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As filed with the Securities and Exchange Commission on April 27, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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Bombardier Receivables Master Trust I
(Issuer with respect to Certificates)
--------------------
Bombardier Credit Receivables Corporation
(Originator of the Trust described herein)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 9999 03-0340600
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
P.O. BOX 5544
BURLINGTON, VERMONT 05402
(802) 655-2824
(Address, including zip code, and telephone
number, including area code, of Registrant's
principal executive offices)
--------------------
ANDREW BARANOWSKY
P.O. BOX 5544
BURLINGTON, VERMONT 05402
(802) 655-2824
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
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Copies to:
<TABLE>
<S> <C>
Steven J. Molitor, Esq. Paul Weiffenbach, Esq.
Morgan, Lewis & Bockius LLP Orrick, Herrington & Suteliffe LLP
101 Park Avenue 1150 18th Street, N.W.
New York, New York 10178 Washington, D.C. 20036
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective. If any of the
securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is post-effective amendment filed pursuant to Rule 462(d)
under that Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
Proposed Proposed
Title of Each Maximum Maximum Amount of
Class of Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered Per Share* Price* Fee
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Certificates..$1,000,000 100% $1,000,000 $278
===============================================================================================
</TABLE>
(*) Estimated solely for purposes of determining the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
WE HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL WE SHALL FILE A FURTHER AMENDMENT
WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER
BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
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PROSPECTUS
BOMBARDIER RECEIVABLES MASTER TRUST I
ISSUER
$________ FLOATING RATE CLASS A ASSET BACKED CERTIFICATES, SERIES 1999-1
$________ FLOATING RATE CLASS B ASSET BACKED CERTIFICATES, SERIES 1999-1
BOMBARDIER CREDIT RECEIVABLES CORPORATION
DEPOSITOR
BOMBARDIER CAPITAL INC.
SERVICER
-----------------
<TABLE>
<S> <C>
The certificates represent Bombardier Receivables Master Trust I will issue two classes of certificates.
obligations of the trust only and The certificates will represent interests in a pool of receivables due from dealers
do not represent interests in or of consumer, recreational and commerical products under financing arrangements.
obligations of Bombardier
Credit Receivables Corporation,
Bombardier Capital Inc. or any
of their affiliates. The
certificates will not be insured
or guaranteed by any Class A Class B Total
governmental agency.
Initial certificate principal balance $_____ $_____ $______
INVESTING IN THE CERTIFICATES Certificate rate(1) ______% ______%
INVOLVES RISKS. YOU SHOULD Price to public (2) ______% ______% $______
CONSIDER CAREFULLY THE Discounts and commissions ______% ______% $______
INFORMATION UNDER THE CAPTION Underwriting proceeds to depositor(3) ______% ______% $______
"RISK FACTORS" BEGINNING ON First interest payment date ______, 1999 ______, 1999
PAGE __. Scheduled first principal payment date ______ ______
Expected final principal payment date ______ ______
Series termination date ______ ______
(1) The pass-through rates for the certificates on any distribution date
will be the variable rates shown above, subject to an interest rate
cap, as described in this prospectus under "Description of the Offered
Certificates -- Distributions."
(2) Plus accrued interest, if any, at the applicable pass-through rate from
____________, 1999.
(3) Before deducting expenses payable by the Depositor, estimated to be
$[__________].
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
J.P. MORGAN & CO.
[UNDERWRITER]
The date of this Prospectus is __________, 1999.
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IMPORTANT NOTICE ABOUT THE INFORMATION IN THIS PROSPECTUS
You should rely only on the information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. We are not offering these certificates in any state
where the offer is not permitted. The information in this document may only be
accurate on the date of this document.
This prospectus includes cross-references to captions in these materials where
you can find further discussions about related topics. The following table of
contents provides the pages on which these captions are located.
In this prospectus, the terms "we," "us" and "our" refer to Bombardier Credit
Receivables Corporation.
2
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TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
PROSPECTUS SUMMARY.......................................4 Discount Option................................87
RISK FACTORS............................................10 Defaulted Receivables and Recoveries...........87
THE DEPOSITOR AND THE TRUST.............................19 Investor Charge-Offs...........................88
The Depositor..................................19 Optional Repurchase............................89
The Trust......................................20 Early Amortization Events......................89
USE OF PROCEEDS.........................................21 Termination....................................93
THE FLOORPLAN AND ASSET-BASED FINANCING Indemnification................................94
BUSINESS ...............................................21 Collection and Other Servicing Procedures......95
General ......................................21 Servicer Covenants.............................95
Creation of the Receivables....................23 Servicing Compensation and Payment of
Credit Underwriting Process and Security.......24 Expenses.............................96
Payment Terms..................................27 Certain Matters Regarding the Servicer.........97
Billing and Collection Procedures..............27 Servicer Default...............................97
Revenue Experience.............................27 Reports ......................................99
Relationship with Manufacturers, Importers Evidence as to Compliance.....................100
and Distributors......................28 Amendments....................................100
Monitoring.....................................30 List of Certificateholders....................101
Collection Activity............................31 The Trustee...................................102
Participation Arrangements.....................32 DESCRIPTION OF THE RECEIVABLES PURCHASE
THE ACCOUNTS............................................32 AGREEMENT..............................................102
General ......................................32 Sale and Transfer of Receivables..............103
Historical Size................................35 Representations and Warranties................104
Delinquency....................................36 Certain Covenants.............................105
Loss Experience................................37 Termination...................................105
Product Mix....................................38 MATERIAL LEGAL ASPECTS OF THE
Aging Experience...............................40 RECEIVABLES............................................105
Geographic Distribution........................41 Transfer of Receivables and Certificates......105
BOMBARDIER CAPITAL INC..................................42 Material Matters Relating to Bankruptcy.......108
MATURITY AND PRINCIPAL PAYMENT MATERIAL FEDERAL INCOME TAX
CONSIDERATIONS .........................................43 CONSEQUENCES...........................................109
DESCRIPTION OF THE CERTIFICATES.........................45 Characterization of the Certificates and
General ......................................45 the Trust............................110
Interest ......................................46 Possible Characterization of the Trust as
Principal......................................47 a Partnership........................110
Extension of Initial Principal Payment Date....49 Possible Characterization of the Trust as
Book-entry Registration........................50 a Corporation........................111
Definitive Certificates........................54 Taxation of Interest Income to
Retained Interest and Variable Funding Certificateholders...................111
Certificate..........................55 Sale or Exchange of Certificates..............112
New Issuances..................................56 Foreign Investors.............................112
Supplemental Certificate.......................57 Information Reporting and Backup
Conveyance of Receivables and Collateral Withholding.........................114
Security.............................58 State and Local Taxation......................114
Representations and Warranties.................59 UNDERWRITING...........................................114
Eligible Accounts and Eligible Receivables.....62 LEGAL MATTERS..........................................116
Ineligible Receivables.........................64 WHERE YOU CAN FIND MORE................................116
Addition of Accounts...........................65 REPORTS TO CERTIFICATEHOLDERS..........................116
Removal of Accounts and Assignment of
Receivables...........................67
Credit Support for the Certificates............69
Collection Account.............................70
Excess Funding Account.........................71
Allocation Percentages.........................72
Distributions from the Collection Account;
Reserve Fund; Principal Account.......81
</TABLE>
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS AND
DOES NOT CONTAIN ALL Of THE INFORMATION THAT YOU NEED TO CONSIDER IN
MAKING YOUR INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF THE
SERIES 1999-1 CERTIFICATES, YOU SHOULD CAREFULLY READ THIS ENTIRE
PROSPECTUS.
THE TRUST
The trust was formed pursuant to a Pooling and Servicing Agreement, dated as of
January 1, 1994, among Bombardier Credit Receivables Corporation, as depositor,
Bombardier Capital Inc., as servicer and Bankers Trust Company, as trustee. The
trust has issued four series of investor certificates each pursuant to a
separate supplement. Three series are outstanding as of ___________.
THE OFFERED CERTIFICATES
The trust will issue a new series of certificates designated as the "Series
1999-1 Certificates." The new series will include the Class A Certificates and
the Class B Certificates.
<TABLE>
<CAPTION>
Class A Class B
Certificates Certificates
------------ ------------
<S> <C> <C>
Initial principal
balance: _________ _________
Certificate rate: LIBOR + __%(1) LIBOR + __%(1)
Ratings
(S&P/Moody's): AAA/Aaa _________
First interest
payment date: __________ _________
Scheduled first
principal payment
date: __________ _________
Expected final
principal payment
date: __________ _________
</TABLE>
(1) Generally, the certificate rate of the Series 1999-1 Certificates will be
subject to a cap based upon the interest rates of the receivables in the trust
less the servicing fee rate.
PRINCIPAL PARTIES
Issuer: Bombardier Receivables Master Trust I will issue the Series 1999-1
Certificates.
Depositor: Bombardier Credit Receivables Corporation which is a wholly-owned
subsidiary of Bombardier Capital Inc. See "The Deposit and the Trust -- The
Depositor" in this prospectus. Bombardier Credit Receivables Corporation's
address is P.O. Box 5544, Burlington, Vermont 05402 and its telephone number
is (802) 655-2824.
Servicer: Bombardier Capital Inc. will service the receivables on behalf of
the trust. Bombardier Capital Inc.'s address is 1600 Mountain View Drive,
Colchester, Vermont 05446 and its telephone number is (802) 654-8100.
See "Description of the Certificates--Collection and Other Servicing
Procedures" and "Bombardier Capital Inc."
Trustee: Bankers Trust Company, a New York banking corporation acts as trustee
for the trust. Bankers Trust Company's address is Four Albany Street, New York,
New York 10006 and its telephone number is (212)-250-6652. See "Description
of the Certificates -- The Trustee."
TRUST ASSETS
The assets of the trust include:
receivables arising in accounts established pursuant to inventory security
agreements or other agreements entered into with dealers to purchase or
finance consumer, recreational and commercial product inventory which have
been added to the trust and those which will be added in the future less
receivables paid or charged-off and excluding:
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(i) receivables generated in removed accounts or ineligible accounts,
(ii) receivables removed from the trust from time to time and
(iii) any undivided interest in the receivables that has been transferred to
a third party;
all funds collected or to be collected with respect
of the receivables;
all funds on deposit in certain accounts of the trust, including the reserve
fund, the excess funding account, the principal account and the collection
account;
any enhancement issued with respect to any other series (the Series 1999-1
Certificates do not benefit from such enhancement);
an assignment of certain of our rights and remedies with respect to the
receivables; and
an assignment of security interests in certain products, contracts or other
assets securing the receivables.
Interests in the trust will be evidenced by the Series 1999-1 Certificates,
investor certificates of other series, the BCRC Certificate and the Variable
Funding Certificate.
We may, at our option, also add accounts established in connection with the
extension of credit to (i) dealers to finance working capital needs and (ii)
manufacturers and distributors to finance the production, manufacturing and
inventory of consumer, recreational and commercial products. See "The Floorplan
and Asset-Based Financing Business," "Description of the Certificates--Addition
of Accounts" and "--Removal of Accounts and Assignment of Receivables."
All new receivables arising under the accounts during the term of the trust will
be transferred by us to the trust. Accordingly, the aggregate amount of
receivables in the trust will fluctuate daily as new receivables are generated
and as existing receivables are collected, charged off as uncollectible or
otherwise adjusted.
PRIOR SERIES AND ISSUANCE OF NEW SERIES
The trust has issued four prior series of investor certificates, three of which
are outstanding as of [___________]. We have summarized certain information
concerning the outstanding prior series in Annex I to this prospectus. Annex I
is hereby incorporated by reference into this prospectus. We may cause the trust
to issue one or more new series of investor certificates. See "Description of
the Certificates--New Issuances."
DISTRIBUTIONS ON THE SERIES 1999-1 CERTIFICATES
Distributions on your certificates will be made on the 15th day of each month
beginning _______, 1999. If the 15th day is not a business day, distributions
will occur on the next business day.
THE REVOLVING PERIOD, THE CONTROLLED ACCUMULATION PERIOD, THE INITIAL
AMORTIZATION PERIOD AND THE EARLY AMORTIZATION PERIOD
The period your certificates are in will determine the method used for
allocating collections on receivables and the timing of payments to you.
The Series 1999-1 Certificates will be in the revolving period from the issuance
date to the beginning of the controlled accumulation period unless an "initial
amortization period" or "early amortization period" occurs. The Series 1999-1
certificates will be in the controlled accumulation period from the accumulation
period commencement date to the date which you have received all payments due to
you, unless an "initial amortization period" or "early amortization period"
occurs.
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The initial amortization period will occur if the servicer elects not to extend
the initial payment date. The first date on which the servicer can elect not to
extend will be the _________ distribution date. See "Description of the
Certificates--Extension of Initial Principal Payment Date."
The early amortization period will begin if certain specified triggering events
occur with respect to the trust assets, the servicer or to us. Under certain
limited circumstances an early amortization period may end and one of the other
three periods will begin. See "Description of the Certificates--Early
Amortization Events."
ALLOCATIONS OF COLLECTIONS OF RECEIVABLES AND DEFAULTED RECEIVABLES
The Series 1999-1 Certificates represent the right to receive varying
percentages of non-principal collections and principal collections collected
during each calendar month. Non-principal collections, principal collections and
defaulted receivables for any calendar month will be allocated to the Series
1999-1 Certificates as more fully described under "Description of the
Certificates-- Allocation Percentages." Non-principal collections, principal
collections and defaulted receivables not allocated to the Series 1999-1
Certificates will be allocated to the other certificates issued by the trust.
Non-principal collections and defaulted receivables at all times and principal
collections during the revolving period will be allocated to the Series 1999-1
Certificates based on the floating allocation percentage applicable to the
related calendar month. Generally, the floating allocation percentage for any
calender month is the percentage, which will never exceed 100%, obtained by
dividing the principal amount of the Series 1999-1 Certificates as of each day
in such calender month by the total amount of receivables in the trust as of
each such day.
During the revolving period, subject to certain limitations, principal
collections allocable to the Series 1999-1 Certificates will be allocated to
other certificates issued by the trust in exchange for the allocation to the
Series 1999-1 Certificates of an equal interest in the receivables that are new
or that would otherwise be allocable to other certificates. See "Description of
the Certificates--Allocation Percentages," "--Allocation of Collections;
Deposits in Collection Account; Limited Subordination of the Retained Interest"
and "--Distributions from the Collection Account; Reserve Fund; Principal
Account."
During the controlled accumulation or any type of amortization period, principal
collections generally will be allocated to the Series 1999-1 Certificates based
on the percentage obtained by dividing the principal amount of the Series 1999-1
Certificates on the last day of the revolving period by the total amount of
receivables in the trust. See "Description of the Certificates--Allocation
Percentages--Principal Collections for all Series" and "--Distributions from the
Collection Account; Reserve Fund--Principal Collections."
INTEREST PAYMENTS
You will receive interest monthly on each distribution date, commencing
__________, 1999. The certificates will accrue interest beginning the preceding
distribution date (or, in the case of the first distribution date, beginning
________, 1999) to but excluding such distribution date and will be calculated
based on the actual number of days elapsed during the related interest period
and a 360-day year.
<TABLE>
<S> <C>
The Class A certificate
rate will equal: LIBOR + ___%
The Class B certificate
rate will equal: LIBOR + ___%
</TABLE>
The trustee will calculate LIBOR as described in "Description of the
Certificates--Interest". Generally, the certificate rate for each class of
certificates will be subject to a cap based upon the interest rates on the
receivables less the servicing fee
6
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rate. [You will be reimbursed for any reduction due to this cap on subsequent
distribution dates under certain circumstances if funds are available.] See
"Description of the Certificates -- Distributions from the Collection Account;
Reserve Fund; Principal Account."
Interest payments on the Series 1999-1 Certificates will be derived solely from
non-principal collections for the related calendar month, any amount on deposit
in the reserve fund, investment proceeds, if any, and, under certain
circumstances, available retained collections which are collections on the
Series 1999-1 retained interest which is represented by the BCRC Certificate.
See "Description of the Certificates--Interest."
PRINCIPAL PAYMENTS
We expect the Class A Certificates to receive one principal distribution equal
to the principal balance of the Class A Certificates on the _________
distribution date;
We expect the Class B Certificates to receive, after the Class A certificates
are reduced to zero, a principal distribution on the _____________ distribution
date.
The Series 1999-1 Certificates will receive principal earlier than expected if
the servicer elects not to extend the initial principal payment date. The first
date on which the servicer can elect not to extend is the __________
distribution date. See "Description of the Certificates--Extension of Initial
Principal Payment Date."
The Series 1999-1 Certificates may also receive principal earlier than expected
if certain events occur. See "Description of the Certificates--Early
Amortization Events." The final principal distribution on the Series 1999-1
Certificates will be made not later than the ________ Distribution Date.
In addition, on the first distribution date following the monthly period in
which an early amortization event occurs or, if applicable, beginning on the
initial principal payment date, any amounts on deposit in the excess funding
account will be distributed to certificateholders. See "Description of the
Certificates--Distributions from the Collection Account; Reserve Fund; Principal
Account."
EXCESS FUNDING ACCOUNT
If the receivables in the trust are less than the required amount on the dates
described in this prospectus, a deposit to the excess funding account will be
required. Amounts in the Excess Funding Account will be made available for
payment on the Series 1999-1 Certificates as described under "Description of
Certificates--Excess Funding Account."
PRINCIPAL ACCOUNT
During the controlled accumulation period, the servicer will allocate available
principal collections, up to a specified amount, to the principal account.
Amounts on deposit in the principal account will be withdrawn for distribution
on the Series 1999-1 Certificates as described under "Description of the
Certificates--Distributions from the Collection Account; Reserve Fund; Principal
Account."
REALLOCATION OF EXCESS PRINCIPAL COLLECTIONS
Principal collections and other amounts that are allocated to the Series 1999-1
Certificates and are not needed to make payment to you, may be applied to cover
principal distributions to certificateholders or enhancement providers of other
series. Principal collections and certain other amounts allocable to other
series during any amortization period to the extent they are not needed to make
payment with respect to such other series, may be applied as principal
distributions on your certificates. See "Description of the Certificates--
Allocation Percentages--Principal Collections for all Series."
CREDIT ENHANCEMENT
7
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Retained Interest: A portion of the interest in the trust represented by the
BCRC Certificate retained by us will be allocated to cover amounts payable with
respect to the Series 1999-1 Certificates and the monthly servicing fee
described below. See "Description of the Certificates--Retained Interest and
Variable Funding Certificate" herein.
If the non-principal collections, investment proceeds, amounts in the reserve
fund and certain other amounts allocable to the Series 1999-1 Certificates for
any monthly period are not sufficient to cover:
the interest payable on the Series 1999-1 Certificates on the next
distribution date (plus any overdue interest and interest thereon);
the net servicing fee for such distribution date;
any allocations to the Series 1999-1 Certificates of defaults on the
receivables for such distribution date; and
certain amounts required to be paid by us with respect to adjustments to the
balances of the receivables,
a portion of the collections on the retained interest represented by the BCRC
Certificate will be applied to make up the deficiency.
It is expected that the retained interest available for the first distribution
date will be no less than $___________. The amount available for subsequent
distribution dates will fluctuate as described under "Description of the
Certificates--Allocation of Collections; Deposits in Collection Account; Limited
Subordination of the Retained Interest." Subject to certain limitations, the
retained interest available to make payments on the Series 1999-1 Certificates
may be increased at our option. See "Description of the Certificates--Allocation
of Collections; Deposits in Collection Account; Limited Subordination of the
Retained Interest."
Reserve Fund: A reserve fund will be established and maintained in the name of
the trustee for the benefit of the Series 1999-1 Certificates. On the closing
date, we will deposit in the reserve fund an amount equal to $_________. Any
amounts on deposit in the reserve fund will be withdrawn to make payments of
interest on the Series 1999-1 Certificates and for certain other purposes, and
funds withdrawn from the reserve fund may be replenished, in the circumstances
described under "Description of the Certificates--Distributions from the
Collection Account; Reserve Fund; Principal Account."
Subordination: The Class A Certificates have the benefit of the subordination of
the Class B Certificates to the extent described in this prospectus. Generally,
the Class A Certificates will receive payments of interest prior to any payment
of interest to the Class B Certificates on any distribution date. In addition,
no principal payments will be made with respect to the Class B Certificates
until the principal balance of the Class A Certificates is reduced to zero. See
"Description of the Certificates."
FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes the Series 1999-1 Certificates will generally be
treated as debt instruments of the trust fund. By acceptance of a certificate
you will agree to treat your certificate as debt for federal, state and local
income tax purposes. See "Certain Federal Income Tax Consequences."
ERISA CONSIDERATIONS
Generally, you may not acquire Class A Certificates or Class B Certificates if
you are purchasing with the assets of a retirement plan, individual retirement
plan or other employee benefit plan. See "ERISA Considerations."
RATINGS
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The Series 1999-1 Certificates will not be offered unless they receive the
ratings indicated on page 4 of this prospectus.
A RATING IS NOT A RECOMMENDATION TO BUY, SELL OR HOLD SECURITIES AND EITHER
RATING AGENCY CAN REVISE OR WITHDRAW ITS RATING AT ANY TIME. IN GENERAL RATINGS
ADDRESS CREDIT RISK AND DO NOT ADDRESS THE LIKELIHOOD OF PREPAYMENT. See "Risk
Factors -- Reduction in the Certificate Rating of Your Certificates Could Have
an Adverse Effect on the Value of the Your Certificates."
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RISK FACTORS
THE CERTIFICATES MAY LACK LIQUIDITY
The underwriters intend to make a market for the purchase and sale of
the certificates but have no obligation to do so. There is no assurance that a
secondary market will develop or, if it develops, that it will continue.
Consequently, you may not be able to sell your certificates readily or at
desirable prices.
The secondary markets for asset-backed securities have experienced
periods of illiquidity and can be expected to do so in the future. Illiquidity
could have a severely adverse effect on the prices at which your certificates
can be sold.
