4) . . . . . . . . . . . . . . .        878,533              13.7

Wellington Management Company, LLP(5) . . . . . . . . . . . .        718,000              11.2

Solomon A. Weisgal(6) . . . . . . . . . . . . . . . . . . . .        549,071               8.6

Richard J. Uhl(7) . . . . . . . . . . . . . . . . . . . . . .        523,118               8.2

Finance Acquisition Corp.(8)  . . . . . . . . . . . . . . . .        507,118               7.9

Mitchell C. Kahn(9) . . . . . . . . . . . . . . . . . . . . .        258,853               4.0

Brian W. Hausmann(10) . . . . . . . . . . . . . . . . . . . .         75,054               1.2

Thomas R. Ehmann(11)  . . . . . . . . . . . . . . . . . . . .         31,603                 *

Stowe W. Wyant(12)  . . . . . . . . . . . . . . . . . . . . .         16,186                 *

Allen D. Rice(13) . . . . . . . . . . . . . . . . . . . . . .          4,950                 *

William N. Plamondon(14)  . . . . . . . . . . . . . . . . . .          2,000                 *

Alan J. Appelman(15)  . . . . . . . . . . . . . . . . . . . .          1,750                 *

All Named Executives and directors as a group (11 persons). .      1,838,000              27.8
</TABLE>

---------------
*    Represents less than one percent of the outstanding Common Stock

(1)  Based on 6,396,519 shares of Common Stock outstanding as of April 25,
     1997.  Beneficial ownership is determined in accordance with the rules of
     the Commission and generally includes voting or investment power with
     respect to securities.  Shares of Common Stock subject to options or
     warrants exercisable or convertible within 60 days are deemed outstanding
     for computing the percentage of the person or group holding such options
     or warrants, but are not outstanding for computing the percentage of any
     other person.  Except as indicated in the footnotes to this table and
     subject to applicable community property laws, the persons named in the
     table have sole voting and investment power with respect to all shares of
     Common Stock beneficially owned.

(2)  Includes 878,533 shares of Common Stock owned by MW, of which MMC is a
     general partner.  Mr. Hiatt is a general partner of MMC and shares voting
     and investment power with respect to such shares.  Also includes 2,000
     shares of Common Stock issuable upon the exercise of options to acquire
     Common Stock.  If the options are exercised, Mr. Hiatt has agreed to
     transfer the shares of Common Stock received upon such exercise to MMC.
     Mr. Hiatt's address is Middlewest Ventures II, L.P., 201 N. Illinois
     Street, Indianapolis, IN  46204.

(3)  Includes 878,533 shares of Common Stock owned by MW, of which MMC is a
     general partner.  Ms. Shockey is




                                      -17-
<PAGE>   18

     a general partner of MMC and shares voting and investment power with
     respect to such shares.  Also includes 2,000 shares of Common Stock
     issuable upon the exercise of options to acquire Common Stock.  If the
     options are exercised, Ms. Shockey has agreed to transfer the shares of
     Common Stock received upon such exercise to MMC.  Ms. Shockey's address is
     Middlewest Ventures II, L.P., 201 N. Illinois Street, Indianapolis, IN
     46204.

(4)  The address of MW is 201 N. Illinois Street, Indianapolis, IN  46204.

(5)  The number of shares of Common Stock owned is based upon information
     contained in a Schedule 13G dated February 28, 1997 filed by Wellington
     Management Company, LLP ("WMC") under the Securities Exchange Act of 1934.
     The shares of Common Stock are owned by various investment advisory clients
     of WMC which is deemed a beneficial owner of such shares by virtue of its
     shared voting power and/or shared dispositive power with respect thereto.
     No investment advisory client of WMC, except First Financial Fund, Inc., is
     known to beneficially own more than 5% of the outstanding Common Stock.
     The address of WMC is 75 State Street,  Boston, MA  02109.

(6)  Includes 2,000 shares of Common Stock issuable upon the exercise of options
     to acquire Common Stock.  Also includes 507,118 shares of Common Stock
     owned by FAC, a wholly owned subsidiary of CHI, of which Mr. Weisgal is a
     director and with respect to which Mr. Weisgal shares voting and investment
     power.  Also includes 1,500 shares of Common Stock owned by the Solomon A.
     Weisgal, Ltd. Profit Sharing Plan & Trust and 500 shares of Common Stock
     owned by the Solomon A. Weisgal, Ltd. Money Purchase Pension Plan & Trust.
     Mr. Weisgal is a co-trustee and beneficiary of such trusts and shares
     voting and investment power with respect to such shares.  Also includes
     37,953 shares of Common Stock owned by Cedar Glen Investments, an Illinois
     general partnership, all the partners of which are trusts.  Mr. Weisgal is
     the trustee or beneficiary of certain of such trusts and shares voting and
     investment power with respect to such shares.  Mr. Weisgal's address is
     Solomon A. Weisgal, Ltd., 120 South Riverside Plaza, Chicago, IL 60606.

(7)  Includes 2,000 shares of Common Stock issuable upon the exercise of options
     to acquire Common Stock.  Also includes 507,118 shares of Common Stock
     owned by FAC, a wholly owned subsidiary of CHI, of which Mr. Uhl is the
     President and a director and with respect to which Mr.  Uhl shares voting
     and investment power.  Also includes 2,000 shares of Common Stock that Mr.
     Uhl holds as custodian for his son under the Uniform Gifts to Minors Act.
     Mr. Uhl's address is Chicago Holdings, Inc., 1000 RIDC Plaza, Pittsburgh,
     PA  15238.

(8)  The address of FAC is 911 Washington Street, Wilmington, DE 19801.  FAC is
     a wholly owned subsidiary of CHI.  The address of CHI is 1000 RIDC Plaza,
     Pittsburgh, PA  15238.

(9)  Includes 135,481 shares of Common Stock issuable upon the exercise of
     options to acquire Common Stock.  Also includes 200 shares of Common Stock
     held by Mr. Kahn's wife as custodian for their sons under the Uniform Gift
     to Minors Act.  The Board of Directors of the Company terminated the
     employment of Mr. Kahn for cause on April 16, 1997, and Mr. Kahn resigned
     as a director of the Company on such date.

(10) Includes 35,213 shares of Common Stock issuable upon the exercise of
     options to acquire Common Stock.

(11) Includes 25,817 shares of Common Stock issuable upon the exercise of
     options to acquire Common Stock.  The Board of Directors of the Company
     terminated the employment of Mr. Ehmann for cause on April 16, 1997.

(12) Includes 7,982 shares of Common Stock issuable upon the exercise of
     options to acquire Common Stock.

(13) Includes 3,750 shares of Common Stock issuable upon the exercise of
     options to acquire Common Stock.

(14) The shares of Common Stock are issuable upon the exercise of options to
     acquire Common Stock.

(15) Includes 1,250 shares of Common Stock issuable upon exercise of options to
     acquire Common Stock.



                                      -18-
<PAGE>   19


ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

STOCK OPTION AGREEMENTS

     The Company has entered into stock option agreements with certain
employees, former employees and a director of the Company for an aggregate of
467,587 shares of Common Stock.  Options to acquire 280,000 of such shares of
Common Stock expired upon Mr. Kahn's termination of employment with the Company.

STOCKHOLDERS' AGREEMENT

     The Company was a party to a stockholders' agreement, dated October 29,
1993, with MW, FAC, Mitchell C. Kahn, Brian W. Hausmann, and certain employees
and early investors in the Company which provided each of the parties with the
opportunity to participate pro-rata in any sale of shares of Common Stock
proposed by a selling party for the same consideration per share and on the same
terms as in the proposed sale transaction.  This stockholders' agreement was
terminated by all of the parties thereto as of June 15, 1996.