THERE COULD BE DELAYS OR ACCELERATIONS OF DISTRIBUTIONS ON YOUR CERTIFICATES IF
THE TRANSFER OF RECEIVABLES TO THE TRUST IS NOT CONSIDERED A SALE IN THE EVENT
OF BANKRUPTCY; THERE COULD BE DELAYS OR REDUCTIONS IN PAYMENTS TO THE TRUST
RELATING TO RECEIVABLES IN THE EVENT OF BANKRUPTCY
Bombardier Capital Inc. and Bombardier Credit Receivables Corporation
will treat the transfer of the receivables to the trust to be a sale. However,
in the event that Bombardier Capital Inc. or we or one of our affiliates becomes
bankrupt, a trustee in bankruptcy may argue that the trust assets were not sold
but were only pledged to secure a loan to Bombardier Capital Inc. If that
argument is made, you could experience delays or reductions in payments on your
certificates. If that argument is successful, the trustee in bankruptcy could
elect to sell the receivables and pay down the certificates early. Thus you
could lose the right to future payments of interest, and might suffer
reinvestment loss in a lower interest rate environment. In addition if the
servicer becomes bankrupt, a bankruptcy trustee or receiver may have the power
to prevent the trustee from appointing a successor servicer. Any related delays
in servicing could result in increased delinquencies or losses on the
receivables.
Furthermore, in some cases Bombardier Credit Receivables Corporation
will sell to the trust receivables in which Bombardier Capital Inc. has not yet
funded its obligation to the related manufacturer, importer or distributor. If
Bombardier Capital Inc. were to become bankrupt, Bombardier Capital Inc. might
be unable to fund such receivables. In these circumstances a manufacturer,
importer or distributor might be able to delay or prevent receipt by the trust
of payments otherwise owing to the trust with respect to such receivables.
See "The Floorplan and Asset-Based Financing Business -- Creation of the
Receivables."
THE LIFE OF YOUR CERTIFICATES IS UNCERTAIN
If certain events relating to the bankruptcy of Bombardier Capital Inc.
or Bombardier Credit Receivables Corporation were to occur, then an early
amortization event would occur and additional receivables would no longer be
transferred to the trust. If no early amortization event other than our
bankruptcy or insolvency exists, then the bankruptcy trustee or Bombardier
Credit Receivables Corporation, as debtor in possession may have the power to
prevent the early sale, liquidation or disposition of the receivables and the
commencement of the early amortization
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period and may be able to require that new receivables be transferred to the
trust. In addition, the trustee, receiver or conservator for us may have the
power to cause the early sale of the receivables and the early payment of the
certificates or to prohibit the continued transfer of receivables to the trust.
See "Certain Legal Aspects of the Receivables--Transfer of Receivables and
Certificates" and "--Certain Matters Relating to Bankruptcy."
Domestic inventory receivables are generally payable by dealers either
upon the sale by the dealer of the product or, in certain cases, in accordance
with a payment schedule set forth in the related inventory security agreement or
other floorplan financing agreement that at the time of creation perfected the
security interest in the eligible products. The timing of the sale of the
eligible products by dealers is uncertain. Asset-based receivables are expected
to be payable as described under "The Floorplan and Asset-Based Financing
Business--Payment Terms." There is no assurance that there will be additional
receivables created under the accounts or that any particular pattern of
repayments will occur. The payment of principal on the certificates is dependent
on obligor repayments and the certificates may not be fully amortized on
___________. See "Description of the Certificates--Termination."
In addition, a significant decline in the amount of receivables
generated could cause an early amortization event and thus cause you to receive
principal payments earlier than you expect. In certain circumstances, we will be
required to designate additional eligible accounts relating to receivables of
the same type as those which are then in the trust. Upon transfer of receivables
arising under such additional eligible accounts from Bombardier Capital Inc. to
us, we will convey the receivables arising under such additional eligible
accounts to the trust. If such additional eligible accounts do not exist or the
receivables arising in such additional eligible accounts otherwise are not
transferred by us when required, an early amortization event will occur and
result in the commencement of an early amortization period, although in certain
circumstances the resulting early amortization period may terminate and the
revolving period recommence. See "Maturity and Principal Payment Considerations"
and see also "Description of the Certificates--Early Amortization Events" for a
discussion of other events which might lead to the occurrence of an Early
Amortization Period.
STATE AND FEDERAL LAW MAY LIMIT THE ABILITIES OF THE SERVICER TO REALIZE ON
RECEIVABLES
Application of federal and state bankruptcy and debtor relief laws
could affect your interest in the receivables if such laws result in any
receivables being reduced or written off as uncollectible or result in delays in
payments due on such receivables. See "Description of the Certificates--
Defaulted Receivables and Recoveries."
Bombardier Capital Inc. represents and warrants and we represent and
warrant that each eligible domestic inventory receivable originated pursuant to
an inventory security agreement or other floorplan financing agreement is at the
time of creation secured by a first priority perfected security interest in the
related product.
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Generally, under applicable state laws, a security interest in
consumer, recreational and commercial goods which secure domestic inventory
receivables may be perfected by the filing of Uniform Commercial Code financing
statements. Bombardier Capital Inc. takes all actions necessary under applicable
state laws to perfect such security interest in the related eligible products.
However, at the time such product is sold by the obligor under the receivable,
the security interest in the product will terminate. Therefore, with respect to
domestic inventory receivables originated pursuant to an inventory security
agreement or other floorplan financing agreement, if a dealer fails to remit
amounts owed with respect to products that have been sold, the related domestic
inventory receivables will no longer be secured by those products.
If asset-based receivables are added to the trust, the obligations
represented thereby will at the time of transfer to the trust be secured by a
first priority perfected security interest in goods, accounts, work in process,
raw materials, component parts or other assets of the related obligor. In the
event that asset-based receivables are secured by assets that are subsequently
sold by such obligor, the same issues discussed above with respect to domestic
inventory receivables may exist with respect to the asset-based receivables.
ADDITIONAL ACCOUNTS MAY HAVE CHARACTERISTICS DIFFERENT FROM THE CURRENT
ACCOUNTS; BOMBARDIER CAPITAL INC. HAS LIMITED EXPERIENCE WITH ASSET-BASED
RECEIVABLES
We expect, and in some cases will be obligated, to designate additional
accounts, the receivables in which will be conveyed to the trust. Although such
additional accounts must be eligible, they may include accounts with criteria
different from those which were applied to the accounts previously added to the
trust. Such additional accounts may also provide financing for types of products
different from those currently included in the trust and subject to certain
conditions, asset-based receivables may be added to trust. Consequently, there
can be no assurance that accounts designated in the future will relate to the
same types of products or will be of the same credit quality as previously
designated accounts or that new product types, or other forms of security, if
any, that may secure the receivables in new accounts will provide security that
is as favorable as that provided by the eligible products securing the
receivables currently included in the trust.
The historical experience of the domestic inventory receivables
portfolio is presented under "The Floorplan and Asset-Based Financing Business"
and "The Accounts." Because Bombardier Capital Inc. only has limited
underwriting and servicing experience, and very limited delinquency, default and
loss experience, with respect to its asset-based receivables portfolio, no
historical information with respect to the asset-based receivables portfolio or
the related accounts is provided in this prospectus. Bombardier Capital Inc.
expects to create a number of accounts that will be transferred to the trust in
the future. The actual historical experience with respect to these additional
accounts that will be held by the trust may be different from the accounts
currently held by the trust. There can be no assurance that the historical
experience of the portfolio of domestic inventory receivables and asset-based
receivables included in the trust in the future will be similar to the
receivables currently included in the trust.
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SOCIAL, ECONOMIC AND OTHER FACTORS MAY HAVE AN ADVERSE EFFECT ON THE COLLECTION
OF AND GENERATION OF NEW RECEIVABLES
Payment of the domestic inventory receivables is largely dependent upon
the retail sale of the related products. Generation of new domestic inventory
receivables and of asset-based receivables is dependent upon the general level
of sales of eligible products or expected need for eligible products. The level
of sales of eligible products and the manufacturing and acquisition of eligible
products may change as the result of a variety of social and economic factors.
Economic factors include interest rates, unemployment levels, the rate of
inflation and customer perception of economic conditions generally.
The use of incentive programs (e.g., manufacturers' rebate programs)
may affect sales. If any of the manufacturers, importers, or distributors of the
eligible products were temporarily or permanently no longer in their respective
businesses, the rate of sales of eligible products generating domestic inventory
receivables and asset-based receivables could decrease, adversely affecting
payment rates with respect to the domestic inventory receivables and asset-based
receivables and the generation of new domestic inventory receivables and of
asset-based receivables. Moreover, if any of the manufacturers, importers or
distributors were temporarily or permanently no longer manufacturing, importing
or distributing the related eligible products, the loss experience with respect
to the related domestic inventory receivables could be adversely affected.
Similar issues relate to the asset-based receivables.
In addition, Bombardier Capital Inc. competes with various other
financing sources, including, without limitation, independent finance companies,
captive finance companies of manufacturers, banks, investment companies and
leasing companies, who are in the business of providing floorplan financing
arrangements to dealers.
THE TRUST IS DEPENDENT UPON BOMBARDIER CREDIT RECEIVABLE CORPORATION AND
BOMBARDIER CAPITAL INC.
Neither Bombardier Credit Receivables Corporation nor Bombardier
Capital Inc. or any affiliate thereof is obligated to make any payments in
respect of the certificates or the receivables, other than the obligation of
Bombardier Credit Receivables Corporation or Bombardier Capital Inc. to purchase
certain receivables from the trust due to the failure to comply with certain
covenants or the breach by us or Bombardier Capital Inc. of certain
representations and warranties, as described below and under "Description of the
Certificates--Representations and Warranties" and "--Servicer Covenants," and
other than certain affiliate support agreements relating to certain receivables
described under "The Floorplan and Asset-Based Financing Business--Relationship
with Manufacturers, Importers and Distributors". However, the trust is
completely dependent upon Bombardier Capital Inc. for the generation of new
receivables. The ability of Bombardier Capital Inc. to generate receivables is
in turn dependent to a large extent on the sales of eligible products. There can
therefore be no
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assurance that we will continue to generate receivables at the same rate as in
prior years. In addition, if Bombardier Capital Inc. were to cease acting as
servicer, delays in processing payments on the receivables and information in
respect thereof could occur and result in delays in payments to you.
YOUR CERTIFICATES HAVE LIMITED CREDIT ENHANCEMENT
Credit enhancement of the certificates will be provided by the
subordination of the retained interest to the extent as described herein as well
as from amounts on deposit in the reserve fund. The Class A certificates will
also have the benefit of the subordination of the Class B certificates. The
amount of such credit enhancement is limited and will be reduced from time to
time as described herein. See "Description of the Certificates--Allocation of
Collections; Deposits in Collection Account; Limited Subordination of the
Retained Interest."
SUBORDINATION OF CLASS B CERTIFICATES WILL CAUSE THE CLASS B CERTIFICATES TO
BEAR LOSSES PRIOR TO THE CLASS A CERTIFICATES
The distribution of principal on the Class B certificates will be made
subsequent to the distribution in full of principal on the Class A certificates.
Investor charge-offs will result in reductions of amounts available to
distribute principal on the Class B certificates before any such reductions will
be incurred in respect of the Class A certificates.
ANY AMOUNTS ON DEPOSIT IN THE EXCESS FUNDING ACCOUNT WILL EARN INTEREST AT A
RATE LOWER THAN THAT OF THE RECEIVABLES
Funds, if any, deposited in the excess funding account will be subject
to certain investment restrictions and, as a result, will likely earn a rate of
return lower than the interest rates borne by a comparable amount of
receivables. Accordingly, during any period during which funds are on deposit in
the excess funding account, such funds will reduce the amount of non-principal
collections available to make payments to you.
EXISTENCE OF OTHER SERIES OF CERTIFICATES MAY LIMIT YOUR ABILITY TO TAKE CERTAIN
ACTIONS WITH RESPECT TO THE TRUST AND OTHER CONSIDERATIONS WITH A MASTER TRUST
Under certain circumstances, the consent or approval of the holders of
a specified percentage of the aggregate unpaid principal amount of all
outstanding certificates of all outstanding series will be required to permit or
to take certain actions, including amending the agreement which created the
trust in certain circumstances and directing a reassignment of the entire
portfolio of the receivables. In addition, following the occurrence of an
insolvency event with respect to us or an early amortization event as a result
of our violating our covenant not to create any lien on any receivable, the
holders of investor certificates evidencing more than 50% of the aggregate
unpaid principal amount of each series or, for series with two or more classes,
of each class will be required, together with the holder of the Variable Funding
Certificate, to direct
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the trustee not to sell or otherwise liquidate the receivables; provided,
however, that if such sale, disposition or liquidation is being made solely on
account of our violation of our covenant not to create any lien on any
receivable, the trustee will effect such sale only if the net proceeds would be
sufficient to pay accrued interest and the outstanding principal balance of each
series.
The trust, as a master trust, has previously issued four series of
investor certificates three of which remain outstanding. The trust may issue
additional series of investor certificates. Each series may be represented by
different classes within the series.
A supplement delivered in connection with the issuance of other series
will specify certain principal terms applicable to such series. Such principal
terms may include provisions creating different or additional security or other
credit enhancement, different classes of investor certificates subordinated
classes of investor certificates, different methods of allocating collections
from the trust and any other amendment or supplement to the agreement which
created the trust which is made applicable only to such series.
There can be no assurance, however, that previously issued series or
the issuance of any other series from time to time hereafter might not have an
impact on the timing or amount of payments received by you. See "Description of
the Certificates--New Issuances." Furthermore, excess principal collections may
be available for reallocation to the certificates during any early amortization
period, initial amortization period or controlled accumulation period from other
series which may shorten the maturity of your certificates. The issuance of an
additional series does not require your consent.
THE INTEREST RATE OF YOUR CERTIFICATES WILL BE SUBJECT TO A CAP
The domestic inventory receivables generally bear interest at the prime
rate as published from time to time in the Wall Street Journal plus a margin
ranging, as of _________, 1999, from [0]% to [8.5]%. The certificate rates on
the Series 1999-1 Certificates will not exceed the weighted average of the
interest rates borne by the receivables less 2%, or if Bombardier Capital Inc.
is not the servicer, 3%. Subject to certain conditions, Bombardier Capital Inc.
may reduce the interest rates applicable to any of the receivables. Furthermore,
as of _________, 1999, approximately ____% (by principal balance) of all
domestic inventory receivables did not bear interest. A reduction in interest
rates on any receivables, or the inclusion of non-interest bearing receivables
in the trust, could have the effect of reducing or possibly eliminating the
positive spread, if any, between the cap described above and the Class A
certificate rate or the Class B certificate rate based upon LIBOR, with a
corresponding risk of a reduction in yield to you.
REDUCTION IN THE CERTIFICATE RATING OF YOUR CERTIFICATES COULD HAVE AN ADVERSE
EFFECT ON THE VALUE OF YOUR CERTIFICATES
It is a condition to the issuance of the certificates that the Class A
certificates be rated "AAA" (or the equivalent) and that the Class B
certificates be rated at least "A" (or the
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equivalent) by at least one nationally recognized rating agency. A rating is
based primarily on the credit underlying the receivables and the level of
subordination of the retained interest and amounts on deposit in the reserve
fund and, in the case of the Class A Certificates, the subordination of the
distribution of principal and interest on the Class B Certificates to the prior
distribution of principal and interest of the Class A certificates.
The rating addresses the likelihood of the ultimate payment of
principal and timely payment of interest on the certificates. A rating agency
does not evaluate, and a rating of the certificates does not address the
likelihood that any amounts not paid to you because of the interest rate cap on
the certificates will be paid or the likelihood of payment in full of the
outstanding principal balance of the certificates on their expected final
payment dates. A rating is not a recommendation to buy, sell or hold securities,
inasmuch as such rating does not comment as to the market price or suitability
for a particular investor.
There is no assurance that a rating will remain for any given period of
time or that a rating will not be lowered or withdrawn entirely by a rating
agency if in its judgment circumstances so warrant. Any such suspension,
reduction or withdrawal in the ratings assigned to the certificates would
probably reduce the market value of the certificates and may affect your ability
to sell them.
BOOK-ENTRY REGISTRATION WILL LIMIT YOUR ABILITY TO EXERCISE YOUR RIGHTS
DIRECTLY; THE LACK OF PHYSICAL CERTIFICATES MAY CAUSE DELAYS IN PAYMENT AND
DIFFICULTIES IN PLEDGING
Your certificates will be initially represented by one or more
certificates registered in the name of Cede, the nominee for The Depository
Trust Company and will not be registered in your name or your nominee. Because
of this you will not be recognized by the trustee as a "Certificateholder".
Unless definitive certificates are issued, you will only be able to exercise
your rights indirectly through The Depository Trust Company, Cedel Bank, societe
anonyme, Euroclear System and their participating organizations. See
"Description of the Certificates--Book-Entry Registration" and "--Definitive
Certificates."
You may hold certificates only in book-entry form through The
Depository Trust Company, the Euroclear System or Cedel Bank, societe anonyme.
Your ability to pledge a certificate to a person that does not participate in
those systems may be limited because of the lack of a physical certificate. In
addition certificate payments will not be made directly to you. Instead, the
trustee or its paying agent will send all distributions to The Depository Trust
Company, which will then credit those distributions to the participating
organizations. Those organizations must in turn credit accounts you have either
directly or indirectly through indirect participants for you to receive your
payments. This may cause you to experience some delay in receiving payments on
the your certificates.
GEOGRAPHIC CONCENTRATION MAY CREATE ADDITIONAL RISKS
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We expect approximately ___%, ___%, ___%, ___%, ___% and ___% of the
obligors under the receivables (by aggregate principal balance as of the cut-off
date) to be located in the States of ________, _________, _________, _________,
_________ and ________, respectively. Consequently, losses on the receivables
and resultant payments on the offered certificates may, both generally and
particularly, be affected significantly by deterioration of economic conditions
in such states.
YEAR 2000 READINESS DISCLOSURE: YOU COULD BE ADVERSELY AFFECTED IN ABSENCE OF
YEAR 2000 COMPLIANCE
Bombardier Capital Inc. has made efforts to identify, modify or replace
computer systems which are not year 2000 compliant and to address other related
issues associated with the change of the millennium, although there is no
assurance these efforts will be fully successful. In the event that computer
problems arise out of a failure to identify, modify or replace appropriate
systems on time, or in the event that the computer systems of Bombardier Capital
Inc., the trustee or certain external suppliers are not fully year 2000
compliant, the resulting disruptions in the collection or distribution of
receipts on the receivables could materially and adversely affect the holders of
the certificates.
With respect to the year 2000 problem, the Depository Trust Company has
informed members of the financial community that it has developed and is
implementing a program so that its systems, as they relate to the timely payment
of distributions, including principal and interest payments, to certificate
holders, book-entry deliveries, and settlement of trades within the Depository
Trust Company, continue to function appropriately on and after January 1, 2000.
This program includes a technical assessment and a remediation plan, each of
which is complete. Additionally, the Depository Trust Company's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
Bombardier has not independently verified the information provided to it by the
Depository Trust Company.
However, the Depository Trust Company's ability to perform properly its
services is also dependent upon other parties, including but not limited to, its
participating organizations, through which you will hold your certificates, as
well as the computer systems of third party service providers. Depository Trust
Company has informed the financial community that it is contacting and will
continue to contact third party vendors from whom the Depository Trust Company
acquires services to:
impress upon them the importance of such services being year 2000
compliant; and
determine the extent of their efforts for year 2000 remediation,
and, as appropriate, testing, of their services.
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In addition, the Depository Trust Company has stated that it is in the process
of developing such contingency plans as it deems appropriate.
If problems associated with the year 2000 problem were to occur with
respect to the Depository Trust Company and the services described above,
payments to you could be delayed or otherwise adversely affected.
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THE DEPOSITOR AND THE TRUST
THE DEPOSITOR
Bombardier Credit Receivables Corporation (the "DEPOSITOR" or "BCRC"),
a wholly-owned subsidiary of Bombardier Capital Inc., ("BCI") and an indirect
wholly-owned subsidiary of Bombardier Corporation Inc., was incorporated on
November 9, 1993. The Depositor was organized for limited purposes, which
include purchasing receivables, beneficial ownership interests and participation
interests in receivables, debt obligations secured by receivables and other
forms of indebtedness and transferring such receivables, interests, debt
obligations and indebtedness to third parties and any activities incidental to
and necessary or convenient for the accomplishment of such purposes (including,
without limitation, entering into and performing its obligations under the
Pooling and Servicing Agreement and the Receivables Purchase Agreement).
The Depositor's mailing address is P.O. Box 5544, Burlington, Vermont
05402. The Depositor's telephone number is (802) 655-2824.
The Depositor has taken steps intended to assure that the voluntary or
involuntary application with respect to Bombardier Corporation or BCI for relief
under the Bankruptcy Code or other bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the enforcement of
creditors' rights generally (collectively, "INSOLVENCY LAWS") will not result in
the substantive consolidation of the assets and liabilities of the Depositor
with those of Bombardier Corporation or BCI. These steps include the creation of
the Depositor as a separate, limited-purpose subsidiary pursuant to a
certificate of incorporation containing certain limitations (including
restrictions on the nature of the Depositor's business, as described above, and
a restriction on the Depositor's ability to commence a voluntary case or
proceeding under any Insolvency Law without the unanimous affirmative vote of
all of its directors). The Depositor's certificate of incorporation includes a
provision that requires it to have among its directors at least two directors
who qualify under the certificate of incorporation as independent directors.
However, there can be no assurance that the activities of the Depositor would
not result in a court concluding that the assets and liabilities of the
Depositor should be substantively consolidated with those of Bombardier
Corporation or BCI in a proceeding under any Insolvency Law.
In addition, tax and certain other statutory liabilities, such as
liabilities to the Pension Benefit Guaranty Corporation relating to the
underfunding of pension plans of Bombardier Inc. or any of its subsidiaries
including Bombardier Corporation and BCI, can be asserted against the Depositor.
To the extent that any such liabilities arise after the transfer of Receivables
to the Bombardier Receivables Master Trust I (the "TRUST"), the Trust's interest
in the Receivables would be prior to the interest of the claimant with respect
to any such liabilities. However, the existence of a claim against the Depositor
could permit the claimant to subject the Depositor to an involuntary proceeding
under the Bankruptcy Code or other Insolvency Law.
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THE TRUST
The Trust was formed under and is administered in accordance with the
laws of the State of New York pursuant to the Pooling and Servicing Agreement.
The Depositor conveys to the Trust, without recourse, the receivables arising
under the Accounts (the "RECEIVABLES"). The Depositor has previously sold
investor certificates representing interests in the assets of the Trust, and
from time to time, the Depositor may offer other series of investor certificates
representing interests in the assets of the Trust (each, including the
Certificates offered by this prospectus, a "SERIES"). To date, the Trust has
issued the Series 1994-1 Certificates, the Series 1996-1 Certificates, the
Series 1997-1 Certificates and the Series 1997-2 Certificates. The Series 1994-1
Certificates are no longer outstanding. The property of the Trust consists of
the Receivables existing in the Accounts on January 1, 1994 (the "INITIAL
CUT-OFF DATE") the Receivables existing in the Additional Accounts added since
the issuance of the Series 1994-1 Certificates as set forth in Annex II hereto
and all Receivables generated in the Accounts from time to time thereafter
during the term of the Trust. The property of the Trust will also include
Receivables generated in Accounts added to the Trust from time to time
hereafter. In each case the Receivables are reduced by Receivables paid or
charged-off and exclude (i) Receivables generated in Removed Accounts or
Ineligible Accounts after the applicable Removal Commencement Date, (ii)
Receivables removed from the Trust from time to time after the Initial Cut-Off
Date, and (iii) Participation Interests in the Receivables that have been
transferred to third parties as described under "The Floorplan and Asset-Based
Financing Business--Participation Arrangements" and "Description of the
Certificates--Removal of Accounts and Assignment of Receivables." The property
of the Trust includes an assignment of substantially all of BCRC's rights and
remedies under the Receivables Purchase Agreement, all funds collected or to be
collected in respect of such Receivables included as property of the Trust, all
funds on deposit in certain accounts of the Trust, including funds on deposit in
the Excess Funding Account, the Principal Account, the Collection Account and
the Reserve Fund, an assignment of security interests in certain products,
contracts or other assets securing such Receivables relating to such Receivables
included as property of the Trust (the "COLLATERAL SECURITY"), and any letter of
credit, surety bond, cash collateral account, guaranteed rate agreement,
maturity liquidity facility, tax protection agreement, subordination, interest
rate swap agreement or other similar arrangement (each, an "ENHANCEMENT") issued
for the benefit of any other Series. See "Description of the
Certificates--Addition of Accounts." See "Description of the Receivables
Purchase Agreement" for a summary of certain terms of the Receivables Purchase
Agreement.
The property of the Trust may in the future include Enhancements for
the benefit of investor certificateholders of other Series. The
Certificateholders will not have any interest in any Enhancement provided for
the benefit of the investor certificateholders of other Series.
The Trust was formed for the transactions relating to the issuance of
certificates such as the Series 1994-1 Certificates, the Series 1996-1
Certificates, the Series 1997-1 Certificates, the
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Series 1997-2 Certificates, the Series 1999-1 Certificates and similar
transactions, as contemplated by the Pooling and Servicing Agreement, and prior
to formation had no assets or obligations. The Trust has not engaged and will
not engage in any business activity, other than as described herein, but rather
will only acquire and hold the Receivables and the other assets of the Trust and
proceeds therefrom, issue the Floating Rate Class A Asset Backed Certificates,
Series 1999-1 (the "CLASS A CERTIFICATES"), the Floating Rate Class B Asset
Backed Certificates, Series 1999-1 (the "CLASS B CERTIFICATES," and together
with the Class A Certificates, the "CERTIFICATES"), other Series of investor
certificates, the BCRC Certificate and the Variable Funding Certificate, issue
additional Series and make payments thereon and related activities. As a
consequence, the Trust is not expected to have any need for, or source of,
capital resources other than the assets of the Trust.
See also "Description of the Certificates--The Trustee."
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the
Depositor, which will use such proceeds, except the portion used to fund the
Reserve Fund, to repay amounts owing to BCI under the Note or to purchase
Receivables from BCI and to provide for amortization of a portion of the
principal amount of the Series 1996-1 Certificates or the Series 1997-2
Certificates. BCI will use the related proceeds to reduce commercial paper
borrowings and for general corporate purposes.
THE FLOORPLAN AND ASSET-BASED FINANCING BUSINESS
GENERAL
The following discussion includes descriptions of the Domestic
Inventory Receivables and the Asset-Based Receivables. Currently, however, the
receivables in the Trust (the "POOL") consists solely of Domestic Inventory
Receivables. The Pool may, in the future, include Asset-Based Receivables as
provided herein. The descriptions below of practices and procedures apply to
current practices and procedures; these practices and procedures may change over
time.
Without limiting the foregoing, BCI expects to provide financing to
additional dealers, and directly to manufacturers and distributors. In addition,
BCI expects that the financing needs of Obligors will change over time, whether
as a result of seasonality or other changes in such Obligors' businesses. In
certain cases, designated Accounts and the Receivables arising thereunder
transferred to the Trust have been acquired by BCI (or an affiliate of BCI) from
another lender and Accounts and the Receivables arising thereunder may in the
future be acquired from other lenders. Accordingly, the types of credit
arrangements designated as Accounts and the Receivables arising thereunder that
are transferred to the Trust, the products or other assets financed by those
Receivables and the security, if any, provided in connection with such
arrangements, are expected to change over time, and the relative proportions of
the various
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types of credit arrangements and collateral may change over time. Consequently,
there can be no assurance that Additional Accounts designated in the future will
relate to the same types of products or will be of the same credit quality as
previously designated Accounts or that the Receivables in the new Accounts will
be supported by the same security that is currently provided for the Domestic
Inventory Receivables. The (a) designation of Additional Accounts and (b)
addition of Asset-Based Receivables are subject to satisfaction of certain
conditions described herein under "Description of the Certificates--Addition of
Accounts."
Currently, the Receivables sold to BCRC consist solely of extensions of
credit and advances (referred to as inventory, wholesale or floorplan financing)
made by BCI, an affiliate of BCI or another lender and acquired by BCI or one of
its affiliates to dealers (as of __________, 1999, approximately ____ Eligible
Obligors) of consumer, recreational and commercial products ("DOMESTIC INVENTORY
RECEIVABLES"). The Receivables may, at the options of BCI and BCRC (but subject
to certain conditions), also consist of extensions of credit and advances by BCI
(or an affiliate) (or made by another lender and acquired by BCI or one of its
affiliates) to (i) dealers to finance such dealers' working capital needs and
(ii) manufacturers and distributors to finance such manufacturers' and
distributors' production, manufacturing and inventory of consumer, recreational
and commercial products ("ASSET-BASED RECEIVABLES") (such dealers, manufacturers
and distributors, together with the dealers referred to in the preceding
sentence, the "OBLIGORS"). BCI is under no obligation to cause Asset-Based
Receivables to be included in the Trust. No selection procedures believed by BCI
to be adverse to the holders of the Certificates were or will be used in
selecting the Receivables to be sold or contributed to BCRC. The accounts
(whether or not they would be "Eligible Accounts") with respect to Domestic
Inventory Receivables are referred to in this section and in the historical
information provided under the sections "The Accounts" and "Maturity and
Principal Payment Considerations" as the "BCI DOMESTIC INVENTORY PORTFOLIO." The
BCI Domestic Inventory Portfolio does not include extensions of credit with
respect to rental cars. [BCI has agreed to not add rental car related
receivables to the Trust.] The Domestic Inventory Receivables are secured by the
products financed for such dealers and occasionally by mortgages, assignments of
certificates of deposit or letters of credit. The Asset-Based Receivables would
be generally expected to be secured by finished goods inventory, accounts
receivable arising from the sale of such inventory, certain work-in-process, raw
materials and component parts, as well as other assets of the borrower.
With respect to Domestic Inventory Receivables, BCI generally provides
dealers with inventory financing by paying to manufacturers, importers or
distributors the wholesale cost of inventory items purchased by such dealers.
These dealers are located in the United States and the Domestic Inventory
Receivables are denominated in U.S. dollars.
In most instances a manufacturer, importer or distributor may make a
number of financing sources other than BCI available to its dealers. BCI has,
however, in the past entered into, and may in the future enter into, captive
financing arrangements with manufacturers, importers or distributors whereby BCI
is made the primary source of financing for such manufacturer's, importer's or
distributor's dealers. In some cases, BCI has in the past offered
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(and BCI may in the future offer) attractive financing rates in order to obtain
captive financing arrangements with certain manufacturers, importers or
distributors.
Asset-Based Receivables that may be sold to the Trust would be
generally expected to arise from asset-based revolving credit facilities
provided to dealers, manufacturers and distributors and would be denominated in
U.S. dollars.
As of _________, 1999, no single Obligor represented more than __% of
the BCI Domestic Inventory Portfolio.
BCI primarily provides secured financing to dealers located principally
in the United States for the purchase of recreational, consumer and commercial
products from specified manufacturers and distributors. The principal products
for which BCI currently provides inventory financing (also referred to as
wholesale or floorplan financing) include (i) recreational products manufactured
by Bombardier (such as Ski-Doo snowmobiles, Sea-Doo personal watercraft, sport
boats, neighborhood vehicles and all-terrain vehicles and related parts and
accessories), (ii) marine products (boats, motors and trailers) which are not
Bombardier products, (iii) manufactured housing, (iv) recreational vehicles,
trailers and campers and specialty vehicles and (v) other recreational products
not manufactured by Bombardier Inc. [The Company is in the process of developing
financing opportunities including those involving consumer electronics and
appliances, heating, air-conditioning and ventilation equipment, machine tools
and keyboard musical instruments.] As of [January 31, 1999], BCI was providing
inventory financing to approximately [3,731] dealers located throughout the
United States for products sold by approximately [603] manufacturers and
distributors. BCI expects to expand the type of products for which it provides
domestic inventory financing in the future. As of ________, 1999, approximately
___% (based on outstanding receivables) or ___% (based on financing volume for
the ___ month period ended _________, 1999) of the Domestic Inventory
Receivables were attributable to products manufactured by Bombardier Inc. or its
subsidiaries.
The products for which BCI expects to provide dealer, manufacturer or
distributor financing (which gives rise to Asset-Based Receivables) are expected
to be varied. Generally Asset-Based Receivables would be expected to involve BCI
providing extensions of credit and advances to dealers to finance their working
capital needs and to manufacturers and distributors to finance such
manufacturers' and distributors' production and inventory of consumer,
recreational and commercial products. The types of products covered by Domestic
Inventory Receivables and Asset-Based Receivables may change over time.
BCI services the Domestic Inventory Receivables, and expects to service
the Asset-Based Receivables, through its executive offices in Colchester,
Vermont and through various regional offices or subsidiaries.
CREATION OF THE RECEIVABLES
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Domestic Inventory Receivables. BCI typically finances 100% of the
wholesale invoice price of new inventory financed by U.S. dealers through BCI.
Receivables in respect of the inventory are generally originated concurrently
with the shipment of such inventory to the financed dealers. BCI generally will
advance funds directly to the manufacturer, importer or distributor on behalf of
the dealer. In some cases, although BCI will have incurred the obligation to
make an advance, BCI will negotiate a delay in funding the advance for a period
ranging, in most cases, from a few days up to [15] days for Eligible Products
not manufactured by affiliates of BCI [, and ranging in some instances up to
30 days for Eligible Products manufactured by affiliates of BCI,] after the
date of the invoices. Any such receivable that is funded on a delayed basis
will not be an Ineligible Receivable because of such receivable's being funded
on a delayed basis. Such receivable if otherwise eligible will be transferred
to the Trust and included in the Pool Balance even though such receivable is
not funded by BCI until a later date. BCI and the manufacturer may also agree
that BCI may discount the invoice price of the inventory ordered by the
dealer. Under such an arrangement, the manufacturer will deem itself paid in
full upon receipt of such discounted amount. In most cases, the products with
respect to which BCI provides domestic inventory financing are new products.
However, in limited circumstances, BCI provides financing of used or trade-in
inventory acquired by dealers for whom BCI provides inventory financing.
Once a dealer has commenced the floorplanning of a manufacturer's,
importer's or distributor's inventory through BCI, BCI, if requested, will
generally finance all purchases of inventory by such dealer from such
manufacturer, importer or distributor, up to the credit limits established from
time to time for such dealer. BCI may limit or cancel this arrangement if a
dealer fails to perform its obligations under its inventory security agreement
or other floorplan financing agreement with BCI, if the relevant manufacturer,
importer or distributor fails to perform its obligations under its repurchase
agreement, if the aggregate outstanding amount of receivables with respect to
any one manufacturer, importer or distributor reaches BCI's predetermined limit
or if the dealer (or manufacturer, importer or distributor) is experiencing
financial difficulties.
Asset-Based Receivables. BCI expects to offer extensions of credit and
advances to dealers to finance such dealers' working capital needs and to
manufacturers and distributors to enable such manufacturers and distributors to
finance production, manufacturing and inventory of consumer, recreational and
commercial products. Asset-Based Receivables would typically be expected to
involve a revolving line of credit, for a contractually committed period of
time, pursuant to which the borrower may receive extensions of credit, subject
to availability of adequate collateral. The amount of Asset-Based Receivables
arising under an Account at any time would be determined primarily by the
financing needs of the borrower.
CREDIT UNDERWRITING PROCESS AND SECURITY
Domestic Inventory Receivables. BCI's credit underwriting process
generally begins by obtaining the endorsement of its program by a manufacturer,
importer or distributor. The manufacturer, importer or distributor of the goods
financed by BCI also generally agrees to provide certain protections to BCI
through a repurchase agreement. Under the repurchase
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agreement, the manufacturer, importer or distributor generally agrees for a
specified period of time (in most cases one to two years after the dealer
purchases the goods financed) to repurchase any of its goods that were financed
by BCI and which have been repossessed by BCI after a dealer defaults, subject
to certain conditions which are contained in the agreements (for further
discussion of repurchase agreements, see "-- Relationship with Manufacturers,
Importers and Distributors" below). Thereafter, BCI will, with the assistance of
such manufacturer, importer or distributor, generally prepare and distribute
promotional material for the purpose of encouraging all eligible and credit
worthy dealers of such manufacturer, importer or distributor to participate in
the program. In certain cases, the manufacturer, importer or distributor is the
primary promoter of the program offered by BCI.
A list of dealers together with the recommended credit line limits for
such dealers is generally obtained from the manufacturer, importer or
distributor. The dealers are then normally contacted by either BCI's
telemarketing department or personnel from BCI's field force. If a dealer is
interested in the program, an application for financing is completed. After
receipt of such application, BCI currently investigates the dealer by reviewing,
among other things, the dealer's financial statements, trade references, past
actual performance and anticipated future performance and personal credit
history. Upon approval, credit limits are established for approved dealers and
the dealer executes an inventory security agreement or other floorplan financing
agreement in favor of BCI. Credit limits are generally subject to different
levels of management approval generally based on the amount of the proposed
credit limit.
Domestic inventory financing originated by BCI is typically documented
by an inventory security agreement or other floorplan financing agreement
providing for a security interest in favor of BCI in all inventory of the dealer
the purchase of which was financed or floorplanned by BCI. The agreements
generally also set forth the dealer's obligations with respect to repayment, the
maintenance and security (including insurance) of the inventory, remedies of BCI
upon a default by such dealer and other matters relating to the dealer's
inventory and business and BCI's rights. The inventory security agreements and
other floorplan financing agreements generally require the dealer to maintain
insurance (for the benefit of BCI) with respect to the inventory being financed
by BCI. Although BCI's right to the proceeds of such insurance will not be
transferred by BCI to BCRC (or by BCRC to the Trust), BCI has agreed under the
Pooling and Servicing Agreement to treat such insurance proceeds received by BCI
as collections on the related Domestic Inventory Receivables.
BCI generally holds a security interest in each item financed until it
is sold by the dealer. The inventory security agreements and other floorplan
financing agreements generally also require the dealer to take (or assist BCI in
taking) all actions as may be necessary for BCI to perfect its security interest
in the financed products. Usually the dealer is required to repay the financed
amount upon sale of the inventory, or within a specified period of time. In
certain cases a dealer may be permitted to extend its obligations for unsold
inventory for limited periods of time. In cases where the dealer is required to
repay the financed amount pursuant to a payment schedule, the inventory being
financed may be sold before the scheduled payment date of the
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related receivable. As a result, BCI would no longer hold a security interest in
the sold inventory.
BCI may also acquire Domestic Inventory Receivables underwritten by
third-party lenders, and although such receivables may not arise in an account
pursuant to an inventory security agreement or other floorplan financing
agreement established by BCI, such account will satisfy BCI's customary
underwriting standards.
BCI generally maintains an active and ongoing relationship with the
dealers to whom it provides floorplan financing and generally reevaluates
individual dealers' credit limits (i) prior to increasing such credit limit,
(ii) on an annual basis and (iii) if a dealer is experiencing financial
difficulties or is not complying with its obligations under its inventory
security agreement or other floorplan financing agreement with BCI. BCI reserves
the right to deny any new or increased credit requests. At times, based upon
BCI's relationship with the manufacturer, importer or distributor and, in the
case of a manufacturer, importer or distributor who has entered into a
repurchase agreement, the past practice of such manufacturer, importer or
distributor in performing its obligations under such repurchase agreement
(discussed under "--Relationship with Manufacturers, Importers and Distributors"
below), BCI may establish a dealer line of credit that would otherwise not be
granted on the strength of dealer credit alone.
Asset-Based Receivables. BCI's credit underwriting process with respect
to Asset-Based Receivables is expected to give consideration to a variety of
factors, including, among others, the financial condition of the borrowing
entity, its credit history and relationship with current and previous lenders
and its historical performance and trends. Upon satisfaction of certain credit
criteria, terms and conditions, an account would be approved for a revolving
line of credit, the size of which would be based on a variety of factors
including the need of the borrower.
Upon approval of the credit, an evaluation of the borrowing base of the
borrower would be performed and advance rates would be established based on the
type of collateral. For purposes of evaluating items such as finished goods
inventory, work-in-process, raw materials, component parts and real estate, an
independent appraisal may be obtained and used in connection with establishing
advance rates. With respect to accounts receivable, eligibility criteria,
typically excluding items past due in excess of, or aged over, a specific number
of days from invoice date, would be established, and concentration limits would
be set with respect to the individual items within the receivables base. Next,
an advance rate on eligible receivables would be determined based on a review of
historical and projected data, giving consideration to factors such as credit
loss experience, dilution, contingent sales and aged items. The intended result
of the above analyses would be to set eligibility criteria and advance rates
such that, upon any necessary collateral liquidation, BCI would fully recover
any principal dollars advanced on the revolving line of credit.
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The adequacy of the borrowing base would be monitored periodically. In
addition, the financial condition of the borrower would be monitored in
connection with financial covenants set forth in the loan agreements, and the
borrower would be subject to audit by BCI.
PAYMENT TERMS
Domestic Inventory Receivables. BCI is generally entitled to receive
repayment in full of the related loan upon sale of the inventory for which
floorplan financing has been provided. This payment system is commonly known as
the Pay-as-Sold Program. Interest is generally payable monthly. See "--Billing
and Collection Procedures" below. A scheduled payment program is made available
in limited instances to certain manufacturer's, importer's and distributor's
eligible dealers pursuant to which such dealers may schedule the repayment of
financed inventory over several months (generally 90 to 180 days), whether sold
or not. The sum of all payments under the scheduled payment program will equal
the advance to the dealer, which advance in most cases will be the full price of
the financed product (rather than the discounted price which is paid to the
manufacturer, importer or distributor in scheduled payment situations), plus in
certain instances interest on the amount advanced to the dealer. In certain
cases where there is a scheduled payment program, there is no interest collected
on such Domestic Inventory Receivable, since the advances were made at a
discount from the face amount of the receivables. See "Description of the
Certificates--Discount Option." The first payment is generally due 30 days from
the invoice date and subsequent payments are generally due each 30 days
thereafter.
Asset-Based Receivables. Obligors would be generally obligated to pay
interest on outstanding borrowings pursuant to a schedule, which normally would
be expected to be monthly or quarterly. Principal payments and draws would also
generally be settled on a periodic basic (which may be weekly, monthly or
quarterly) or, if earlier, when and to the extent principal outstanding balances
exceed eligible collateral at negotiated advance rates (i.e., the maximum
percentage of the borrowing base, or portion thereof, that the borrowed amount
can represent).
BILLING AND COLLECTION PROCEDURES
Domestic Inventory Receivables. A statement setting forth billing and
related account information is prepared by BCI and generally mailed or otherwise
transmitted to each dealer on a monthly basis. Each dealer's statement is
generally generated and distributed on the second or third day following BCI's
month-end cut-off date. Interest and other non-principal charges are usually
required to be paid by the fifteenth day of each month and in all cases prior to
the month-end cut-off date for the month in which such amounts are generally
billed. Both interest and other non-principal charges are generally billed in
arrears. Generally, dealers remit payments to bank lock boxes. In cases where a
manufacturer, importer or distributor is responsible for a payment (such as
interest payments in certain situations), billing goes to such manufacturer,
importer or distributor.
REVENUE EXPERIENCE
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Domestic Inventory Receivables. BCI generally charges dealers interest
at a floating rate determined by BCI on each business day. BCI is currently
determining the rate to be the "prime rate" designated in the "Wall Street
Journal," plus a spread generally ranging from 0% to 8.5% per annum based on
risk and/or other factors including the manufacturer's, importer's or
distributor's support of the dealer. The interest rate for any given period is
the average daily prime rate plus the applicable spread and is applied to the
average balances outstanding during the applicable period. The average spread
over the average prime rate charged to dealers for the Domestic Inventory
Receivables and the average prime rate for the fiscal years ended January 31,
1999, 1998, 1997, 1996 and 1995 is set forth in the chart below.
AVERAGE SPREAD AND PRIME RATE
<TABLE>
<CAPTION>
Year Ended
January 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Average Spread
over Prime Rate
Average Prime
Rate
Spread plus
Prime Rate
</TABLE>
There is seasonality in the level of outstanding Domestic Inventory
Receivables and in repayments of principal. See "Maturity and Principal Payment
Considerations." Dealer inventory financed by Domestic Inventory Receivables
typically increases during the fall and winter months reaching a peak during the
late winter or early spring, at which point the outstanding Domestic Inventory
Receivables then begin liquidating during the spring and summer. In large part,
this seasonality is attributable to the Domestic Inventory Receivables related
to marine products and Bombardier products.