REGISTRATION RIGHTS AGREEMENT

     The Company entered into an Amended and Restated Registration Rights
Agreement, dated as of October 29, 1993, as amended (the "Registration Rights
Agreement"), with Mitchell C. Kahn, Brian W. Hausmann, certain employees of the
Company, MW, FAC and certain other early investors in the Company.  The
Registration Rights Agreement provides that each of the stockholders who or
which are parties to it has the right, whenever the Company proposes to register
any of its securities, to require that the Company include in such registration
some or all of its shares.  The expenses of such registrations (other than
underwriting discounts and commissions) will be borne by the Company.  The
Company has agreed to indemnify the stockholders for losses caused by (i) any
untrue or alleged untrue statement or omission of material fact in any
registration statement and (ii) with certain exceptions, any violation by the
Company of any federal, state or common law rule or regulation in connection
with a registration.  The Company has also agreed to pay damages equal to the
net proceeds a stockholder would have received in the event the Company
materially fails to comply with its registration obligations under the
Registration Rights Agreement.  Shares sold pursuant to Rule 144 under the
Securities Act or pursuant to an effective registration statement under the
Securities Act will no longer be subject to the Registration Rights Agreement.



                                      -19-
<PAGE>   20

                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on this 29th day of
April, 1997.


                                        FIRST MERCHANTS ACCEPTANCE CORPORATION


                                        By:     /s/ WILLIAM N. PLAMONDON
                                           -----------------------------------  
                                                    William N. Plamondon
                                                  Co-President and Co-Chief
                                                       Executive Officer


                                        By:    /s/ RICHARD J. UHL 
                                           -----------------------------------
                                                      Richard J. Uhl
                                                 Co-President and Co-Chief
                                                     Executive Officer

                               POWER OF ATTORNEY

     Each person whose signature appears below hereby authorizes and constitutes
William N. Plamondon, Richard J. Uhl and Norman Smagley, and each of them
singly, his true and lawful attorneys-in-fact with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities to sign and file any and all amendments to this report
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done, in and about the premises, hereby
ratifying and confirming all that said attorneys-in-fact or any of them, or
their substitutes, may lawfully do or cause to be done by virtue hereof.



                                      -20-
<PAGE>   21


     Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

        SIGNATURE                          TITLE
        ---------                          -----
<S>                              <C>                                <C>
  /s/ WILLIAM N. PLAMONDON        Co-President and Co-Chief          April 29, 1997 
------------------------------    Executive Officer, Director
  William N. Plamondon            (Principal Executive Officer)

  /s/ RICHARD J. UHL              Co-President and Co-Chief          April 29, 1997 
------------------------------    Executive Officer, Director
  Richard J. Uhl                  (Principal Executive Officer)

  /s/ NORMAN SMAGLEY              Senior Vice President and          April 29, 1997 
------------------------------    Chief Financial Officer
  Norman Smagley                  (Principal Accounting Officer
                                  and Principal Financial Officer)

  /s/ THOMAS A. HIATT             Director                           April 29, 1997 
------------------------------
  Thomas A. Hiatt


  /s/ MARCY H. SHOCKEY            Director                           April 29, 1997 
------------------------------
  Marcy H. Shockey


  /s/ SOLOMON A. WEISGAL          Director                           April 29, 1997 
------------------------------
  Solomon A. Weisgal

  /s/ STOWE W. WYANT              Director                           April 29, 1997 
------------------------------  
  Stowe W. Wyant
</TABLE>




                                      -21-
<PAGE>   22

                               INDEX TO EXHIBITS


  EXHIBIT NO.        DESCRIPTION

     3.1             Restated Certificate of Incorporation of the Company, filed
                     with the Commission as Exhibit 3.1 to the Company's
                     Registration Statement on Form S-1 (File No. 33-81070), is
                     incorporated herein by reference.