RELATIONSHIP WITH MANUFACTURERS, IMPORTERS AND DISTRIBUTORS
Domestic Inventory Receivables. BCI's primary marketing focus is the
manufacturer, importer or distributor of the financed product. Affiliates of BCI
(which manufacture Ski-Doo snowmobiles, Sea-Doo personal watercraft sport boats,
neighborhood vehicles and all-terrain vehicles, and related parts and
accessories) manufacture products which are financed directly by BCI. Such
affiliate manufactured products resulted in Domestic Inventory Receivables
representing in the aggregate, as of _________, 1999, approximately ___% of
BCI's Domestic Inventory Receivables portfolio. With the exception of four
independent manufacturers who accounted, as of _________, 1999, for
approximately ___%, ___%, ___% and ___%, respectively, of BCI's Domestic
Inventory Receivables portfolio, no other manufacturer,
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importer, or distributor currently accounts for more than 2% of BCI's Domestic
Inventory Receivables portfolio.
In most instances, rates, terms and procedures are agreed upon at the
manufacturer, importer or distributor level, although for large dealers specific
arrangements may be made with the individual dealer.
In certain situations, the manufacturer, importer or distributor will
pay all or a portion of the interest that would otherwise be payable for some
period by a dealer with respect to a Domestic Inventory Receivable; in such
cases, the manufacturer, importer or distributor makes such payment to BCI and
the dealer has a corresponding interest moratorium.
In the past, most financing to dealers has involved a commitment by the
manufacturer, importer or distributor to repurchase the financed products if BCI
repossesses such products after a dealer defaults. In some cases, these
repurchase obligations lapse when an unsold product reaches a certain age. The
repurchase price to be paid to BCI is generally equal to (i) the unpaid loan
balance with respect to the repossessed goods plus (ii) certain costs of
repossession less (iii) in certain circumstances, a scheduled amount determined
according to the age of the repossessed goods. In certain cases, manufacturers,
importers and distributors are also subject to recourse agreements which
obligate the manufacturer, importer or distributor to repurchase the receivables
in the event of a dealer default. The obligations of the manufacturer, importer
or distributor do not relieve the dealers of any of their obligations to BCI.
However, in certain cases, the manufacturer, importer or distributor who makes a
payment with respect to a Domestic Inventory Receivable due from a dealer may
become subrogated to the related claims by BCI against the dealer and may
require a transfer of BCI's corresponding claims against the dealer to the
extent of the payment.
The terms of such repurchase commitments may vary, both by industry and
by manufacturer, importer or distributor. In certain circumstances, the
manufacturer's, importer's or distributor's repurchase obligation may be limited
to a specified percentage of the amount financed. In addition, current trends in
the domestic inventory financing business indicate that repurchase commitments
may not always be available from manufacturers, importers and distributors or
may be replaced with a commitment by the manufacturer or distributor to remarket
the goods financed in the case of a dealer default.
To the extent repurchase agreements and other agreements are entered
into with manufacturers, importers or distributors relating to the dealers who
are being financed by Domestic Inventory Receivables, such agreements will,
pursuant to the Receivables Purchase Agreement, be assigned by BCI to BCRC, but
not by BCRC to the Trust. BCI agrees under the Pooling and Servicing Agreement
to use reasonable efforts to collect under such agreements (on behalf of BCRC)
with manufacturers, importers and distributors with respect to the Domestic
Inventory Receivables, and BCRC and BCI agree to treat such amounts as
collections on the related Receivables and to deposit all such collections into
the Trust.
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Asset-Based Receivables. Asset-Based Receivables are not expected to be
supported by any commitment from a manufacturer, importer or distributor to
repurchase any financed products.
MONITORING
Domestic Inventory Receivables. Once the dealer credit line is
established, the relevant manufacturer, importer or distributor may, after
obtaining BCI's approval for each shipment, ship products to the dealer and
receive payment therefor (as a loan to the dealer) from BCI so long as such
dealer's BCI financed inventory level remains within the limits of that dealer's
credit line. Provided the relevant account is in good standing, performing under
its inventory security agreement or other floorplan financing agreement and the
credit line has not been withdrawn, approval will normally be given.
In order to ensure compliance with the Pay-As-Sold Program, BCI
periodically conducts audit inspections of dealers. In most cases, inventory is
typically inspected from three to six times per year based upon the performance
of the related dealer and the size of outstanding receivables with respect to
such dealer. Audits may be conducted as infrequently as once per year. The
audits are intended to ensure that the dealers are paying for floorplanned
products as they are sold. The inspections are performed by BCI field
representatives or outside inspection service personnel who have been specially
trained to audit the inventory of dealers. The field representatives or outside
inspection service personnel performing the audit will generally do the
following: (i) check the actual inventory; (ii) inspect products for signs of
use or excessive wear and tear; (iii) spot check dealer sales orders with
respect to manufactured housing related receivables and spot check contract
pendings with respect to other receivables; (iv) complete condition reports on
product that is materially worn or damaged; (v) inspect the dealer's place of
business and report unusual conditions; (vi) attempt collection for principal as
needed; and (vii) obtain the dealer's signature certifying the audit. Should
discrepancies in a dealer's inventory and payment schedule or other problems be
discovered by the auditing representative, BCI's management is promptly apprised
of the situation.
Asset-Based Receivables. Once BCI establishes a credit line with a
borrower, BCI expects to monitor the adequacy of the borrowing base on a
periodic basis and expects to perform periodic audits. In addition, BCI expects
to monitor the financial condition of the borrower periodically in connection
with loan covenants set forth in the loan agreements, and the borrower would be
subject to audit by BCI.
Outsourcing. BCI has delegated certain of its servicing and
administrative duties to third parties and BCI may from time to time in the
future delegate all or a portion of its servicing and administrative duties with
respect to the Receivables to third parties, provided that no such delegation
shall relieve BCI of its responsibility as Servicer with respect to such duties.
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COLLECTION ACTIVITY
Domestic Inventory Receivables. BCI is responsible for all normal
collection activity with respect to Domestic Inventory Receivables. When it has
been determined that any further collection activity will require repossession,
any remaining inventory is generally repossessed by BCI in conjunction with the
applicable manufacturer, importer or distributor. In such instances, if the
manufacturer, importer or distributor has entered into a repurchase agreement,
such manufacturer, importer or distributor is generally obligated under such
repurchase agreement to pay BCI (i) the unpaid principal amount of the
Receivables with respect to the repossessed product plus (ii) certain costs of
repossession and (iii) in certain circumstances, less a scheduled amount
determined according to the age of the repossessed products. The dealer,
however, remains obligated to pay BCI for any unpaid interest, other
non-principal collections and any amounts not otherwise collected from the
manufacturer, importer or distributor. Any payments collected by the Servicer
from a manufacturer, importer or distributor under any recourse obligation with
respect to a defaulting dealer will be treated under the Pooling and Servicing
Agreement as collections in respect of the related Receivables. Any legal action
against a dealer is generally initiated by BCI as Servicer of the Receivables.
All payments on such receivables are due when the related inventory is
sold or when payment is otherwise scheduled to be made and a default will exist
if payment is not made when due. BCI has in the past entered into (and may in
the future agree to) an extended payment term arrangement with a defaulted
dealer. When a dealer is on a scheduled payment program and a payment is missed
or cannot be made, the usual course of action by BCI involves an inspection of
the dealer's inventory. Based on such inspection, a decision is generally made
either to extend the payment due date or to institute other collection measures.
Asset-Based Receivables. Upon default by the borrower under an
Asset-Based Receivable credit arrangement, which, among other conditions, may
arise as a result of the borrower's failure to comply with certain covenants or
failure to maintain an adequate borrowing base to support outstanding balances,
BCI would be expected to continue its ongoing assessment of the borrower's
financial condition and determine its best course of action for purposes of
obtaining repayment, including the possibility of immediate liquidation of all
collateral.
Charge-Off Policy. BCI's historical charge-off policy regarding
accounts included in the BCI Domestic Inventory Portfolio has been generally to
pursue all collection activities prudently before charging-off the account. The
accounts are charged-off in accordance with BCI's policies in effect from time
to time.
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PARTICIPATION ARRANGEMENTS
From time to time BCI may permit other financing sources to participate
in certain of its financing arrangements with Obligors and in such cases, BCI
will provide for such participation by granting to or transferring to such other
financing sources an undivided interest in the receivables, related collateral
security and other rights associated therewith (a "PARTICIPATION INTEREST"). The
documentation for the underlying line of credit will remain in the name of BCI,
as lender and BCI will be the Servicer under such arrangement. In a separate
contractual arrangement with BCI, the holder of the Participation Interest will
agree to provide a portion of the funding for such financing to BCI and will
have the right to receive a portion of the payments received on account of
principal, interest and other fees and charges due from the Obligor and with
respect to the related collateral security and other rights associated
therewith. BCI may advise an Obligor that the size of its line of credit is
conditioned upon participants in the financing. In other circumstances, there
will be no such condition and BCI may be obligated to maintain the full amount
of the line of credit notwithstanding its expectation that a portion of it will
be participated. Subject to the Rating Agency Condition being satisfied with
respect to the form of the documentation pursuant to which Participation
Interests are to be granted, the receivables, related collateral security and
other associated rights to be sold by BCI to the Depositor, and in turn by the
Depositor to the Trust, may be subject to Participation Interests granted
pursuant to such documentation.
The Depositor is permitted to cause the Trust to transfer an undivided
interest in certain Receivables, related Collateral Security and other
associated rights included in the Trust's assets to the Depositor, which may
thereafter transfer such interest in the form of a Participation Interest
subject to the Rating Agency Condition being satisfied with respect to the form
of the documentation pursuant to which such Participation Interests are to be
granted. The Depositor has caused interests in certain receivables to be
transferred to it from the Trust and the Depositor has transferred such
interests to BCI.
THE ACCOUNTS
GENERAL
The following discussion includes descriptions of the Domestic
Inventory Receivables and the Asset-Based Receivables. Currently, however, the
Accounts consist solely of Eligible Accounts in the BCI Domestic Inventory
Portfolio as provided herein. BCI and BCRC have the option, subject to certain
conditions, to include accounts containing Asset-Based Receivables.
The Receivables arise in the Accounts. The Accounts consist of accounts
in the BCI Domestic Inventory Portfolio (and may in the future also consist of
all or a portion of the accounts in BCI's Asset-Based Receivables portfolio)
that were, in either case, Eligible Accounts at the time of such selection. In
order to be an Eligible Account, each Account must meet certain
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criteria provided in the Pooling and Servicing Agreement. See "Description of
the Certificates--Representations and Warranties" and "--Eligible Accounts and
Eligible Receivables." All Eligible Accounts sold or contributed to BCRC by BCI
pursuant to the Receivables Purchase Agreement will be deposited by BCRC into
the Trust pursuant to the Pooling and Servicing Agreement. No selection
procedures believed by BCI to be adverse to the holders of the Series have been
or will be used by BCI in selecting the Accounts to be transferred to BCRC.
The "POOL BALANCE" means the aggregate principal balances of the
Receivables that are Eligible Receivables. As long as an Account is an Eligible
Account, the Receivables in such Account (which will be part of the Trust's
assets) may be performing or non-performing Receivables and may be Eligible
Receivables or Ineligible Receivables; however, only Eligible Receivables will
be considered in determining the Pool Balance (and therefore in determining
various amounts or percentages which are based on the Pool Balance).
The Accounts pursuant to which the Domestic Inventory Receivables have
been or will be generated by BCI or an affiliate of BCI are evidenced by
inventory security agreements or other floorplan financing agreements entered
into by dealers with BCI to finance the purchase by the dealers of inventory.
The accounts pursuant to which the Asset-Based Receivables will be generated
(which accounts may in the future also be included in the Pool as Accounts) are
expected to be revolving credit arrangements entered into with BCI or affiliates
of BCI by dealers to finance working capital needs and by manufacturers and
distributors to finance such manufacturers' and distributors' production,
manufacturing and inventory of consumer, recreational and commercial products.
The terms of such revolving credit arrangements would be generally negotiated
between BCI (or an affiliate of BCI) and its borrower and, therefore, no general
form of financing agreement exists with respect to the Asset-Based Receivables.
Pursuant to the Pooling and Servicing Agreement, BCRC has the right
(subject to certain conditions), and in some circumstances is obligated, to
designate from time to time additional qualifying accounts to be included as
Accounts and to convey to the Trust the Receivables of such Additional Accounts,
including Receivables thereafter created. These accounts must meet the
eligibility criteria to qualify as Eligible Accounts as of the date such
accounts are designated as Additional Accounts. Pursuant to the Receivables
Purchase Agreement, BCI will from time to time sell or contribute the
Receivables then existing, with certain exceptions, or thereafter created under
the Accounts and under any such Additional Accounts to BCRC, which will transfer
such Receivables to the Trust pursuant to the Pooling and Servicing Agreement.
See "Description of the Certificates--Addition of Accounts" and "--
Representations and Warranties." Eligible Receivables in the BCI Domestic
Inventory Portfolio or Asset-Based Receivables portfolio may consist of
performing Receivables which were previously non-performing.
Subject to certain conditions specified in the Pooling and Servicing
Agreement, BCRC has the right to remove Accounts and Receivables from the Trust.
See "Description of the Certificates--Removal of Accounts and Assignment of
Receivables." Throughout the term of the
33
<PAGE>
<PAGE>
Trust, the Accounts from which the Receivables arise will be the Accounts
designated by BCRC on the Initial Cut-Off Date plus any Additional Accounts,
minus any Accounts removed from the Trust.
Pursuant to the Pooling and Servicing Agreement, the Servicer (expected
to be BCI) or any subservicer (which may include a BCI affiliate) may, subject
to certain conditions, change the terms relating to the Accounts and the
Receivables. See "Description of the Certificates--Collection and Other
Servicing Procedures."
Certain information with respect to the accounts in the BCI Domestic
Inventory Portfolio as of ________, 1999 is set forth below:
CREDIT LIMITS OF THE ACCOUNTS
<TABLE>
<CAPTION>
Accounts with Credit Limits Principal Amount of % of Receivables in
Ranging From: Receivables the Trust
- --------------------------- ------------------- -------------------
<S> <C> <C>
$_________ to $_________ $__________ ___%
$_________ to $_________ $__________ ___%
$_________ to $_________ $__________ ___%
---------------------------------------------------------
Totals $__________ 100%
================================================================
</TABLE>
YEAR ACCOUNTS ESTABLISHED
<TABLE>
<CAPTION>
Year Account Principal Amount of % of Receivables
Established: Receivables in Trust
------------ ------------------- ----------------
<S> <C> <C>
1999 $__________ ___%
1998 $__________ ___%
1997 $__________ ___%
1996 $__________ ___%
1995 or earlier $__________ ___%
----------------------------------------------------------
Totals $__________ 100%
==========================================================
</TABLE>
As of ___________, 1999;
There were approximately ____ Eligible Accounts which had been
designated to the Trust.
34
<PAGE>
<PAGE>
Receivables in such Accounts had an aggregate principal balance of
approximately $________.
The average aggregate credit limit per Account was approximately
$__________.
The average principal balance of Receivables per Account was
approximately $__________.
The aggregate principal balance of Receivables as a percentage of the
aggregate credit limits of such Eligible Accounts was approximately ____.
[With respect to Eligible Accounts in the Trust, the weighted average
spread over the prime rate charged to dealers for the period _________, 1999
through ___________, 1999 was approximately ____%.]
All of the historical information (including tables and numbers)
contained in this Prospectus regarding BCI or any Receivables or Accounts also
includes receivables and accounts held by BCI Finance Inc. (formerly BCI
Recovery Inc.). BCI Finance Inc., which was incorporated in 1991, is a
wholly-owned subsidiary of BCI. In October 1991 and June 1993, pools of then
non-performing receivables held by BCI were sold to BCI Finance Inc. In January
1993, an additional pool of non-performing receivables held by BCI was
transferred to BCI Finance Inc. in exchange for receivables held by BCI Finance
Inc. which had become performing receivables.
BCI and BCRC may designate Additional Accounts from time to time and
transfer the Receivables arising therein to the Trust. As a result, the actual
composition of the Receivables by business line represented by the Trust's
assets is expected to change over time. In addition, due to the variability and
uncertainty with respect to the rates at which Receivables in the Trust are
created, paid or otherwise reduced, the information set forth below may vary
significantly over time.
HISTORICAL SIZE
The Eligible Accounts comprise only a portion of the entire receivables
in the BCI Domestic Inventory Portfolio, which portfolio would also include
accounts which would not qualify as Eligible Accounts. As a result, the
historical information with respect to Eligible Accounts may be different than
the historical information set forth below.
The following table sets forth information on the aggregate year-end
outstanding principal balances, average number of dealers financed, average
month-end outstanding principal balance on receivables and average volume per
dealer for each of the periods shown.
35
<PAGE>
<PAGE>
SIZE OF PORTFOLIO
<TABLE>
<CAPTION>
Year Ended January 31,
---------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------
(U.S. Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Outstanding Principal Balance............... 759,700 652,800
Average Number of Dealers................... 3,377 3,945
Average Month-End Principal
Balances Per Dealer......................... 184.90 131.80
Average Financing Volume Per
Dealer...................................... 527.70 404.70
</TABLE>
DELINQUENCY
The following table shows delinquency information for the BCI Domestic
Inventory Portfolio as of the dates shown.
36
<PAGE>
<PAGE>
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
Year Ended January 31,
---------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------
(U.S. Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Aggregate Principal Balance................. $759.7 $652.8
Delinquent Amount (1)....................... $ 4.8 $ 9.6
Delinquent Amount/
Aggregate Principal Balance................. 0.6% 1.5%
Allowance for Credit Losses on
Losses on BCI's Books....................... $ 9.7 $ 12.8
Allowance/Aggregate
Principal Balance........................... 1.3% 2.0%
</TABLE>
- ------------------
(1) Consists of the total principal and past due charges on receivables which
were (i) unpaid when due as a result of retail sale of the underlying
product (i.e., sold out of trust) or (ii) unpaid when due under a scheduled
payment program and with respect to which BCI determined that the payment
was undercollateralized after the due date. The percentage of outstanding
Domestic Inventory Receivables which were on a scheduled payment program as
of the above dates was generally less than 4% by principal balance.
See the last two paragraphs under "General" above.
LOSS EXPERIENCE
The following tables set forth BCI's average principal receivables
balance and loss experience for each of the periods shown with respect to the
receivables in the BCI Domestic Inventory Portfolio. The Eligible Accounts will
comprise only a portion of the entire receivables in the BCI Domestic Inventory
Portfolio, which also includes accounts that would be ineligible. In addition,
the Eligible Accounts may also in the future comprise all or a portion of the
receivables in the Asset-Based Receivables portfolio for which there is
currently no historical loss experience information available. As a result,
actual loss experience with respect to the Eligible Accounts may be different.
There can be no assurance that the loss experience for the Receivables in the
future will be similar to the historical experience set forth below.
37
<PAGE>
<PAGE>
LOSS EXPERIENCE
<TABLE>
<CAPTION>
January 31,
---------------------------------------------
1999(1) 1998 1997 1996 1995
---------------------------------------------
<S> <C> <C> <C> <C> <C>
Average Principal Receivables
Balance(2)................................ $624.4 $520.1
Net Losses(3)............................. (1) $ 7.1 $ 0.7
Net Losses/Liquidations................... (1) 0.42% 0.04%
Net Losses/Average Principal
Receivables Balance(4).................... (1) 1.13% 0.13%
</TABLE>
- ------------------
(1) [Reflects changes to BCI's charge-off policy.]
(2) Average Principal Receivables Balance is the average of the month-end
outstanding principal balances for the twelve months ending on the last day
of the period.
(3) Net losses in any period are gross losses less recoveries for such period.
Recoveries include recoveries from collateral security in addition to the
products.
(4) Net losses in any period reflect losses recorded in such period on BCI's
books and records.
See the last two paragraphs under "General" above.
PRODUCT MIX
The level of BCI's domestic inventory financing has increased over the
last four years. The following table details BCI's domestic inventory financing
activity by outstanding aggregate receivables and by volume based on current
product categories for the BCI Domestic Inventory Portfolio. The increase in
financing is not across all industry sectors. While the information reflected in
these tables includes receivables arising under accounts that would not qualify
as Eligible Accounts, the relative product mix for receivables arising under
accounts that would qualify as Eligible Accounts would be similar to the product
mix reflected in these tables.
38
<PAGE>
<PAGE>
OUTSTANDING RECEIVABLES
<TABLE>
<CAPTION>
January 31,
-------------------------------------------------------------
Product 1999 1998 1997 1996 1995
- --------------------------------- -------------------------------------------------------------
(U.S. Dollars in Millions/% of Total)
<S> <C> <C> <C> <C> <C>
Recreational Products............
Marine Products (other
than Bombardier Products)........
Manufactured Housing ............
Recreational Vehicles............
Other............................
-------------------------------------------------------------
Totals...........................
=============================================================
</TABLE>
FINANCING VOLUME
<TABLE>
<CAPTION>
January 31,
-------------------------------------------------------------
Product 1999 1998 1997 1996 1995
- --------------------------------- -------------------------------------------------------------
(U.S. Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Recreational Products............
Marine Products (other
than Bombardier Products)........
Manufactured Housing ............
Recreational Vehicles............
Other............................
-------------------------------------------------------------
Totals...........................
=============================================================
</TABLE>
Bombardier Recreational Products
As a manufacturer, Bombardier Inc. is one of the BCI's most significant
customers. Bombardier recreational products financed by BCI include Ski-Doo
snowmobiles, Sea-Doo personal watercraft, sport boats, neighborhood vehicles and
all-terrain vehicles, and related parts and accessories.
Marine Products (not including Bombardier products)
As of January 31, 1999, BCI provided inventory finance to approximately
[1,400] dealers for purchases of the products of approximately [274] marine
manufacturers and distributors. The marine products financed by BCI are
primarily boats under 30 feet in length, outboard motors and trailers, including
packages consisting of all three products.