     3.2             Amended and Restated Bylaws of the Company  . . . . . . .

     4.1             Specimen certificate for the Company's Common Stock, filed
                     with the Commission as Exhibit 4.1 to the Company's
                     Registration Statement on Form S-1 (File No. 33-81070), is
                     incorporated herein by reference.

     4.2             Indenture dated January 1, 1995, between the Company and
                     LaSalle National Bank, as trustee, including the form of
                     note, filed with the Commission as Exhibit 4.2 to the
                     Company's Annual Report on Form 10-K for the fiscal year
                     ended May 31, 1995, is incorporated herein by reference.

     4.3             Indenture dated as of November 17, 1995, among the Company,
                     First Merchants Auto Receivable Corporation and Harris
                     Trust and Savings Bank, as Trustee, including the form of
                     note, filed with the Commission as Exhibit 3 to the
                     Company's Form 8-K dated November 17, 1995, is incorporated
                     herein by reference.

     4.4             Indenture between First Merchants Auto Trust 1996-A as
                     Issuer and Harris Trust and Savings as Indenture Trustee,
                     filed with the Commission as Exhibit 10.8 to the Company's
                     Quarterly Report on Form 10-Q for the quarter ended June
                     30, 1996, is incorporated herein by reference.

     4.5             Indenture dated as of September 1, 1996 between First
                     Merchants Acceptance Auto Trust 1996-B and Harris Trust and
                     Savings Bank, as Indenture Trustee filed with the
                     Commission as Exhibit 4 to the Company's 8-K dated
                     September 26, 1996, is incorporated herein by reference.




                                      -22-
<PAGE>   23

  EXHIBIT NO.        DESCRIPTION

     4.6*            Indenture dated as of October 15, 1996, between the
                     Company as Issuer and LaSalle National Bank as Indenture
                     Trustee.

     10.1            1994 Non-Employee Directors Stock Option Plan, filed with
                     the Commission as Exhibit 10.2 to the Company's
                     Registration Statement on Form S-1 (File No.  33-81070), is
                     incorporated herein by reference.

     10.2            Incentive Stock Option Plan, filed with the Commission as
                     Exhibit 10.4 to the Company's Registration Statement on
                     Form S-1 (File No. 33-81070), is incorporated herein by
                     reference.

     10.3            Third Amended and Restated Loan and Security Agreement, as
                     amended, among the Company, LaSalle National Bank, as
                     agent, and the lenders named therein, filed with the
                     Commission as Exhibit 10.5 to the Company's Annual Report
                     on Form 10-K for the fiscal year ended May 31, 1995, is
                     incorporated herein by reference.

     10.4            Amended and Restated Registration Rights Agreement, dated
                     as of October 29, 1993, as amended, filed with the
                     Commission as Exhibit 10.11 to the Company's Registration
                     Statement on Form S-1 (File No. 33-81070), is incorporated
                     herein by reference.

     10.5            Amended and Restated Stock Option Agreement dated as of
                     November 1, 1993 between the Company and Mitchell C. Kahn,
                     filed with the Commission as Exhibit 10.12 to the Company's
                     Registration Statement on Form S-1 (File No.  33-81070), is
                     incorporated herein by reference.

     10.6            Second Stock Option Agreement dated as of April 15, 1994
                     between the Company and Mitchell C. Kahn, filed with the
                     Commission as Exhibit 10.13 to the Company's Registration
                     Statement on Form S-1 (File No. 33-81070), is incorporated
                     herein by reference.




                                      -23-
<PAGE>   24
  EXHIBIT NO.        DESCRIPTION

     10.7            Amended and Restated Stock Option Agreement dated as of
                     November 1, 1993 between the Company and Brian W. Hausmann,
                     filed with the Commission as Exhibit 10.14 to the Company's
                     Registration Statement on Form S-1 (File No.  33-81070), is
                     incorporated herein by reference.

     10.8            Management Purchase Agreement dated as of May 23, 1991
                     between the Company and Brian W. Hausmann, as amended,
                     filed with the Commission as Exhibit 10.15 to the Company's
                     Registration Statement on Form S-1 (File No.  33-81070), is
                     incorporated herein by reference.

     10.9            Management Purchase Agreement dated as of May 23, 1991
                     between the Company and Mitchell C. Kahn, as amended, filed
                     with the Commission as Exhibit 10.16 to the Company's
                     Registration Statement on Form S-1 (File No. 33-81070), is
                     incorporated herein by reference.

     10.10           Office Building Lease dated as of July 2, 1992 between the
                     Company and The Travelers Insurance Company, as amended,
                     filed with the Commission as Exhibit 10.35 to the Company's
                     Registration Statement on Form S-1 (File No.  33-81070), is
                     incorporated herein by reference.

     10.11           Agreement for Supreme Data Processing Services dated as of
                     May 5, 1993 between the Company and Norwest Financial
                     Information Services Group, Inc. and corresponding Master
                     Equipment Purchase Agreement and Software License dated as
                     of June 30, 1993, filed with the Commission as Exhibit
                     10.36 to the Company's Registration Statement on Form S-1
                     (File No. 33-81070), is incorporated herein by reference.

     10.12           Stock Option Agreement dated as of May 26, 1994 between
                     the Company and Stowe W. Wyant, filed with the Commission
                     as Exhibit 10.38 to the Company's Registration Statement on
                     Form S-1 (File No. 33-81070), is incorporated herein by
                     reference.




                                      -24-
<PAGE>   25


   EXHIBIT NO.       DESCRIPTION

     10.13           Management Purchase Agreement dated as of May 23, 1991
                     between the Company and Marilyn E. Millard, filed with the
                     Commission as Exhibit 10.43 to the Company's Registration
                     Statement on Form S-1 (File No. 33-81070), is incorporated
                     herein by reference.

     10.14           Management Purchase Agreement dated as of May 23, 1991
                     between the Company and John W. McCarthy, filed with the
                     Commission as Exhibit 10.44 to the Company's Registration
                     Statement on Form S-1 (File No. 33-81070), is incorporated
                     herein by reference.

     10.15           Management Purchase Agreement dated as of February 28,
                     1992 between the Company and Robert G. Mark, filed with the
                     Commission as Exhibit 10.45 to the Company's Registration
                     Statement on Form S-1 (File No. 33-81070), is incorporated
                     herein by reference.

     10.16           Interest Rate Cap Agreement Confirmation dated as of
                     December 15, 1994 relating to the ISDA Master Agreement
                     dated as of January 10, 1994 between the Company and
                     Firstar Bank Milwaukee, N.A., filed as Exhibit 10.37 to the
                     Company's Registration Statement on Form S-1 (File No.
                     33-88244), is incorporated herein by reference.

     10.17           Third Amendment dated May 5, 1995 to the Office Building
                     Lease filed as Exhibit 10.10, filed with the Commission as
                     Exhibit 10.52 to the Company's Annual Report on Form 10-K
                     for the fiscal year ended May 31, 1995, is incorporated
                     herein by reference.

     10.18           Waiver and Consent dated as of September 22, 1995
                     pertaining to the Third Amended and Restated Loan and
                     Security Agreement filed as Exhibit 10.3, filed with the
                     Commission as Exhibit 10.53 to the Company's Registration
                     Statement on Form S-1 (File No. 33-96310), is incorporated
                     herein by reference.



                                      -25-
<PAGE>   26


   EXHIBIT NO.       DESCRIPTION

     10.19           Purchase Agreement, dated November 10, 1995, among the
                     Company, First Merchants Auto Receivable Corporation and
                     Salomon Brothers, Inc., filed with the Commission as
                     Exhibit 2 to the Company's Form 8-K dated November 17,
                     1995, is incorporated herein by reference.