39
<PAGE>
<PAGE>
Manufactured Housing
Manufactured housing products for which BCI provides inventory
financing consist of single wide (14 feet) and double wide (28 feet)
manufactured housing units. As of January 31, 1999, BCI was financing
approximately [592] dealers of manufactured homes. In January 1999, BCI
significantly expanded its manufactured housing inventory receivables through a
portfolio purchase from NationsCredit Manufactured Housing Corporation in the
principal amount of approximately US$[175] million.
Recreational Vehicles
The recreational vehicles financed by BCI are primarily motorized
on-the-road recreational vehicles, pull-behind travel trailers and campers. The
specialty vehicles financed by BCI include horse trailers, cargo trailers, buses
and certain trucks. BCI has also recently begun financing fleet purchases by
rental car dealers and has instituted a program to finance fleet purchases of
previously rented vehicles by certain used car dealers.
Other
BCI also provides inventory financing for motorcycles and hot tubs and
is currently developing other inventory financing opportunities.
See the last two paragraphs under "General" above.
AGING EXPERIENCE
The following table provides the age distribution of product inventory
for all dealers in the BCI Domestic Inventory Portfolio as a percentage of total
principal outstanding at the date indicated. Because the Eligible Accounts will
comprise only a portion of the entire BCI Domestic Inventory Portfolio, which
also includes accounts that would be ineligible, actual age distribution with
respect to the Eligible Accounts may be different.
40
<PAGE>
<PAGE>
PRODUCT AGE DISTRIBUTION
<TABLE>
<CAPTION>
January 31,
--------------------------------------------------
Days 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-120........................ 61.44% 64.79%
121-180...................... 13.92% 14.25%
181-270...................... 9.37% 8.95%
Over 270..................... 15.54% 12.01%
</TABLE>
See the last two paragraphs under "General" above.
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of dealers on
the basis of the principal amount of receivables outstanding and the number of
dealers generating such receivables with respect to the BCI Domestic Inventory
Portfolio. This table includes dealers who have either month-end outstanding
principal balances as of April 25, 1999 or who had a positive average daily
principal balance for the month ended April 25, 1999. While some of the
receivables included in this table arose under accounts that would not qualify
as Eligible Accounts, the relative geographic distribution of receivables
arising under accounts that would qualify as Eligible Accounts would be similar
to the distribution reflected in this table.
GEOGRAPHIC DISTRIBUTION (1)
<TABLE>
<CAPTION>
Receivables Percentage of Total Percentage of
Outstanding-(U.S. Receivables Number Number of
State Dollars in Thousands) Outstanding of Accounts Accounts
- ------------------------- --------------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
[State]..................
[State]..................
[State]..................
[State]..................
[State]..................
</TABLE>
- ---------------------------
(1) No other state represents more than 5% of the outstanding Domestic
Inventory Receivables. The remaining states each represent less than ___%
of the outstanding Domestic Inventory Receivables.
See the last two paragraphs under "General" above.
41
<PAGE>
<PAGE>
BOMBARDIER CAPITAL INC.
BCI is a financial services company incorporated in Massachusetts in
1974 and is a wholly-owned subsidiary of Bombardier Capital Holdings Inc., a
Delaware corporation ("BCHI") located in Jacksonville, Florida. BCHI is
wholly-owned by Bombardier Corporation, an Idaho corporation, which in turn is
wholly-owned by Bombardier Corporation (Delaware), a Delaware corporation.
Bombardier Corporation (Delaware) is wholly-owned by Bombardier Inc., a Canadian
corporation. BCI's executive office is located at 1600 Mountain View Drive,
Colchester, Vermont 05446. The telephone number of the executive office is (802)
654-8100.
BCI's business operations are carried on through five divisions. As at
January 31, 1999, the Inventory Finance Division and the Commercial & Industrial
Finance Division accounted for approximately [66.2]% of the managed assets of
BCI. The Consumer Finance Division, the Mortgage Division and the Technology
Management & Finance Division were created in 1997.
The Inventory Finance Division, which has been in operation since the
inception of BCI, provides secured purchase money inventory financing to dealers
selling recreational, commercial and consumer products. The Commercial &
Industrial Finance Division has been in operation since 1991 and provides
domestic and international lending, leasing and asset management services in
connection with a range of business aircraft and other commercial and industrial
products and provides factoring of accounts receivable and other financial
services to affiliated Bombardier companies. BCI has entered new market segments
by launching its own consumer retail and manufactured housing financing
operations through its Consumer Finance Division and Mortgage Division. In
addition, BCI has begun providing commercial leasing services relating to
computer and telecommunications hardware and software and related equipment
through its Technology Management and Finance Division. BCI operates in highly
competitive markets.
As of January 31, 1997, January 31, 1998 and January 31, 1999, BCI's
total assets under management (primarily financing assets) were approximately
$[934] million, $[1,289] million and $_____ million, respectively, and
shareholders' equity was approximately $[139] million, $[159] million and $_____
million, respectively. For the fiscal years ended 1997, 1998 and 1999, total BCI
revenues were approximately $[110] million, $[171] million and $_____ million,
respectively.
Bombardier Inc. is a Canadian corporation which, directly and through
its subsidiaries, is engaged in design, development, manufacture and marketing
in the aerospace, recreational products and transportation equipment industries.
In addition, Bombardier Inc. and its subsidiaries offer support, maintenance and
training services, as well as operations management in the public and private
sectors. Through various subsidiaries, Bombardier Inc. is engaged in financial
services and one division of Bombardier Inc. is involved in the development of
real estate interests earmarked for new uses. Bombardier Inc. and its
subsidiaries operate plants in
42
<PAGE>
<PAGE>
Canada, Mexico, the United States, Austria, Belgium, the Czech Republic,
Finland, France, Germany, Switzerland and the United Kingdom.
Bombardier Inc.'s equity securities are publicly traded on The Montreal
Exchange and The Toronto Stock Exchange, on the Brussels stock exchange in
Belgium and on the Frankfurt Stock Exchange in Germany. Bombardier Inc. is a
reporting issuer under the securities laws of various provinces in Canada
(including Quebec and Ontario) and therefore makes various public filings with
the securities commissions of those provinces, as well as filings with the
exchanges on which its securities are traded. Bombardier does not have
securities registered in the United States.
"Sea-Doo", "Ski-Doo" and various other words, numbers and
configurations used in this Prospectus are trademarks and/or trade names of
various products of Bombardier Inc. and/or its affiliates and are registered
and/or otherwise protected under applicable law.
The registered office of Bombardier Inc. is at 800 Rene-Levesque
Boulevard West, Montreal, Quebec, Canada H3B 1Y8.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Principal payments with respect to the Certificates will not commence
until the Scheduled Payment Date, unless an Early Amortization Event has
occurred or unless BCI elects not to extend the Initial Principal Payment Date.
Principal with respect to the Class B Certificates will not be distributable
until all principal with respect to the Class A Certificates has been
distributed (although distribution to the Class B Certificates may occur on the
same day as the final principal payment to the holders of the Class A
Certificates). It is expected that the final principal payment with respect to
the Class A Certificates will be made on the Class A Expected Final Payment Date
and that a single principal payment in respect of the Class B Certificates will
be made on the Class B Expected Payment Date, but the principal of the Class A
or the Class B Certificates may be paid earlier or, depending on the actual
payment rate on the Receivables, later, as described herein.
The majority of Domestic Inventory Receivables are payable upon the
retail sale of the related Eligible Product and therefore, the timing of such
payments is uncertain.
In addition, there is no assurance that BCI will generate additional
Receivables under the Accounts or that any particular pattern of payments will
occur. In the event of a decline in the rate at which additional Receivables are
generated during the Revolving Period, BCRC may be unable to convey new
Receivables to the Trust (under existing Accounts designated for the Trust) at
the level anticipated or may be unable to contribute Receivables in new Accounts
when otherwise required to do so under the Pooling and Servicing Agreement. (The
obligation to designate additional Accounts under certain circumstances applies
to Accounts of the same type or types as are then included in the Pool;
therefore, if the Pool includes only Accounts containing
43
<PAGE>
<PAGE>
Domestic Inventory Receivables, only Domestic Inventory Receivables would be
required to be added to the Pool unless BCI and BCRC, at their options, and
subject to certain conditions, decide to designate accounts containing
Asset-Based Receivables.) Such failure on the part of BCRC would constitute an
Early Amortization Event, causing principal payments on the Certificates to
commence earlier than would otherwise have been the case.
Further, during the Controlled Accumulation Period or any Initial
Amortization Period or Early Amortization Period, a decline in the rate at which
additional Receivables are generated may have the effect of reducing the rate of
principal distributions on the Certificates, thus extending the maturity of the
Certificates and increasing their exposure to losses in the Pool. Alternatively,
the issuance of other Series may result in the allocation of Excess Principal
Collections from such other Series to the Certificates during any Initial
Amortization Period or Early Amortization Period, which may shorten the maturity
of the Certificates. See "Description of the Certificates--Interest" and
"--Principal" and "The Floorplan and Asset-Based Financing Business."
Following the exhaustion of coverage provided by the Available
Subordinated Amount, the yield to maturity on the Certificates will be more
sensitive to the rate and timing of Defaulted Receivables. For a description of
Investor Charge-Offs, see "Description of the Certificates--Investor
Charge-Offs."
Domestic Inventory Receivables arise through financing arrangements
related to Eligible Products. "ELIGIBLE PRODUCTS" means any consumer,
recreational and commercial products, including, but not limited to, marine
equipment (boats, motors and trailers), snowmobiles, snow-grooming equipment,
personal watercraft, recreational vehicles, manufactured housing, motorcycles,
lawn and garden equipment, horse trailers, personal computers and consumer
electronics and appliances and spares and parts relating to such products.
The amount of new Receivables generated in any month and monthly
payment rates on the Receivables may vary because of seasonal variations in
sales and inventory levels of Eligible Products, retail incentive programs
provided by the manufacturers, importers and distributors of the Eligible
Products and various economic factors affecting Eligible Product sales
generally. The following table sets forth the highest and lowest monthly payment
rates for the Domestic Inventory Receivables portfolio during any month in the
periods shown and the average of the monthly payment rates for all months during
the periods shown, in each case calculated as the percentage equivalent of a
fraction, the numerator of which is the aggregate of all collections of
principal during the period and the denominator of which is the average
aggregate principal balance for such period. There can be no assurance that the
rate of Principal Collections will be similar to the historical experience set
forth below. Because the Eligible Accounts will comprise only a portion of the
entire BCI Domestic Inventory Portfolio, actual monthly payment rates with
respect to the Eligible Accounts may be different.
44
<PAGE>
<PAGE>
MONTHLY PRINCIPAL PAYMENT RATES
<TABLE>
<CAPTION>
Year Ended January 31,
---------------------------------------------------
1999 1998 1997 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Highest Month............................. 35.9% 37.3%
Lowest Month.............................. 11.1% 14.4%
Average of the Months
in the Period............................. 22.9% 24.4%
</TABLE>
See the last paragraph under "The Accounts--General."
Because BCI may cause an Initial Amortization Period to commence on any
Initial Principal Payment Date and because the occurrence of an Early
Amortization Event would initiate an Early Amortization Period, the final
distribution of principal on the Certificates may be made, in the case of the
Class A Certificates, prior to the Class A Expected Final Payment Date and, in
the case of the Class B Certificates, prior to the Class B Expected Payment
Date. See "Description of the Certificates--Early Amortization Events" and
"--Extension of Initial Principal Payment Date."
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement, dated as of January 1, 1994, filed as an exhibit to the Registration
Statement of which this Prospectus is a part, as supplemented by the respective
supplements relating to prior Series of investor certificates and to the
Certificates and the Variable Funding Certificate and as amended by Amendment
Number 1 dated as of January 1, 1997 ("AMENDMENT NUMBER 1") (as so supplemented
and amended and as further supplemented and amended from time to time, the
"Pooling and Servicing Agreement"), among BCRC, as depositor, BCI, as servicer
(in such capacity, the "SERVICER") and Bankers Trust Company, as trustee (the
"TRUSTEE"). The Pooling and Servicing Agreement provides that it is governed by
New York law. The following discussion represents a summary of certain terms of
the Pooling and Servicing Agreement and does not purport to provide a complete
description. For further information, owners and prospective owners of
Certificates are advised to examine the Pooling and Servicing Agreement,
including Amendment Number 1, copies of which (without certain exhibits or
schedules) will be made available by the Trustee upon written request.
The Certificates will evidence undivided beneficial ownership interests
in the Receivables representing the right to receive from the Trust, upon
certain terms as further described herein, funds up to (but not in excess of)
the amounts required to make payments of interest on and principal of the
Certificates pursuant to the Pooling and Servicing Agreement. The initial
45
<PAGE>
<PAGE>
principal balance of the Class A Certificates is $_________ and the initial
principal balance of the Class B Certificates is $_________. The Certificates
will initially be represented by two or more certificates registered in the name
of the nominee of The Depository Trust Company ("DTC") (together with any
successor depository selected by the Depositor, the "DEPOSITORY"), except as set
forth below. The Certificates will be available for purchase in minimum
denominations of $1,000 and integral multiples thereof in book-entry form. The
Depositor has been informed by DTC that DTC's nominee will be Cede & Co.
("CEDE"). Accordingly, Cede is expected to be the holder of record of the
Certificates. No Certificate Owner will be entitled to receive a certificate
representing such person's beneficial interest in the Certificates, unless and
until Definitive Certificates are issued under the limited circumstances
described herein. All references herein to actions by Certificateholders shall
refer to actions taken by DTC upon instructions from its Participants (as
defined below), and all references herein to distributions, notices, reports and
statements to Certificateholders shall refer to distributions, notices, reports
and statements to Cede, as the registered holder of the Certificates. See
"Book-Entry Registration" and "Definitive Certificates" below.
INTEREST
Interest on the principal balance of the Class A Certificates will
accrue at a per annum rate (the "CLASS A CERTIFICATE RATE") equal to the lesser
of (i) the sum of (A) LIBOR (as defined in the third following paragraph) and
(B) ___% and (ii) the Net Receivables Rate (as defined in the second following
paragraph) and will be payable to the holders of the Class A Certificates on
each Distribution Date, commencing [DATE], 1999. Interest on the principal
balance of the Class B Certificates will accrue at a per annum rate (the "CLASS
B CERTIFICATE RATE") equal to the lesser of (i) the sum of (A) LIBOR (as defined
in the third following paragraph) and (B) ____% and (ii) the Net Receivables
Rate (as defined in the second following paragraph) and will be payable to the
holders of the Class B Certificates on each Distribution Date, commencing
[DATE], 1999. "CERTIFICATE RATE" means the Class A Certificate Rate or the Class
B Certificate Rate, as the context requires. Interest due on a Distribution Date
will accrue from and including the preceding Distribution Date (or, in the case
of the first Distribution Date, from and including the date of the issuance of
the certificates (the "CLOSING DATE") to but excluding such Distribution Date
(each such period, an "INTEREST PERIOD"). Interest due for any Distribution Date
will be calculated on the basis of the actual number of days elapsed during the
related Interest Period and a 360-day year. Interest due but not paid on any
Distribution Date will be due on the next Distribution Date together with, to
the extent lawfully payable, interest on such amount at the applicable
Certificate Rate. Interest payments on the Certificates will be derived solely
from (i) Investor Non-Principal Collections for the preceding calendar month
(the "Collection Period"), (ii) the amount, if any, then on deposit in the
Reserve Fund, (iii) any Investment Proceeds and (iv) Series 1999-1 Available
Retained Collections to the extent of the Required Subordination Draw Amount.
See "Allocation Percentages" and "Distribution from the Collection Account;
Reserve Fund; Principal Account" below. Such amounts available to make interest
payments on the Certificates will be distributed first in respect of the Class A
Certificates and then to the Class B Certificates, in each case up to the
accrued and unpaid interest thereon.
46
<PAGE>
<PAGE>
"ADJUSTMENT DATE" shall mean the second London Business Day preceding
the first day of the related Interest Period.
["NET RECEIVABLES RATE" shall mean, for any Adjustment Date, the
weighted average of the interest rates borne by the Receivables included in the
Pool for the preceding Collection Period less, if BCI is the Servicer, 2%, or,
if BCI is not the Servicer, 3%.]
"LIBOR" with respect to any Interest Period will be based on the
offered rates for deposits in United States dollars having a maturity of one
month (the "INDEX MATURITY") commencing on the related Adjustment Date which
appears on the Telerate Page 3750 as of 11:00 A.M., London time, on such date of
calculation. If such rate does not appear on Telerate Page 3750, LIBOR with
respect to such Interest Period will be determined at approximately 11:00 A.M.,
London time, on such Adjustment Date on the basis of the rates at which deposits
in United States dollars are offered by four major banks in the London interbank
market (selected by the Calculation Agent) to prime banks in the London
interbank market for a period equal to the Index Maturity and in a principal
amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each such bank to
provide a quotation of its rate. If at least two such quotations are provided,
LIBOR will be the arithmetic mean (rounded up or down, as the case may be, to
the nearest whole multiple of 0.0625% per annum; provided, however, that any
amount falling in the middle shall be rounded up to the nearest whole multiple
of 0.0625%) of such quotations. If fewer than two quotations are provided, LIBOR
with respect to such Interest Period will be the arithmetic mean (rounded
upwards or downwards as aforesaid) of the rates quoted at approximately 11:00
A.M., New York City time, on such Adjustment Date by three major banks in New
York, New York selected by the Calculation Agent for loans in United States
dollars to leading European banks having the Index Maturity and in a principal
amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, LIBOR in effect for the applicable period will be LIBOR in effect
for the previous period.
"TELERATE PAGE 3750" means the display page currently so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"LONDON BUSINESS DAY" means any day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
"CALCULATION AGENT" means the Trustee or any other Calculation Agent
selected by the Depositor which is reasonably acceptable to the Trustee.
PRINCIPAL
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In general, no principal payments will be made on the Certificates
until the Distribution Date in _____________, unless (i) BCI elects not to
extend the Initial Principal Payment Date or (ii) an Early Amortization Event,
as described herein, occurs. If BCI elects not to extend the Initial Principal
Payment Date, principal distributions on the Certificates will begin on such
Initial Principal Payment Date, the earliest of which would be the __________
Distribution Date. If an Early Amortization Event occurs, principal
distributions on the Certificates will begin on the Distribution Date following
the end of the Collection Period in which such event occurs. During the
Revolving Period (defined below), Principal Collections allocable to the
Certificates, subject to certain limitations, will either (a) be deposited in
the Excess Funding Account as described herein, (b) be allocated to one or more
outstanding Series which are in amortization, early amortization or accumulation
periods to cover principal payments due to the certificateholders of any such
Series or which provide for excess funding accounts or similar arrangements or
(c) if no such Series is then amortizing or accumulating principal or otherwise
provides for excess funding accounts or similar arrangements, either be paid (or
made available) to the holder of the BCRC Certificate to maintain at a constant
level the interest in the Trust represented by the Certificates, or held as
Unallocated Principal Collections. See "Allocation Percentages--Principal
Collections for all Series" and "Distributions from the Collection Account;
Reserve Fund--Principal Collections" below.
The "Revolving Period" will be the period beginning on the Series
Cut-Off Date and ending on the earliest of (x) the Accumulation Period
Commencement Date, (y) the date the Trustee mails notice to the
Certificateholders that BCI has elected not to extend the Initial Principal
Payment Date, and (z) the business day immediately preceding the day on which an
Early Amortization Event occurs.
"ACCUMULATION PERIOD COMMENCEMENT DATE" means the first day of the
___________ Monthly Period, if the Accumulation Period Length is six months, the
first day of the _____ Monthly Period, if the Accumulation Period Length is five
months, the first day of the _____ Monthly Period, if the Accumulation Period
Length is four months, the first day of the ________ Monthly Period, if the
Accumulation Period Length is three months, the first day of the _______ Monthly
Period, if the Accumulation Period Length is two months and the first day of the
________ Monthly Period if the Accumulation Period Length is one month;
provided, however, if the Accumulation Period Length has been determined to be
less than six months and, after such determination, any outstanding Series
enters into an early amortization period, the Accumulation Period Commencement
Date shall be the earlier of (i) the date that such outstanding Series entered
into its early amortization period and (ii) the Accumulation Period Commencement
Date, as previously determined.
During the Controlled Accumulation Period, the Initial Amortization
Period or any Early Amortization Period, Principal Collections allocable to the
Certificates plus certain other amounts comprising Available Investor Principal
Collections will no longer be deposited in the Excess Funding Account or
allocated to another outstanding Series or paid or made available to
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the holder of the BCRC Certificate, as described above, but rather (x) in the
case of the Controlled Accumulation Period, will be deposited into the Principal
Account until the amount on deposit equals the Controlled Deposit Amount, and
(y) in the case of the Initial Amortization Period or an Early Amortization
Period, will be deposited (up to the amount of Monthly Principal for the related
Distribution Date) into the Collection Account and distributed to the
Certificateholders as Monthly Principal until either the outstanding principal
balance of each class of the Certificates has been reduced to zero or the
____________ Distribution Date (the "SERIES 1999-1 TERMINATION DATE") has
occurred.
During the Controlled Accumulation Period, Principal Collections
allocable to the Certificates will be deposited into the Principal Account, in
an amount up to the Controlled Deposit Amount. During any Initial Amortization
Period or Early Amortization Period, Principal Collections allocable to the
Certificates will be distributed first to the Class A Certificates until the
principal balance thereof is reduced to zero, and then to the Class B
Certificates until the principal balance thereof is reduced to zero.
It is expected that a single principal payment with respect to the
Class A Certificates will be made on the Class A Expected Final Payment Date and
that a single principal payment in respect of the entire principal balance of
the Class B Certificates will be made on the Class B Expected Payment Date, but
the principal of the Class A or the Class B Certificates may be paid earlier or,
depending on the actual payment rate on the Receivables, later, as described
under "Maturity and Principal Payment Considerations" herein. If an interest in
the Receivables represented by each outstanding Series is required to be
repurchased as described below under the last paragraph of "Representations and
Warranties," principal payments on the Certificates will be made on the
Distribution Date following such repurchase. See "Allocation Percentages--
Principal Collections for all Series" and "Distributions from the Collection
Account; Reserve Fund--Principal Collections" below.