     10.20           Sale and Servicing Agreement, dated November 17, 1995,
                     among the Company, First Merchants Auto Receivable
                     Corporation and Harris Trust and Savings Bank, as back up
                     servicer, filed with the Commission as Exhibit 4 to the
                     Company's Form 8-K dated November 17, 1995, is incorporated
                     herein by reference.

     10.21           Amendment to Third Amended and Restated Loan and Security
                     Agreement, dated as of November 10, 1995, by and among the
                     Company, LaSalle National Bank, as agent and one of the
                     lenders, and other lenders named therein, filed with the
                     Commission as Exhibit 5 to the Company's Form 8-K dated
                     November 17, 1995, is incorporated herein by reference.

     10.22           Form of Waiver pertaining to the Amended and Restated
                     Registration Rights Agreement filed as Exhibit 10.54 to the
                     Company's Registration Statement on Form S-1 (File No.
                     33-96310), is incorporated herein by reference.

     10.23           Amendment to Third Amended and Restated Loan and Security
                     Agreement, dated as of December 18, 1995, by and among the
                     Company, LaSalle National Bank, as agent and one of the
                     lenders, and other lenders named therein filed with the
                     Commission as Exhibit 10.33 to the Company's Annual Report
                     on Form 10-K for the fiscal year ended December 31, 1995,
                     is incorporated herein by reference.

     10.24           Purchase Agreement, dated March 4, 1996, among the
                     Company, First Merchants Auto Receivable Corporation II and
                     Salomon Brothers Inc., filed with the Commission as Exhibit
                     2 to the Company's Form 8-K dated March 12, 1996, is
                     incorporated herein by reference.



                                      -26-
<PAGE>   27

   EXHIBIT NO.       DESCRIPTION

     10.25           Receivables Purchase Agreement, dated March 1, 1996, among
                     the Company and First Merchants Auto Receivable Corporation
                     II, filed with the Commission as Exhibit 3 to the Company's
                     Form 8-K dated March 12, 1996, is incorporated herein by
                     reference.

     10.26           Pooling and Service Agreement, dated March 1, 1996, among
                     the Company, as Servicer, First Merchants Acceptance
                     Corporation II, as depositor and Harris Trust and Savings
                     Bank, as Trustee and backup Servicer filed with the
                     Commission as Exhibit 4 to the Company's Form 8-K dated
                     March 12, 1996, is incorporated herein by reference.

     10.27           Fourth Amended and Restated Loan and Security Agreement,
                     dated as of February 28, 1996, by and among the Company,
                     LaSalle National Bank, NBD Bank, Firstar Bank of Milwaukee,
                     N.A., Harris Trust and Savings Bank, The Boatmen's National
                     Bank of St. Louis, First Bank, N.A., CoreStates Bank, N.A.,
                     Natwest Bank, filed with the Commission as Exhibit 10.4 to
                     the Company's Quarterly Report on Form 10-Q for the quarter
                     ended March 31, 1996, is incorporated herein by reference.

     10.28           Amended and Restated First Merchants Acceptance
                     Corporation 1994 Employee Stock Purchase Plan, dated May
                     15, 1996, filed with the Commission as Exhibit 10.1 to the
                     Company's Quarterly Report on Form 10-Q for the quarter
                     ended June 30, 1996, is incorporated herein by reference.

     10.29           Amended and Restated First Merchants Acceptance
                     Corporation 1994 Equity Incentive Plan, dated May 15, 1996,
                     filed with the Commission as Exhibit 10.2 to the Company's
                     Quarterly Report on Form 10-Q for the quarter ended June
                     30, 1996, is incorporated herein by reference.

     10.30           Purchase Agreement, dated May 10, 1996, among the Company,
                     First Merchants Auto Receivable Corporation II and Salomon
                     Brothers Inc., filed with the Commission as Exhibit 10.3 to
                     the Company's Quarterly Report on Form 10-Q for the quarter
                     ended June 30, 1996, is incorporated herein by reference.



                                      -27-
<PAGE>   28
   EXHIBIT NO.       DESCRIPTION

     10.31           Receivables Purchase Agreement, dated May 1, 1996, among
                     the Company and First Merchants Auto Receivable Corporation
                     II, filed with the Commission as Exhibit 10.4 to the
                     Company's Quarterly Report on Form 10-Q for the quarter
                     ended June 30, 1996, is incorporated herein by reference.

     10.32           Sales and Servicing Agreement, dated May 1, 1996, among
                     First Merchants Auto Trust 1996-A as Issuer, First
                     Merchants Auto Receivables Corporation II, as seller, The
                     Company, as Servicer, and Harris Trust and Savings Bank, as
                     Trustee and backup Servicer, filed with the Commission as
                     Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q
                     for the quarter ended June 30, 1996, is incorporated herein
                     by reference.

     10.33           Administrative Agreement, dated May 1, 1996, among First
                     Merchants Auto Trust 1996-A, the Company and First and
                     Harris Trust and Savings Bank, filed with the Commission as
                     Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q
                     for the quarter ended June 30, 1996, is incorporated herein
                     by reference.

     10.34           Amended and Restated Trust Agreement, dated May 1, 1996,
                     among First Merchants Auto Receivables Corporation II as
                     Depositor and Chemical Bank Delaware as Owner Trustee,
                     filed with the Commission as Exhibit 10.7 to the Company's
                     Quarterly Report on Form 10-Q for the quarter ended June
                     30, 1996, is incorporated herein by reference.

     10.35           Remote Outsourcing Agreement dated as of June 1, 1996
                     between the Company and Alltel Financial Information
                     Services, Inc., filed with the Commission as Exhibit 10.12
                     to the Company's Quarterly Report on Form 10-Q for the
                     quarter ended June 30, 1996, as amended, is incorporated
                     herein by reference.

     10.36           Employment Agreement dated as of June 1, 1996 between the
                     Company and Mitchell C. Kahn, filed with the Commission as
                     Exhibit 10.13 to the Company's Quarterly Report on Form
                     10-Q for the quarter ended June 30, 1996, as amended, is
                     incorporated herein by reference.



                                      -28-
<PAGE>   29


   EXHIBIT NO.       DESCRIPTION

     10.37           Amendment No. 1 dated May 1, 1996 to the Fourth Amended
                     and Restated Loan and Security Agreement by and among the
                     Company, LaSalle National Bank as agent, and the other
                     lenders named therein, filed with the Commission as Exhibit
                     10.14 to the Company's Quarterly Report on Form 10-Q for
                     the quarter ended June 30, 1996, as amended, is
                     incorporated herein by reference.

     10.38           Purchase Agreement, dated June 28, 1996, among the
                     Company, First Merchants Auto Receivable Corporation II,
                     and Salomon Brothers Inc., filed with the Commission as
                     Exhibit 2 to the Company's Form 8-K dated June 26, 1996, is
                     incorporated herein by reference.

     10.39           Receivables Purchase Agreement, dated as of June 1, 1996
                     between the Company and First Merchants Auto Receivable
                     Corporation II, filed with the Commission as Exhibit 3 to
                     the Company's Form 8-K dated June 26, 1996, is incorporated
                     herein by reference.

     10.40           Pooling and Servicing Agreement, dated June 19, 1996,
                     among the Company, as Servicer, First Merchants Acceptance
                     Corporation II, as depositor and Harris Trust and Savings
                     Bank, as Trustee and backup Servicer filed with the
                     Commission as Exhibit 4 to the Company's Form 8-K dated
                     June 26, 1996, is incorporated herein by reference.

     10.41           Third Amendment to Amended and Restated Registration
                     Rights Agreement dated June 15, 1996, among the Company and
                     other parties named therein, filed with the Commission as
                     Exhibit 10.12 to the Company's Quarterly Report on Form
                     10-Q for the quarter ended June 30, 1996, is incorporated
                     herein by reference.