Distributions on the Certificates will be made on each Distribution
Date to the holder of Certificates in whose names the Certificates were
registered (expected to be Cede, as nominee of DTC) at the close of business on
the day preceding such Distribution Date (or, if Definitive Certificates are
issued, on the last day of the preceding calendar month) (each a "RECORD DATE").
However, the final distribution on the Certificates will be made only upon
presentation and surrender of the Certificates. Distributions will be made to
DTC in immediately available funds.
EXTENSION OF INITIAL PRINCIPAL PAYMENT DATE
Unless an Early Amortization Event occurs, principal with respect to
the Class A Certificates is expected to be paid on the _________ Distribution
Date and principal with respect to the Class B Certificates is expected to be
paid, concurrently with the final distribution on the Class A Certificates,
on the ___________ Distribution Date; provided, however, that the
Certificateholders will receive payments of principal earlier if BCI elects not
to extend the Initial Principal Payment Date. The period during which principal
is distributed to the
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Certificateholders as a result of BCI's election not to extend the Initial
Principal Payment Date is called the "INITIAL AMORTIZATION PERIOD." The first
"INITIAL PRINCIPAL PAYMENT DATE" will be the __________, but will successively
and automatically be extended to the next Distribution Date after the
then-current Initial Principal Payment Date unless BCI elects not to so extend;
provided further, however, that the Initial Principal Payment Date may not
extend beyond the Class A Expected Final Payment Date. In the event that BCI
elects not to extend the Initial Principal Payment Date, the Revolving Period or
the Controlled Accumulation Period, as applicable, will end and the Available
Investor Principal Collections for each Distribution Date commencing on the
Initial Principal Payment Date will be paid (i) first, to the Class A
Certificateholders until the earlier of the date on which the outstanding
principal balance of the Class A Certificates has been reduced to zero or the
Series 1999-1 Termination Date and (ii) second to the Class B Certificateholders
until the earlier of the date on which the outstanding principal balance of the
Class B Certificates has been reduced to zero or the Series 1999-1 Termination
Date.
BCI will cause the Trustee to provide a copy of BCI's notice not to
extend the Initial Principal Payment Date to each Certificateholder, BCRC and
the Rating Agencies. The Servicer will cause the Trustee to mail such notice no
later than the fifth business day following the Distribution Date prior to the
effective Initial Principal Payment Date on which principal payments will
commence.
BOOK-ENTRY REGISTRATION
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"). DTC was created to hold securities for
its participating organizations ("PARTICIPANTS") and facilitate the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes in their accounts, thereby eliminating the need
for physical movement of certificates. Participants include the Underwriters,
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("INDIRECT PARTICIPANTS").
Certificate Owners that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Certificates may do so only through Participants and Indirect
Participants. In addition, Certificate Owners will receive all distributions of
principal of and interest on the Certificates from the Trustee through DTC and
its Participants. Under a book-entry format, Certificate Owners will receive
payments after the related Distribution Date because, while payments are
required to be forwarded to Cede, as nominee for DTC, on each such date, DTC
will forward such payments to its Participants which
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thereafter will be required to forward them to Indirect Participants or
Certificate Owners. It is anticipated that the only Certificateholder (as such
term is used in the Pooling and Servicing Agreement) will be Cede, as nominee of
DTC, and that Certificate Owners will not be recognized by the Trustee as
Certificateholders under the Pooling and Servicing Agreement. Certificate Owners
will only be permitted to exercise the rights of Certificateholders under the
Pooling and Servicing Agreement indirectly through DTC and its Participants, who
in turn will exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC
and its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Certificates and is
required to receive and transmit distributions of principal of and interest on
the Certificates. Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the Certificates similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
their respective Certificate Owners.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Certificate
Owner to pledge Certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such Certificates, may
be limited due to the lack of a physical certificate for such Certificates.
DTC has advised the Depositor that neither DTC nor Cede will consent or
vote with respect to any action permitted to be taken by the Certificateholders
under the Pooling and Servicing Agreement or any other agreement. Under its
usual procedures, DTC mails an omnibus proxy to the issuer as soon as possible
after the record date. The omnibus proxy assigns Cede's consenting or voting
rights to those Participants to whose accounts the Certificates are credited on
the record date (identified in a listing attached thereto).
Cedelbank ("Cedelbank") was incorporated in 1970 as a limited company
under Luxembourg law (a societe anonyme). Cedelbank is owned by a parent
corporation, Cedel International, societe anonyme, the shareholders of which are
banks, securities dealers and financial institutions. Cedel International
currently has about 100 shareholders, including U.S. financial institutions or
their subsidiaries. No single entity may own more than twenty percent of Cedel
International's stock. Cedelbank is registered as a bank in Luxembourg, and as
such is subject to regulation by the Luxembourg Commission for the Supervision
of the Financial Sector, which supervises Luxembourg banks. Cedelbank holds
securities for its customers and facilitates the clearance and settlement of
securities transactions by electronic book-entry transfers between their
accounts. Cedelbank provides various services, including safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Cedelbank also deals with domestic
securities markets in over 30 countries through established depository and
custodial relationships. Cedelbank has established an electronic bridge with
Morgan Guaranty Trust as the Operator of the Euroclear System in Brussels to
facilitate settlement of trades between Cedelbank and Euroclear. Cedelbank
currently
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accepts over 110,000 securities issues on its books. Cedelbank's customers are
world-wide financial institutions including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations. Cedelbank's U.S.
customers are limited to securities brokers and dealers, and banks. Currently,
Cedelbank has approximately 2,000 customers located in over 80 countries,
including all major European countries.
The Euroclear System ("EUROCLEAR") was created in 1968 to hold
securities for participants of Euroclear ("EUROCLEAR PARTICIPANTS") and to clear
and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of 32
currencies, including United States dollars. Euroclear includes various other
services, including securities lending and borrowing, and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. Euroclear is operated by the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"EUROCLEAR OPERATOR"), under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation (the "COOPERATIVE"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries. Indirect access to Euroclear is also available to other firms
that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to the Certificates held through Cedelbank
or Euroclear will be credited to the cash accounts of Cedelbank customers or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws
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and regulations. See "Certain Federal Income Tax Consequences." Cedelbank or the
Euroclear Operator, as the case may be, will take any action permitted to be
taken by a Certificateholder under the Pooling and Servicing Agreement on behalf
of a Cedelbank customer or Euroclear Participant only in accordance with its
relevant rules and procedures and subject to the ability of its Depositary (as
defined below) to effect such actions on its behalf through DTC.
Holders of Certificates may hold their Certificates through DTC (in the
United States) or Cedelbank or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations which are participants in such
systems.
The Certificates will initially be registered in the name of Cede &
Co., the nominee of DTC. Cedelbank and Euroclear will hold omnibus positions on
behalf of their participants through customers' securities accounts in
Cedelbank's and Euroclear's names on the books of their respective depositaries
which in turn will hold such positions in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank, N.A. ("CITIBANK") will act as
depositary for Cedelbank and Morgan Guaranty Trust Company of New York
("MORGAN") will act as depositary for Euroclear (in such capacities,
individually the "DEPOSITARY" and collectively the "DEPOSITARIES").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time zone differences, credits of securities received in
Cedelbank or Euroclear as a result of a transaction with a Participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedelbank customers on such business day. Cash received in
Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank customers or Euroclear Participant to a Participant will be received
with value on the DTC settlement date but will be
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available in the relevant Cedelbank or Euroclear cash account only as of the
business day following settlement in DTC. For information with respect to tax
documentation procedures relating to the Certificates, see "Certain Federal
Income Tax Consequences--Foreign Investors."
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Certificates among participants
of DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
DEFINITIVE CERTIFICATES
The Certificates will be issued in fully registered, certificated form
to Certificate Owners or their nominees ("DEFINITIVE CERTIFICATES"), rather than
to DTC or its nominee, only if (i) the Depositor advises the Trustee that DTC is
no longer willing or able to discharge properly its responsibilities as
Depository with respect to the Certificates and the Depositor is unable to
locate a qualified successor, (ii) the Depositor, at its option, advises the
Trustee that it elects to terminate the book-entry system with respect to the
Certificates through DTC or (iii) after the occurrence of a Servicer Default
under the Pooling and Servicing Agreement, Certificate Owners representing not
less than 50% of the aggregate unpaid principal amount of the Certificates or of
a class of the Certificates advise the Trustee and DTC through Participants in
writing that the continuation of a book-entry system through DTC (or a successor
thereto) is no longer in the best interests of such Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee is required through DTC to notify all
Certificate Owners of the availability through DTC of Definitive Certificates
for the Certificates. Upon surrender by DTC of the certificate or certificates
held by it or its nominee representing such Certificates and instructions for
registration, the Trustee will issue the Certificates in the form of Definitive
Certificates, and thereafter the Trustee will recognize the holders of such
Definitive Certificates ("HOLDERS") as Certificateholders under the Pooling and
Servicing Agreement.
Distributions of principal of and interest on the Certificates will be
made by the Trustee directly to holders in accordance with the procedures set
forth herein and in the Pooling and Servicing Agreement. Distributions on each
Distribution Date will be made to holders in whose names the Definitive
Certificates were registered at the close of business on the preceding Record
Date. Distributions will be made by wire transfer to the address of each holder
as it appears on the register maintained by the Trustee. The final distribution
on any Certificate (whether Definitive Certificates or the certificate or
certificates registered in the name of Cede representing the Certificates),
however, will be made only upon presentation and surrender of such Certificate
on the final payment date at such office or agency as is specified in the notice
of final distribution to Certificateholders. The Trustee will provide such
notice to registered Certificateholders not later than the fifth day of the
month of the final distribution.
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Definitive Certificates will be transferable or exchangeable at the
offices of the Trustee, which shall initially be Bankers Trust Company. Unless
otherwise provided in the related Supplement, no service charge will be imposed
for any registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
RETAINED INTEREST AND VARIABLE FUNDING CERTIFICATE
The Trust's assets will be allocated in part to the Certificates and
any other Series of investor certificates that may be outstanding from time to
time, with the remainder being allocated to BCRC as holder of the "BCRC
Certificate" (evidencing the "Retained Interest") and to the holder (currently
BCRC) of the "Variable Funding Certificate" (evidencing the "Variable Funding
Interest"). The Retained Interest will consist of (x) the portion thereof that
will be in part subordinated from time to time to the Certificates and, in part,
to the investor certificates in respect of each prior Series and to any
additional Series (i.e., the Pool Available Subordinated Amount on such date
(after giving effect to the allocations, distributions, withdrawals and deposits
to be made on such date)) and (y) with respect to each Series on any date of
determination, a percentage (which in the case of the Certificates will
initially be __%) of the related adjusted invested amount (including the
Adjusted Invested Amount) of each such Series, which will not be subordinated to
the Certificates. The sum of (x) and (y) is referred to as the "RETAINED
PARTICIPATION AMOUNT." As of the Closing Date, the amount under the foregoing
clause (x) allocable to the Certificates will be no less than $_________ and the
amount under the foregoing clause (y) allocable to the Certificates will be
$_________.
The Variable Funding Interest will consist of the excess, if any, of
the Pool Balance over the Required Pool Balance (the "VARIABLE FUNDING AMOUNT")
which generally will fluctuate and could be eliminated as the Pool Balance
fluctuates relative to the Required Pool Balance. However, upon the occurrence
of a Liquidation Event, the proportionate interest in the Pool Balance
represented by the Variable Funding Certificate as of the date of such
Liquidation Event will be fixed relative to the interests represented by the
Certificates and the investor certificates of other Series for purposes of
further allocations of Principal Collections from the Pool and the relative
interest of the Variable Funding Certificate in further allocations of Non-
Principal Collections will not be less than the relative interest thereof as of
the Liquidation Event. See "Allocation of Collections; Deposits in Collection
Account; Limited Subordination of the Retained Interest" below. On each business
day on which Non-Principal Collections and Principal Collections are received by
the Servicer, the holder of the Variable Funding Certificate will be entitled to
receive a distribution equal to the product of (x) the Variable Funding
Percentage and (y) all Non-Principal Collections and Principal Collections.
Pursuant to the Pooling and Servicing Agreement, the BCRC Certificate
and the Variable Funding Certificate have been issued to BCRC. BCRC holds the
BCRC Certificate and has pledged its interest in the Variable Funding
Certificate to BCI as security for the Note issued by BCRC to BCI as part of the
consideration for the sale of the Receivables by BCI to BCRC.
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Amounts allocated to BCRC with respect to the Variable Funding Certificate or
the BCRC Certificate may be available to BCRC to pay principal and interest on
such Note. See "Description of the Receivables Purchase Agreement--Sale and
Transfer of Receivables." Except after the occurrence of a Liquidation Event as
described herein, the outstanding principal balance of the Variable Funding
Certificate will fluctuate to reflect increases or decreases in the aggregate
outstanding principal balance of the Receivables, including any increases due to
the transfer of additional Receivables to the Trust. The holder of the Variable
Funding Certificate will own an undivided interest in the Trust that will rank
pari passu with the interest of all Series in the aggregate and the portion of
the Retained Interest that is not subordinated to the Certificates or to the
investor certificates of any other Series.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that, pursuant to one or
more supplements thereto (each, a "SUPPLEMENT"), BCRC may cause the Trustee to
issue one or more new Series (each, a "NEW ISSUANCE"). Under the Supplement,
BCRC may specify, among other things, with respect to any Series: (a) its name
or designation, (b) its initial principal amount (or method for calculating such
amount) and the currency in which it is denominated, (c) its certificate rate
(or the method for determining its certificate rate), (d) the payment date or
dates and the date or dates from which interest shall accrue; (e) the method for
allocating collections to certificateholders, (f) the issuer and terms of any
form of Enhancement with respect thereto, (g) the terms on which the investor
certificates of such Series may be exchanged for investor certificates of
another Series, repurchased by the Depositor or remarketed to other investors,
(h) the Series termination date (i) the designation of any accounts established
in connection with any Series (the "Series Accounts") and the terms governing
the operation of any such Series Accounts, (j) the monthly servicing fee and the
investors' servicing fee, (k) the number of classes of investor certificates of
such Series and, if more than one class, the rights and priorities of each such
class, (l) the extent to which the investor certificates of such Series will be
issuable in temporary or permanent global form, (m) whether the investor
certificates of such Series may be issued in bearer form and any limitations
imposed thereon, (n) the priority of such Series with respect to any other
Series, (o) whether such Series will be part of a group and (p) any other terms
permitted by the related Supplement (all such terms, the "Principal Terms" of
such Series). The Depositor may offer any Series under a prospectus or other
disclosure document in transactions either registered under the Securities Act
of 1933, as amended (the "SECURITIES ACT") or exempt from registration
thereunder, directly or through the Underwriters or one or more other
underwriters or placement agents. There is no limit to the number of investor
certificates that may be issued under the Pooling and Servicing Agreement.
As stated above, the Pooling and Servicing Agreement provides that BCRC
may specify the terms of a new Series such that each Series has a scheduled
amortization period, controlled amortization period or accumulation period which
may have a different length and begin on a different date than the scheduled
amortization period or accumulation period for any other Series. Further, one or
more Series may be in their early amortization periods, controlled amortization
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period or accumulation periods while other Series are not. Thus, certain Series
may be amortizing or accumulating principal, while other Series are not
amortizing or accumulating principal. Moreover, different Series may have the
benefits of different forms of Enhancement issued by different entities. Under
the Pooling and Servicing Agreement, the Trustee will hold each form of
Enhancement only on behalf of the Series (or a particular class within a Series)
to which it relates. The Pooling and Servicing Agreement also provides that the
Depositor may specify different certificate rates and monthly servicing fees
with respect to each Series (or a particular class within a Series). In
addition, the Depositor has the option under the Pooling and Servicing Agreement
to vary between Series (or classes within a Series) the terms upon which a
Series (or classes within a Series) may be repurchased by the Depositor.
Under the Pooling and Servicing Agreement and pursuant to a Supplement,
a new Series may be issued only upon the satisfaction of certain specified
conditions. BCRC may cause the issuance of a new Series by notifying the Trustee
at least five business days in advance of the applicable issuance date (each, a
"SERIES ISSUANCE DATE"). The notice shall state the designation of any Series
and with respect to such Series: (a) its initial principal amount, (b) its
currency and certificate rate, (c) the issuer of any Enhancement with respect to
such Series and (d) the related Series Issuance Date. The Pooling and Servicing
Agreement provides that the Trust will issue any Series only upon delivery to it
of the following: (i) a Supplement in form satisfactory to the Trustee signed by
BCRC and the Servicer and specifying the Principal Terms of such Series; (ii)
any related Enhancement agreement executed by each of the parties thereto other
than the Trustee; and (iii) an opinion of counsel to the effect that, for
federal income and Vermont state income tax purposes, (x) such issuance will not
adversely affect the characterization of the investor certificates of any
outstanding Series or class as debt of BCRC, (y) such issuance will not cause or
constitute a taxable event with respect to any certificateholder or the Trust
and (z) the investor certificates of such new Series will be characterized as
debt of BCRC (an opinion of counsel to the effect referred to in clauses (x) and
(y) with respect to any action is referred to herein as a "TAX OPINION"). Such
issuance is also subject to the conditions that (a) the Depositor shall have
delivered to the Trustee and any Enhancement Provider a certificate of a vice
president or more senior officer, dated the related Series Issuance Date, to the
effect that the Depositor reasonably believes that such issuance will not cause
an Early Amortization Event to occur, (b) after giving effect to such issuance,
BCRC shall have an interest in the Pool represented by the BCRC Certificate and
the Variable Funding Certificate equal in the aggregate to at least 2% of the
aggregate amount of Receivables included in the Pool, in each case as of the
Series Issuance Date and after giving effect to such issuance and (c) written
notice of the proposed New Issuance shall have been given to each Rating Agency
at least five Business Days before the Series Issuance Date and no Rating Agency
shall have notified BCRC, BCI or the Trustee that such issuance will result in a
reduction or withdrawal of the ratings of any outstanding Series or class of
investor certificates. Upon satisfaction of all such conditions, the Trust will
issue such Series.
SUPPLEMENTAL CERTIFICATE
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The Pooling and Servicing Agreement provides that the BCRC Certificate
shall, at all times, be beneficially owned by BCRC; however, under certain
conditions, BCRC may surrender the BCRC Certificate to the Trustee in exchange
for a newly issued BCRC Certificate and a second certificate (the "SUPPLEMENTAL
CERTIFICATE"). The Supplemental Certificate is not required to be beneficially
owned by BCRC and may be delivered to or at the direction of BCRC to any entity.
The Pooling and Servicing Agreement requires that any Supplemental Certificate
be created pursuant to a Supplement setting forth the terms of the Supplemental
Certificate. It is a condition to delivery of the Supplemental Certificate that,
following delivery of the Supplemental Certificate to another entity, BCRC
shall, nevertheless, have an interest in the Pool (represented by the remaining
BCRC Certificate and the Variable Funding Certificate) equal to at least 2% of
the aggregate amount of Receivables included in the Pool. Additional conditions
to the delivery of a Supplemental Certificate are (i) BCRC shall have given the
Rating Agencies 10 days' prior notice and the Rating Agency Condition shall have
been satisfied with respect to such exchange and (ii) a Tax Opinion shall be
delivered to the Trustee. In addition, if the Supplement pursuant to which the
Supplemental Certificate is issued amends any of the terms of the Pooling and
Servicing Agreement, the Supplement shall be subject to the conditions described
under the caption "Amendments" below.
If any Supplemental Certificate is to be transferred or exchanged, it
shall be transferred or exchanged only upon satisfaction of the conditions set
forth in clauses (i) and (ii) of the preceding paragraph.
If a Supplemental Certificate is issued, all references herein to the
BCRC Certificate and distributions made with respect to the BCRC Certificate
shall include the Supplemental Certificate and distributions to be made with
respect to the Supplemental Certificate and references to the holder of the BCRC
Certificate or to BCRC as holder of the BCRC Certificate shall include BCRC and
the holder of the Supplemental Certificate.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
On the date of the issuance of the Series 1994-1 Certificates (the
"INITIAL CLOSING DATE"), BCRC sold and assigned to the Trust all of BCRC's
right, title and interest in and to the Receivables under the Eligible Accounts
purchased from BCI and the related Collateral Security as of the Initial Cut-Off
Date, all Receivables thereafter created in such Accounts and BCRC's interest in
the related Collateral Security and the Receivables Purchase Agreement (other
than repurchase agreements and other agreements with manufacturers, importers or
distributors), and the proceeds of all of the foregoing. Since the Initial
Closing Date, BCRC has six times added Additional Accounts to the Trust as shown
in Annex II hereto.
In connection with the sale of the Receivables then existing or
thereafter arising under the Eligible Accounts sold or contributed to BCRC by
BCI and the transfer of such Receivables by BCRC to the Trust, BCI has indicated
in its computer records that such Receivables and the related Collateral
Security have been transferred to BCRC and that BCRC has transferred its
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interest therein to the Trust. In addition, BCI provided to BCRC, and BCRC has
provided to the Trustee, a computer file or microfiche or written list
containing a true and complete list of all the Eligible Accounts and the
outstanding balances of the Receivables therein as of the Initial CutOff Date
and as of the Additional Cut-Off Dates, as applicable. BCI has retained and will
not deliver to BCRC or to the Trustee any other records or agreements relating
to such Receivables. Except as set forth above, the records and agreements
relating to the Receivables in such Eligible Accounts have not and will not be
segregated from those relating to other accounts and receivables of BCI, and the
physical documentation relating to such Receivables will not be stamped or
marked to reflect the transfer of such Receivables to the Trust. BCRC has filed
one or more financing statements in accordance with Vermont state law to perfect
the Trust's interest in such Receivables, the Collateral Security, the
Receivables Purchase Agreement and the proceeds thereof. See "Risk
Factors--State and Federal Law May Limit the Abilities of the Servicer to
Realize on Receivables" and "Certain Legal Aspects of the Receivables."
As described below under "Addition of Accounts," BCRC has the right
(subject to certain limitations and conditions), and in some circumstances is
obligated, to designate from time to time additional accounts to be included as
Additional Accounts, to acquire from BCI under the Receivables Purchase
Agreement the Receivables then existing or thereafter created in such Additional
Accounts and to convey to the Trust the Receivables then existing or
subsequently arising thereunder. Each such Additional Account must be an
Eligible Account. In respect of any conveyance of Receivables in Additional
Accounts, BCRC will follow the procedures set forth in the preceding paragraph,
except that the computer file or microfiche or written list will show
information for such Additional Accounts as of the date such Additional Accounts
are identified and selected (the "ADDITIONAL CUT-OFF DATE").
REPRESENTATIONS AND WARRANTIES
In certain situations, BCRC is required from time to time to add or
remove or repurchase Receivables in certain designated Accounts to or from the
Trust. In addition, under certain conditions BCRC has the right at its option to
add or remove Receivables in certain designated Accounts to or from the Trust.
The following paragraphs as well as those set forth under the captions "Addition
of Accounts" and "Removal of Accounts and Assignment of Receivables" below
summarize the circumstances under which such actions must or may be taken and
the respective repurchase obligations of BCRC and BCI with respect to the
Accounts and the Receivables.
BCRC has made representations and warranties to the Trustee and will
make such representations and warranties on the Closing Date relating to the
Accounts, the Receivables and the Collateral Security to the effect, among other
things, that (a) as of the Initial Cut-Off Date, the Initial Closing Date, the
Closing Date and any future Series Issuance Date, each Account is an Eligible
Account and, in the case of Additional Accounts, as of the Additional Cut-Off
Date and the date the related Accounts are included as Accounts (an "ADDITION
DATE") and on each Transfer Date, each Additional Account is an Eligible
Account, (b) each Receivable and all
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Collateral Security conveyed to the Trust on the Initial Closing Date or, in the
case of Additional Accounts, on the Addition Date, and on each Transfer Date
have been conveyed to the Trust free and clear of any liens, except for liens
created or permitted under the Pooling and Servicing Agreement and (c) with
respect to each Receivable and all Collateral Security transferred to the Trust
on the Initial Closing Date or, in the case of Additional Accounts, the Addition
Date, and on each Transfer Date, all appropriate consents and governmental
authorizations required to be obtained by BCRC in connection with the conveyance
of each such Receivable or Collateral Security to the Trust have been duly
obtained.
If BCRC breaches any representation and warranty described in this
paragraph and such breach remains uncured for 30 days or such longer period as
may be agreed to by the Trustee, after the earlier to occur of the discovery of
such breach or receipt of written notice of such breach by BCRC, and such breach
has a materially adverse effect on the Certificateholders and the holders of
investor certificates of each other outstanding Series or the interest
represented by the Variable Funding Certificate, such Receivable or, in the case
of a breach relating to an Account, all Receivables in the related Account will
be retransferred from the Trust to BCRC on the terms and conditions set forth
below (and in the case of an Account, such Account shall no longer be designated
for inclusion in the Trust).
"TRANSFER DATE" means each business day on which Receivables are
created in the Eligible Accounts provided that such date is prior to the earlier
of the Appointment Date and the Termination Date. An "APPOINTMENT DATE" occurs
if a Liquidation Event occurs or if BCRC violates its covenant not to create or
permit to exist any liens on the Receivables or the Collateral Security except
to the extent permitted by the Pooling and Servicing Agreement and such
violation becomes an Early Amortization Event.
Each such Receivable shall be retransferred from the Trust to BCRC on
or before the end of the Collection Period in which such retransfer obligation
arises, with a corresponding reduction in the principal balance of such
Receivable from the Pool Balance. Unless a Liquidation Event has occurred, in
the event that such deduction would cause the Pool Balance to be less than the
Required Pool Balance on the preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
related Distribution Date), on the date on which such retransfer to BCRC is to
occur, BCRC will be obligated to make a deposit into the Collection Account in
immediately available funds in an amount equal to the amount by which the Pool
Balance would be less than the Required Pool Balance as a result of such
deduction (the amount of any such deposit being referred to herein as a
"TRANSFER DEPOSIT AMOUNT"), provided that if the Transfer Deposit Amount is not
so deposited, the related Receivables will not be reassigned to BCRC and will
remain part of the Trust. The reassignment of any such Receivable to BCRC and
the payment of any related Transfer Deposit Amount will be the sole remedy
respecting any breach of the representations and warranties described in the
preceding paragraph with respect to such Receivable available to the
Certificateholders or the Trustee on behalf of the Certificateholders.
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In the Pooling and Servicing Agreement, BCRC also makes representations
and warranties to the Trustee to the effect, among other things, that as of the
Initial Closing Date and each Series Issuance Date (including the Closing Date
for the Certificates) (a) it is duly incorporated and in good standing and has
the authority to consummate the transactions contemplated by the Pooling and
Servicing Agreement and the Pooling and Servicing Agreement (or in the case of
Additional Accounts, the related assignment) constitutes a valid, binding and
enforceable agreement of BCRC and (b) the Pooling and Servicing Agreement
constitutes a valid sale, transfer and assignment to the Trust of all right,
title and interest of BCRC in the Receivables and the Collateral Security,
whether then existing or thereafter created, and the proceeds thereof, under the
UCC as then in effect in the State of Vermont, which is effective on the Closing
Date (or as of the Addition Date, if applicable).
In the event that (i) any of the representations and warranties
described in clause (a) of this paragraph has been breached, (ii) the
representation and warranty with respect to the Pooling and Servicing Agreement
in clause (b) of this paragraph has been breached and the Pooling and Servicing
Agreement does not constitute the grant of a perfected security interest in the
Receivables and the Collateral Security (and the proceeds thereof) under the UCC
as then in effect in the State of Vermont or (iii) certain other representations
and warranties set forth in the Pooling and Servicing Agreement are breached,
and, in the case of clause (i), (ii) or (iii), such breach has a material
adverse effect on the interests of the Certificateholders and the holders of
investor certificates of each other outstanding Series or the holder of the
Variable Funding Certificate, either the Trustee, the holder of the Variable
Funding Certificate, or the holders of investor certificates of all outstanding
Series (including the Certificates) evidencing not less than a majority of the
aggregate unpaid principal amount of all outstanding Series of investor
certificates, by written notice to BCRC and the Servicer (and to the Trustee and
the issuer or provider of any Enhancement (an "ENHANCEMENT PROVIDER") if given
by certificateholders), may, unless a Liquidation Event has occurred, direct the
Depositor to repurchase the interest in the Receivables represented by each
outstanding Series or the Variable Funding Certificate (or both) within 60 days
of such notice, or within such longer period specified in such notice.
Such repurchase will not be required to be made, however, if at the end
of such applicable period, (x) each such representation and warranty shall be
satisfied in all material respects or (y) in the case of clause (b) of this
paragraph, the Pooling and Servicing Agreement then constitutes the grant of a
security interest in the Receivables and the Collateral Security (and proceeds
thereof) under the UCC as then in effect in the State of Vermont, and any
material adverse effect on the interest in the Receivables represented by each
outstanding Series or the Variable Funding Certificate (or both), as applicable
caused thereby shall have been cured. The portion of the price for such
repurchase in respect of the Certificates will be equal to the sum of (i) the
aggregate principal balance of the Certificates on the Distribution Date on
which the purchase is scheduled to be made and (ii) accrued and unpaid interest
on the unpaid principal balance of the Certificates at the applicable
Certificate Rate plus any Class A Carry-Over Amount or Class B Carry-Over Amount
(together with interest on overdue Monthly Interest, to the extent lawfully
payable). The deposit by or on behalf of BCRC with the Trustee of the repurchase
price for all outstanding
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Series or the Variable Funding Certificate (or both), in immediately available
funds, will be considered a payment in full of such Series or the Variable
Funding Certificate (or both). If notice is given as provided above, the
obligation of BCRC to make any such deposit will constitute the sole remedy
respecting a breach of the representations and warranties available to the
investor certificateholders or the holder of the Variable Funding Certificate or
the Trustee on behalf of such certificateholders.
"DETERMINATION DATE" means, with respect to any Distribution Date, the
day that is two Business Days prior to such Distribution Date.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
An "ELIGIBLE ACCOUNT" is defined to mean (i) each individual financing
account established by BCI or established by an affiliate of BCI or by a third
party (but which satisfies BCI's customary underwriting standards) and acquired
by BCI (or an affiliate of BCI), with an Obligor with respect to Eligible
Products pursuant to an inventory security agreement pursuant to a floorplan
financing agreement other than an inventory security agreement, in the ordinary
course of business, and (ii) each individual line of credit or financing
agreement extended by BCI (or an affiliate of BCI) or by a third party (but
which satisfies BCI's customary underwriting standards) and acquired by BCI or
an affiliate of BCI to an Obligor for the purpose of financing working capital,
manufacturing, production or inventories and secured by assets of such Obligor,
which, in each case, as of the date of determination thereof (a) relates to an
Obligor that is an "Eligible Obligor" and (b) is in existence and, after its
establishment or acquisition by BCI or an affiliate of BCI, is maintained and
serviced by BCI. BCI (or its affiliates) may assign (or grant participation
rights in) such Account or any Receivable therein to any person without
affecting such Account's status as an Eligible Account. See "Removal of Accounts
and Assignment of Receivables" below and "The Floorplan and Asset-Based
Financing Business--Participation Arrangements."
Payments received on account of Receivables arising in Accounts in
which a third-party has a Participation Interest are allocated to the Trust only
to the extent of BCI's undivided interest in the related advance and the amount
of such payments allocated to the undivided interest of the third party will not
be included in the Trust. In addition, Receivables arising under Accounts
included in the Pool shall, upon removal for assignment to a third party or
removal for any other purpose, no longer be included in the Trust's assets. The
definition of Eligible Account may be changed by amendment to the Pooling and
Servicing Agreement without the consent of the Certificateholders if the Rating
Agency Condition is satisfied.
An "ELIGIBLE PRODUCT" is defined to mean any consumer, recreational and
commercial products, including, but not limited to, marine equipment (boats,
motors and trailers), snowmobiles, snow-grooming equipment, personal watercraft,
recreational vehicles, manufactured housing, motorcycles, lawn and garden
equipment, horse trailers, personal
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computers and consumer electronics and appliances and spares and parts relating
to such products.
An "ELIGIBLE OBLIGOR" is defined to mean (a) in the case of Domestic
Inventory Receivables, a dealer that is located in the United States of America
(including its territories and possessions), (b) in the case of Asset-Based
Receivables, a dealer, distributor or manufacturer that is located in the United
States of America (including its territories and possessions) and (c) which
Obligor, in the case of Domestic Inventory Receivables and Asset-Based
Receivables, has not been identified by the Servicer as being the subject of any
voluntary or involuntary bankruptcy, insolvency, liquidation or receivership
proceedings.
An "ELIGIBLE RECEIVABLE" is defined to mean each Receivable: (a) which
was originated by BCI, by an affiliate of BCI or acquired by BCI (or an
affiliate of BCI) in each case in the ordinary course of business, (b) which
arose under an Account that at the time such Receivable was transferred to the
Trust was an Eligible Account, (c) which is owned by BCI at the time of sale or
contribution by BCI to BCRC, (d) which represents the obligation of an Obligor
to repay an advance made to or on behalf of such Obligor (or credit extended for
such Obligor), in the case of Domestic Inventory Receivables, to finance an
Eligible Product and, in the case of Asset-Based Receivables, to finance
working capital or the production, manufacturing or inventory of Eligible
Products, (e) which in the case of (i) Domestic Inventory Receivables, at the
time of creation and (except with respect to Receivables that are payable in
accordance with a repayment schedule regardless of whether the related Eligible
Products have been sold and with respect to which the related Eligible Products
have then been sold) at the time of transfer to the Trust, is secured by a first
priority perfected security interest in the Eligible Product relating thereto
and, (ii) Asset-Based Receivables included in the Trust, the obligations with
respect thereto at the time of transfer to the Trust are secured by a first
priority perfected security interest in goods, accounts, work in process, raw
materials, component parts or other rights or assets of the Obligor; (f) which
is not unenforceable as a result of any violation of requirements of law
applicable thereto and the related inventory security agreement or other
floorplan financing agreement in the case of Domestic Inventory Receivables or
the related loan agreement in the case of Asset-Based Receivables is not
unenforceable as a result of any violation of requirements of law applicable to
any party thereto, (g) with respect to which all consents and governmental
authorizations required to be obtained by BCI (or an affiliate of BCI) or BCRC
in connection with the creation of such Receivable or the transfer thereof to
BCRC and the Trust or the performance by BCI (or an affiliate of BCI) of the
inventory security agreement or the other floorplan financing agreement in the
case of Domestic Inventory Receivables or the related loan agreement in the case
of Asset-Based Receivables pursuant to which such Receivable was created, have
been duly obtained, effected or given and are in full force and effect, (h) as
to which at all times following the transfer of such Receivable to the Trust,
the Trust will have good and marketable title thereto free and clear of all
liens arising prior to the transfer or arising at any time, other than liens
permitted pursuant to the Pooling and Servicing Agreement and other than tax and
certain other statutory liens (including liens in favor of the Pension Benefit
Guaranty Corporation) which may arise thereafter and which relate to affiliates
of BCRC, (i) which has
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been the subject of a valid transfer and assignment from the Depositor to the
Trust of all the Depositor's right, title and interest therein (including, with
certain exceptions, any proceeds thereof), (j) which will at all times be the
legal and assignable payment obligation of the Obligor relating thereto,
enforceable against such Obligor in accordance with its terms (as such terms may
be modified or revised from time to time with the consent of the Servicer),
except as such enforceability may be limited by the Bankruptcy Code or other
applicable Insolvency Laws, (k) which at the time of transfer to the Trust is
enforceable against the Obligor to the extent of the full principal amount of
such Receivable, except as such enforceability may be limited by the Bankruptcy
Code or other applicable Insolvency Laws, (l) as to which, at the time of
transfer of such Receivable to the Trust, BCI (or an affiliate of BCI) and BCRC
have satisfied all their respective obligations under the Pooling and Servicing
Agreement with respect to such Receivable required to be satisfied at such time,
(m) as to which, at the time of transfer of such Receivable to the Trust,
neither BCI (or any affiliate of BCI) nor BCRC has taken any action (or failed
to take any action required of it under the Receivables Purchase Agreement or
the Pooling and Servicing Agreement) which would impair the rights of the Trust
or the certificateholders therein and (n) which constitutes either an "account"
or "chattel paper" as defined in Article 9 of the UCC as then in effect in the
State of Vermont;
[provided, however, that "Eligible Receivables" do not include any Domestic
Inventory Receivables that have not been paid in full within 491 days following
the origination thereof subject to the limitation that with respect to each four
month period commencing June 1, October 1, and February 1, of each year (each,
an "Origination Period"), no more than 10% of the aggregate principal balance of
Domestic Inventory Receivables originated and transferred to the Trust during
the four month period commencing 16 months prior to each Origination Period will
be excluded from Eligible Receivables pursuant to this proviso.] The foregoing
definition of "Eligible Receivables" may be changed by amendment to the Pooling
and Servicing Agreement without the consent of the Certificateholders if the
Rating Agency Condition for such amendment is satisfied.
It is not required or anticipated that BCRC or the Trustee will make
any initial or periodic general examination of the Receivables or any records
relating to the Receivables for the purpose of establishing the presence or
absence of defects, compliance with representations and warranties of BCI or for
any other purpose. In addition, it is not anticipated or required that BCRC or
the Trustee will make any initial or periodic general examination of the
Servicer for the purpose of establishing the compliance by the Servicer with its
representations or warranties, the observation of its obligations under the
Pooling and Servicing Agreement or for any other purpose.
INELIGIBLE RECEIVABLES
Any Receivable that is not an Eligible Receivable is an "INELIGIBLE
RECEIVABLE." Although Ineligible Receivables existing or arising in Eligible
Accounts will from time to time
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be transferred to the Trust, the Pool Balance will for all purposes be
calculated solely on the basis of the aggregate principal balance of Receivables
that are Eligible Receivables.
ADDITION OF ACCOUNTS
Subject to the conditions described below, BCRC has the right to
designate from time to time additional Eligible Accounts (the Receivables in
which Accounts would be transferred to BCRC by BCI under the Receivables
Purchase Agreement) to be included in the Pool as Accounts. In addition, unless
a Liquidation Event has occurred, BCRC is required to designate and to add to
the Pool the Receivables of additional Eligible Accounts if, as of the date for
which such calculation is made, either (i) the Pool Balance is less than the
Required Pool Balance (as defined below) or (ii) the aggregate interest in the
Pool represented by the BCRC Certificate and the Variable Funding Certificate
held by BCRC is less than 2% of the aggregate amount of Receivables included in
the Pool. In either case referred to in the preceding sentence, unless a
Liquidation Event has occurred with respect to BCI or BCRC, BCRC under the
Receivables Purchase Agreement will be required to purchase or acquire from BCI
(but BCI will have no obligation to sell to BCRC), within 10 business days after
the event described in (i) or (ii) has occurred, the Receivables arising in such
Additional Accounts to the extent necessary to cure the above deficiency.
Any provision under the Pooling and Servicing Agreement (and the
Receivables Purchase Agreement) requiring BCRC to designate Additional Accounts
to the Pool means accounts of the same type, i.e., Accounts giving rise to
Domestic Inventory Receivables or if Asset-Based Receivables have already been
added to the Pool, then Accounts giving rise to either Domestic Inventory
Receivables or Asset-Based Receivables. However, at the options of BCRC and BCI
and subject to certain conditions (including satisfaction of the Rating Agency
Condition referred to below), Asset-Based Receivables may be added in
satisfaction of such a requirement even if the only Accounts then in the Trust
are Accounts containing Domestic Inventory Receivables. Additional accounts
referred to in this paragraph are "ADDITIONAL ACCOUNTS" and the term "ACCOUNTS"
as used herein shall include Additional Accounts.
Any designation of Additional Accounts referred to in the preceding
paragraph is subject to the following conditions, among others: (i) each such
Additional Account must be an Eligible Account and with respect to Additional
Accounts designated at the option of BCRC, the Rating Agency Condition shall
have been satisfied; provided, that the Rating Agency Condition need not be
satisfied if the Automatic Addition Condition (described below) has been
satisfied; (ii) the addition of the Receivables arising in such Additional
Accounts shall not, in the reasonable belief of BCRC, cause an Early
Amortization Event to occur; (iii) BCRC shall not select such Additional
Accounts in a manner that it believes is adverse to the interests of the
certificateholders or any Enhancement Provider; and (iv) unless the Accounts are
being added pursuant to the Automatic Addition Condition, BCRC shall deliver
certain legal opinions to the Trustee and any Enhancement Providers.
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Each Additional Account must be an Eligible Account at the time of its
addition and, unless all necessary conditions (including, without limitation, if
not already included in the Pool, satisfaction of the Rating Agency Condition
with respect to the inclusion of Asset-Based Receivables) have been met, such
Additional Accounts may not include Asset-Based Receivables. However, since
Additional Accounts (as well as Receivables in general arising under Accounts
subsequent to May 1, 1999 (the "SERIES CUT-OFF DATE") or arising under
Additional Accounts) may have been originated or acquired by BCI or its
affiliates at a later date using credit criteria, or having other
characteristics, different from those which were applicable to the Accounts and
the Receivables therein transferred to the Trust prior to the Closing Date, they
may not be of the same credit quality as such Accounts and such Receivables.
The "AUTOMATIC ADDITION CONDITION" means, with respect to the
designation of Additional Accounts that (i) such Accounts do not contain
Asset-Based Receivables unless Asset-Based Receivables have been previously
added to the Trust after having met the Rating Agency Condition, (ii) during the
calendar quarter in which such addition occurs, the number of new Accounts which
have been added (after taking into account such addition) will not exceed 5% of
the number of all Accounts at the end of the preceding calendar quarter and the
aggregate dollar amount of Principal Receivables in such new Accounts added
pursuant to the Automatic Addition Condition during such calendar quarter shall
not exceed 5% of the Pool Balance at the end of the preceding calendar quarter,
and (iii) during the 12 consecutive calendar months ending with the calendar
month in which the addition is made and including such addition, the number of
such new Accounts does not exceed 20% of the number of all Accounts at the
beginning of such 12-month period and the aggregate dollar amount of Principal
Receivables in such new Accounts added pursuant to the Automatic Addition
Condition during such 12-month period shall not exceed 20% of the Pool Balance
at the beginning of such 12-month period.
When determining the amount of Accounts and Principal Receivables which
have been added to the Trust for purposes of the tests set forth in (ii) and
(iii) of this paragraph, only those Accounts which have been added pursuant to
the Automatic Addition Condition will be taken into consideration. Additions
made under other provisions of the Pooling and Servicing Agreement will not be
included. If Accounts have been added pursuant to the Automatic Addition
Condition certain legal opinions related to such Accounts are to be delivered to
the Trustee every six months to the extent that the addition of such Accounts
have not been covered by legal opinions previously delivered to the Trustee.
"RATING AGENCY CONDITION" means, with respect to any action, if the
terms of the Pooling and Servicing Agreement or the Series 1999-1 Supplement
among BCI, the Depositor and the Trustee (the "SERIES 1999-1 SUPPLEMENT") set
forth a specific time in advance of the effectiveness of the action that notice
must be given to the Rating Agencies, notice shall have been given in accordance
with such requirement or if no advance notice is required or no specific time is
stated for such notice, the Rating Agencies have received written notice of the
proposed action at least 10 days prior to the proposed effective date of such
action and either (i) as of the proposed effective date of the action, no Rating
Agency shall have notified the Depositor, the
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Servicer or the Trustee in writing that such action will result in a reduction
or withdrawal of any rating of any outstanding Series or class with respect to
which it is a Rating Agency, or (ii) each such Rating Agency shall have
confirmed in writing to the Depositor, the Servicer or the Trustee that such
action will not result in a reduction or withdrawal of the rating of any
outstanding Series or class with respect to which it is a Rating Agency.