     10.42           Stockholders Termination Agreement among the Company and
                     the other parties named therein, filed with the Commission
                     as Exhibit 10.13 to the Company's Quarterly Report on Form
                     10-Q for the quarter ended June 30, 1996, is incorporated
                     herein by reference.



                                      -29-
<PAGE>   30


   EXHIBIT NO.       DESCRIPTION

     10.43           Amended and Restated Trust Agreement, dated as of
                     September 1, 1996, between First Merchants Auto Receivable
                     Corporation II, as Depositor and Chase Manhattan Bank
                     Delaware as Owner Trustee, filed with the Commission as
                     Exhibit 1 to the Company's 8-K dated September 26, 1996, is
                     incorporated herein by reference.

     10.44           Sales and Servicing Agreement dated as of September 1,
                     1996, among First Merchants Auto Trust 1996-B, as Issuer,
                     First Merchants Auto Receivable Corporation II, as Seller,
                     the Company, as Servicer, and Harris Trust and Savings
                     Bank, as Indenture Trustee, Collateral Agent Backup
                     Servicer, filed with the Commission as Exhibit 2 to the
                     Company's 8-K dated September 26, 1996, is incorporated
                     herein by reference.

     10.45           Receivables Purchase Agreement, dated as of September 1,
                     1996, between the Company and First Merchants Auto
                     Receivable Corporation II filed with the Commission as
                     Exhibit 3 to the Company's 8-K dated September 26, 1996, is
                     incorporated herein by reference.

     10.46*          Consent and Amendment to Fourth Amended and Restated Loan
                     and Security Agreement dated as of October 29, 1996, by and
                     among the Company as Borrower; NBD Bank; Firstar Bank
                     Milwaukee, N.A., Harris Trust and Savings Bank; The
                     Boatmen's National Bank of St. Louis; First Bank, National
                     Association; CoreStates Bank, N.A., Fleet Bank, National
                     Association, f/k/a Natwest Bank N.A. and Mellon Bank, N.A.
                     as Lenders; and LaSalle National Bank as Lender and Agent
                     for the Lenders.

     10.47*          Second Amendment to Fourth Amended and Restated Loan and
                     Security Agreement dated as of December 26, 1996, by and
                     among the Company as Borrower; NBD Bank; Firstar Bank
                     Milwaukee, N.A.; Harris Trust and Savings Bank; The
                     Boatmen's National Bank of St. Louis; First Bank, National
                     Association; CoreStates Bank, N.A., Fleet Bank, National
                     Association; and Mellon Bank, N.A. as Lenders; and LaSalle
                     National Bank as Lender and Agent for the Lenders.




                                      -30-
<PAGE>   31


   EXHIBIT NO.       DESCRIPTION

     10.48*          Underwriting Agreement dated October 29, 1996 among the
                     Company as Seller, J.C. Bradford & Co., Piper Jaffray Inc.,
                     Keefe, Bruyette & Woods, Inc., and Stifel, Nicolas &
                     Company, Incorporated as Underwriters.

     11.1**          Statement regarding computation of earnings per share.

     13.1**          First Merchants Acceptance Corporation Annual Report to
                     Stockholders for December 31, 1996 (such report, except to
                     the extent incorporated herein, is furnished to the
                     Commission for informational purposes only and is not to be
                     part of this annual report on Form 10-K).

     21.1*           Subsidiaries of the Registrant.

     23.1*           Consent of Deloitte & Touche LLP.

     27.1**          Financial Data Schedule.


*    Filed as an exhibit to the Company's original Annual Report on Form 10-K
     for the year ended December 31, 1996.

**   As previously disclosed in a Current Report on Form 8-K dated April 16,
     1997, the Company discovered unauthorized entries made in the Company's
     financial records and expects that it will restate previously reported
     results for 1996.  The Company expects to file with the Commission an
     additional amendment to this Form 10-K to reflect the results of the
     restatement.  The Company anticipates that it will refile this exhibit, if
     appropriate, with the additional amendment.




                                      -31-