"REQUIRED POOL BALANCE" for any date means an amount calculated as of
the end of any business day equal to (x) the sum of the amounts for each Series
obtained by multiplying the required investor percentages (including the
Required Investor Percentage) by the respective adjusted invested amounts
(including the Adjusted Invested Amount) plus (y) the Pool Available
Subordinated Amount as of the end of such Business Day; minus (z) any amount on
deposit in any reserve fund on such date, except that, for Series 1997-1 and
Series 1999-1, the amount for this clause (z) will be equal to the positive
difference, if any, between the amount on deposit in the Reserve Fund and the
Reserve Fund Required Amount.
The "SERIES 1999-1 REQUIRED BALANCE" with respect to any date is the
sum of (x) the Required Investor Percentage of the Adjusted Invested Amount and
(y) the Available Subordinated Amount.
"REQUIRED INVESTOR PERCENTAGE" will mean, with respect to the
Certificates, 104%; provided, however, that BCRC may, reduce or otherwise adjust
the Required Investor Percentage without the consent of the Certificateholders
so long as the Rating Agency Condition has been satisfied.
REMOVAL OF ACCOUNTS AND ASSIGNMENT OF RECEIVABLES
BCRC shall have the right at any time to cease transferring newly
originated Receivables in certain designated Accounts (the "REMOVED ACCOUNTS")
to the Trust. To cease transferring any newly originated Receivables in such
Removed Account, BCRC (or the Servicer on its behalf) shall, among other things,
(a) on or before the fifth business day prior to the date on which the transfer
of such Receivables will cease (the "REMOVAL COMMENCEMENT DATE"), furnish to the
Trustee, any Enhancement Provider and each Rating Agency a written notice (the
"REMOVAL NOTICE") specifying the Removal Commencement Date; (b) on or before the
fifth business day after the Removal Commencement Date, BCRC shall have
furnished to the Trustee a computer file, microfiche list or other list of the
Removed Accounts, specifying for each Removed Account its number, the aggregate
amount outstanding in such Removed Account and the aggregate amount of
Receivables therein as of the day immediately preceding the Removal Commencement
Date; (c) represent and warrant that the removal of such Removed Accounts will
not, in the reasonable belief of BCRC, cause an Early Amortization Event to
occur or cause the Pool Balance to be less than the Required Pool Balance; (d)
represent and warrant that no selection procedures believed by BCRC to be
adverse to the holders of certificates of any Series were utilized in selecting
the Removed Accounts; (e) represent and warrant that the removal of such Removed
Accounts will not result in a reduction or withdrawal of the ratings of the
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Certificates or any other outstanding Series or class of investor certificates
by any Rating Agency; and (f) on or before the related Removal Commencement
Date, deliver to the Trustee and any Enhancement Provider an officers'
certificate confirming the items set forth in clauses (c), (d) and (e) above.
Under certain conditions, the Pooling and Servicing Agreement may be
amended without the consent of the Certificateholders or any Rating Agency to
permit BCRC to also remove existing Receivables in Removed Accounts (including
all amounts then held or thereafter received in respect of such Receivables).
See "Amendments."
On the fifth business day after any date on which an Account becomes an
Ineligible Account (the "REMOVAL COMMENCEMENT DATE"), BCRC will commence the
removal of the Receivables of such Ineligible Account from the Trust by (a)
furnishing to the Trustee, any Enhancement Provider and the Rating Agencies a
Removal Notice specifying the Removal Commencement Date and the Ineligible
Accounts to be removed; (b) on or before the fifth business day after the
Removal Commencement Date, furnishing to the Trustee a computer file, microfiche
list or other list of the Ineligible Accounts, specifying for each Ineligible
Account its number and the aggregate amount and outstanding principal balance of
Receivables therein as of the date immediately preceding the Removal
Commencement Date and (c) from and after such Removal Commencement Date, ceasing
to transfer to the Trust any Receivables arising in the Ineligible Accounts.
With respect to the removal of Accounts pursuant to either of the two
immediately preceding paragraphs, whether such removal occurs at the option of
BCRC prior to the time that BCRC is permitted to remove existing Receivables in
Removed Accounts or upon a required removal of an Ineligible Account, (a) from
and after the applicable Removal Commencement Date, all Principal Collections in
respect of each Removed Account or Ineligible Account will be allocated first to
the oldest outstanding principal balance of such Account, until the
Determination Date on which the outstanding principal balance of Receivables
(the "DESIGNATED BALANCE") in such Account is reduced to zero (with respect to
any such Account, the "REMOVAL TERMINATION DATE"); and (b) on each business day
from and after such Removal Commencement Date until the related Removal
Termination Date, BCRC will allocate (x) to the Trust (to be further allocated
pursuant to the Pooling and Servicing Agreement), Non-Principal Collections in
respect of such Accounts based on the ratio of (1) the amount of Principal
Receivables in such Accounts on such business day that were previously sold to
the Trust to (2) the total amount of Principal Receivables in such Account on
such business day and (y) to the Depositor the remainder of the Non-Principal
Collections in respect of such Accounts on such business day.
Upon satisfaction of the above conditions on the related Removal
Termination Date, such Removed Accounts or Ineligible Accounts shall be deemed
to have been removed from the Trust and BCRC shall be permitted to sell,
transfer, assign, set over and otherwise convey, without recourse,
representation or warranty, all the right, title and interest in and to the
Receivables
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remaining and thereafter arising in the Removed Accounts or Ineligible Accounts,
all amounts received or to be received with respect thereto and all proceeds
thereof.
BCRC may at any time remove specific Receivables from the Trust,
including all amounts then held or thereafter received in respect of such
Receivables, without removing any other Receivables in the related Account then
existing or thereafter arising, and shall have the right to remove the related
Collateral Security and other rights associated with such Receivables, provided
the Receivables are removed from the Trust in connection with an assignment of
such Receivables to a third party in return for payment for such Receivables. As
a condition to the assignment and removal of such Receivables, the payment
therefor shall be in an amount at least equal to the principal amount of such
Receivables plus accrued interest to the removal date. All of such payments
shall be included as collections. BCRC has agreed pursuant to the Pooling and
Servicing Agreement that any such removal will take place only if, in the
reasonable belief of BCRC, no Early Amortization Event will occur as a result of
such removal.
BCRC also has the right to cause the Trustee to remove from the Trust
and reassign to BCRC Domestic Inventory Receivables originated and transferred
to the Trust during the four month period commencing 16 months prior to such
Origination Period that continue to be unpaid in full 450 or more days following
the origination thereof, provided that the aggregate amount of such Domestic
Inventory Receivables that may be so removed and reassigned shall not exceed 10%
of the aggregate principal balance of Domestic Inventory Receivables originated
and transferred to the Trust during such four month period commencing 16 months
prior to such Origination Period. BCRC shall effect such removal and
reassignment by depositing in the Collection Account for application as
collections on the Receivables an amount equal to the principal amount of such
Receivables plus accrued interest to the date of such reassignment. The Trust
will be under no obligation to hold any such Receivables for the purpose of
allowing BCRC to cause a reassignment of such Receivables.
In addition to the provisions described above, the Pooling and
Servicing Agreement provides that in connection with the granting of
Participation Interests in Receivables in the Trust, BCRC has the right to
remove from the Trust the undivided interest which is to be granted to a third
party. If an interest in a Receivable is removed, the Collateral Security or
interest in the Collateral Security attributable to such interest may also be
removed. The requirements for removing an undivided interest include the
requirement that BCRC or the Servicer on BCRC's behalf, represent and warrant
that such removal will not, in the reasonable belief of BCRC, cause an Early
Amortization Event to occur or cause the Pool Balance to be less than the
Required Pool Balance. See "The Floorplan and Asset-Based Financing
Business--Participation Arrangements."
CREDIT SUPPORT FOR THE CERTIFICATES
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The following sections summarize the structure for allocating
collections made on the Receivables and certain other amounts among the Classes
of Certificates, the other Series, the Variable Funding Certificate and the BCRC
Certificate.
COLLECTION ACCOUNT
The Servicer has established and is required to maintain, or cause to
be established and maintained, an Eligible Deposit Account for the benefit of
certificateholders in the name of the Trustee (the "COLLECTION ACCOUNT").
"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 or trust company organized under the laws
of the United States or any one of the states thereof (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 or trust company has a credit rating from each Rating Agency in one
of its generic rating categories which signifies investment grade. "ELIGIBLE
INSTITUTION" means (a) the corporate trust department of the Trustee or (b) a
depository institution or trust company organized under the laws of the United
States or any one of the states thereof (or a domestic branch of a foreign bank)
which at all times (i) has either (x) a long-term unsecured debt rating
acceptable to each such Rating Agency or (y) a certificate of deposit rating
acceptable to each such Rating Agency and (ii) is a member of the FDIC.
Funds in the Collection Account generally will be invested in (i)
obligations of or fully guaranteed by the United States, (ii) demand deposits,
time deposits or certificates of deposit of depository institutions or trust
companies incorporated under the laws of the United States 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,
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 or
entity other than such depository institution or trust company) of which at the
time of the Trust's investment or contractual commitment to invest therein has a
credit rating from any individual Rating Agency in the highest investment
category granted thereby, (iii) commercial paper at the time of the Trust's
investment of contractual commitment to invest therein having a credit rating
from any individual Rating Agency in the highest investment category granted
thereby, (iv) demand deposits, time deposits and certificates of deposit which
are fully insured by the FDIC, (v) bankers' acceptances issued by any depository
institution or trust company described in (ii) above, (vi) investments in money
market funds which have the highest rating from, or have otherwise been approved
in writing by, any individual Rating Agency, (vii) certain repurchase
obligations entered into with depositor institutions or trust companies with
respect to securities which are direct obligations of or obligations guaranteed
by the United States or any agency or instrumentality thereof which is backed by
the full faith and credit of the United States, and (viii) other investments
acceptable to any individual Rating Agency as being consistent with the
then-current rating of the Certificates (collectively, "ELIGIBLE INVESTMENTS").
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Any earnings (net of losses and investment expenses) on funds in the
Collection Account will be credited to the Collection Account. The Servicer will
have the revocable power to instruct the Trustee to make withdrawals and
payments from the Collection Account for the purpose of carrying out the
Trustee's or the Servicer's duties under the Pooling and Servicing Agreement.
EXCESS FUNDING ACCOUNT
The Servicer has established and is required to maintain, or, cause to
be established and maintained, an Eligible Deposit Account for the benefit of
the Certificateholders in the name of the Trustee (the "EXCESS FUNDING
ACCOUNT"). The Excess Funding Account is intended to preserve for the benefit of
the Certificateholders certain Principal Collections otherwise payable in
respect of other Series or the BCRC Certificate during the Revolving Period and
the Controlled Accumulation Period. The Excess Funding Account is held for the
benefit of the Certificateholders in the name of the Trustee.
On each Business Day during the Revolving Period and the Controlled
Accumulation Period, if the Pool Balance at the end of the preceding Business
Day was less than the Required Pool Balance also calculated as of the end of
such preceding Business Day, the Servicer will cause Principal Collections
allocable to the Certificates (during a Controlled Accumulation Period, after
depositing into the Principal Account an amount equal to the Controlled Deposit
Amount for the related Distribution Date) to be deposited by the Servicer in the
Excess Funding Account in an amount equal to the Excess Funded Amount (such
amount having been also calculated as of the end of the preceding Business Day),
minus the amount then held in the Excess Funding Account.
The "EXCESS FUNDED AMOUNT" shall be calculated for each Business Day
and shall be an amount equal to the product of (a) the excess, if any, of (i)
the Required Pool Balance as of the end of the preceding day over (ii) the Pool
Balance as of the end of such preceding day and (b) a fraction the numerator of
which is the Series 1999-1 Required Balance and the denominator of which is the
aggregate of the required balances for all Series (including the Series 1999-1
Required Balance) providing for excess funding accounts or similar arrangements.
On each Business Day during the Revolving Period or the Controlled Accumulation
Period, funds on deposit in the Excess Funding Account (including without
limitation the Excess Funded Amount) will be withdrawn and paid (or made
available) to the holder of the BCRC Certificate or allocated to one or more
Series which are in amortization, early amortization or accumulation periods to
the extent that as of the end of the preceding day, the excess referred to the
preceding sentence (i.e., the amount under clause (a) (i) over the amount under
clause (a) (ii)) has been reduced or no longer exists.
Funds on deposit in the Excess Funding Account will be invested at the
direction of the Servicer in Eligible Investments. On each Distribution Date,
all net investment income earned on amounts in the Excess Funding Account since
the preceding Distribution Date will be withdrawn from the Excess Funding
Account and applied as described herein.
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ALLOCATION PERCENTAGES
This section sets forth the procedure for calculating the Certificates'
allocable share of certain distributions and other payments made with respect to
the Receivables. Amounts not allocated to the Certificates as described below
will be allocated to other Series, the Variable Funding Certificate or the BCRC
Certificate.
Allocation to the Certificates. The Servicer will allocate amounts to
the Certificates for each Collection Period as follows:
(i) Non-Principal Collections and the Defaulted Amount will be
allocated to the Certificates based on the Floating Allocation Percentage;
(ii) during the Revolving Period, Principal Collections will be
allocated to the Certificates based on the Floating Allocation Percentage;
(iii) during the Controlled Accumulation Period, any Initial
Amortization Period and any Early Amortization Period, Principal Collections
will be allocated to the Certificates based on the Principal Allocation
Percentage; and
(iv) Miscellaneous Payments will be allocated to the Certificates on
the basis of the Series 1999-1 Investor Allocation Percentage;
provided, however, that with respect to the allocation of Principal Collections
among Series and the Variable Funding Certificate for any Collection Period, if
the sum of (i) the sum of the floating allocation percentages (including the
Floating Allocation Percentage, if applicable) for each Series in its revolving
period, (ii) the sum of the principal allocation percentages (including the
Principal Allocation Percentage, if applicable) for each Series in its
amortization, accumulation or early amortization period and (iii) the Variable
Funding Percentage exceeds 100%, then Principal Collections for such Collection
Period will be allocated among the Series and the Variable Funding Certificate
pro rata on the basis of such allocation percentages after the pro rata
reduction of such percentages so that the sum thereof equals 100% for such
period; provided further, that with respect to the allocation of Non-Principal
Collections among Series and the Variable Funding Certificate for any Collection
Period, if the sum of (i) the sum of the floating allocation percentages
(including the Floating Allocation Percentage) for each Series and (ii) the
Variable Funding Percentage exceeds 100%, then Non-Principal Collections for
such Collection Period will be allocated among the Series and the Variable
Funding Certificate on the basis of such allocation percentages after the pro
rata reduction of such percentages so that the sum thereof equals 100% for such
period.
"FLOATING ALLOCATION PERCENTAGE" means the percentage (which shall
never exceed 100%) obtained for each day in a Collection Period, by dividing the
Invested Amount as of the
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close of business on the preceding day by the Pool Balance as of the close of
business on such preceding day; provided, however, that, with respect to the
Collection Period in which the Certificates are issued, the Floating Allocation
Percentage shall mean the percentage obtained by dividing the Invested Amount of
the Certificates by the Pool Balance on the Series Cut-Off Date (giving pro
forma effect as of the Series Cut-Off Date to the issuance of the Certificates).
"PRINCIPAL ALLOCATION PERCENTAGE" means the percentage (which shall
never exceed 100%) obtained by dividing the Invested Amount as of the last day
of the Revolving Period by the Pool Balance as of each day in such Collection
Period.
"INVESTED AMOUNT" means for any date an amount equal to (a) the
Adjusted Invested Amount of the Certificates, minus (b) the amount, without
duplication, of principal payments (except principal payments made from the
Excess Funding Account and any transfers from the Excess Funding Account to the
Collection Account) made on the Certificates prior to such date minus (c) the
excess, if any, of the aggregate amount of Investor Charge-Offs for all
Distribution Dates preceding such date over the aggregate amount of any
reimbursements of Investor Charge-Offs for all Distribution Dates preceding
such date.
"INITIAL PRINCIPAL AMOUNT" means the aggregate initial principal amount
of the Certificates, which is $____.
"ADJUSTED INVESTED AMOUNT" means the Initial Principal Amount of the
Certificates plus (x) the amount of any withdrawals from the Excess Funding
Account in connection with an increase in Receivables in the Trust since the
Closing Date minus (y) the amount of any additions to the Excess Funding Account
in connection with a reduction in the Receivables in the Trust since the Closing
Date.
"MISCELLANEOUS PAYMENTS" for any Collection Period means the sum of (a)
Adjustment Payments and Transfer Deposit Amounts on deposit in the Collection
Account on the related Distribution Date received with respect to such
Collection Period and (b) Unallocated Principal Collections available to be
treated as Miscellaneous Payments as of the Distribution Date following such
Collection Period as described below under "Principal Collections for all
Series."
"POOL AVAILABLE SUBORDINATED AMOUNT" means for any date the sum of the
Available Subordinated Amount and the aggregate available subordinated amounts
for all other outstanding Series.
"POOL INVESTED AMOUNT" means for any date the sum of the Invested
Amount and the invested amounts for all other outstanding Series.
"SERIES 1999-1 INVESTOR ALLOCATION PERCENTAGE" means, for any
Collection Period, the percentage obtained by dividing the Invested Amount as of
the last business day preceding such Collection Period by the Pool Invested
Amount on such day.
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Principal Collections for all Series. Principal Collections allocable
to the Certificates for any Collection Period during the Revolving Period will
first be allocated to the Excess Funding Account to the extent described above
under "--Excess Funding Account." Principal Collections allocable to the
Certificates for any Collection Period with respect to the Controlled
Accumulation Period will first be allocated to make deposits up to the
Controlled Deposit Amount in the Principal Account. Principal Collections
allocable to the Certificates for any Collection Period with respect to any
Initial Amortization Period or any Early Amortization Period will first be
allocated to make required payments of Monthly Principal on the Certificates.
See "Distributions from the Collection Account; Reserve Fund--Principal
Collections" below. Principal Collections allocable to the Certificates for any
Collection Period during the Controlled Accumulation Period remaining after the
allocation to provide for the deposit of the Controlled Deposit Amount into the
Principal Account will then be allocated to the Excess Funding Account to the
extent described above under "Excess Funding Account." Thereafter, the Servicer
will determine the amount of Available Investor Principal Collections remaining
after such required payments are made and the amount of any similar excess for
any other Series (collectively, "EXCESS PRINCIPAL COLLECTIONS"). The Servicer
will allocate Excess Principal Collections to cover any principal distributions
on any Series which are either scheduled or permitted and which have not been
covered out of Principal Collections and certain other amounts allocated to such
Series ("PRINCIPAL SHORTFALLS").
Excess Principal Collections will generally not be used to cover
investor charge-offs for any Series. If Principal Shortfalls exceed Excess
Principal Collections for any Collection Period, Excess Principal Collections
will be allocated pro rata among the applicable Series entitled to receive
monthly principal (and giving effect to any requirements to apply such
distributions sequentially among classes of the same Series) based on the
relative amounts of Principal Shortfalls. To the extent that Excess Principal
Collections exceed Principal Shortfalls, the balance will be paid (or made
available) to the holder of the BCRC Certificate only if the Pool Balance for
the related Distribution Date (determined after giving effect to any Receivables
transferred to the Trust on such date) exceeds the Required Pool Balance for the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on such
Distribution Date). Any amount not paid to the holder of the BCRC Certificate
because the Pool Balance does not exceed the Required Pool Balance will be held
unallocated ("UNALLOCATED PRINCIPAL COLLECTIONS") in the Collection Account
until the Pool Balance exceeds the Required Pool Balance, at which time such
amount will be paid to the holder of the BCRC Certificate, or until an early
amortization event occurs or an accumulation or scheduled amortization period
commences for any Series, after which event or commencement such amount will be
treated as a Miscellaneous Payment.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT; LIMITED SUBORDINATION
OF THE RETAINED INTEREST
Except as otherwise provided in the following paragraphs, the Servicer,
no later than two business days after the date of receipt of any collections on
the Receivables, will deposit such
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collections (net of the Variable Funding Percentage of such collections and the
Excess Retained Percentage of such collections) into the Collection Account.
Notwithstanding the foregoing, for so long as (i) BCI remains the
Servicer under the Pooling and Servicing Agreement, (ii) no Servicer Default has
occurred and is continuing and (iii) (x) BCI is a subsidiary of Bombardier
Corporation (which shall own at least 80% of the voting common stock of BCI) and
BCI has and maintains a short-term debt rating of at least A-1 by Standard &
Poor's and P-1 by Moody's, (y) BCI arranges for and maintains a letter of credit
or other form of Enhancement in respect of the Servicer's obligation to make
deposits of collections on the Receivables in the Collection Account that is
acceptable in form and substance to each Rating Agency or (z) BCI otherwise
obtains the Rating Agency confirmations described below, then, subject to any
limitations in the confirmations referred to below, BCI need not deposit
collections into the Collection Account on the days indicated in the preceding
paragraph but may use for its own benefit all such collections until the
business day immediately preceding the related Distribution Date, at which time
BCI will make such deposits in a single deposit into the Collection Account in
an amount equal to the net amount of such deposits and withdrawals which would
have been made had the conditions described in this paragraph not applied;
provided, however, that prior to ceasing daily deposits as described above, BCI
shall have delivered to the Trustee written confirmation from each of the Rating
Agencies that the failure by BCI to make daily deposits will not result in a
reduction or withdrawal of the ratings of the Certificates or any other
outstanding Series or class of investor certificates.
In addition to and notwithstanding the foregoing, with respect to any
Collection Period, the Servicer will only be required to deposit collections
into the Collection Account up to the aggregate amount of collections required
to be deposited into all Series Accounts or, without duplication, distributed on
the related Distribution Date to all investor certificateholders and to each
Enhancement Provider pursuant to the terms of any Supplement or Enhancement
agreement, and if, at any time prior to such Distribution Date, the amount of
collections deposited in the Collection Account exceeds the amount required to
be deposited, the Servicer will be permitted to withdraw such excess from the
Collection Account.
The requirements of the preceding paragraphs are subject to the
following exceptions. On any date on which collections are received, the
Servicer may distribute (or make available) directly (a) to the holder of the
Variable Funding Certificate, an amount equal to the Variable Funding Percentage
of such collections and (b) to the holder of BCRC Certificate, the Excess
Retained Percentage of such collections. On any date on which collections are
received during the Revolving Period, the Controlled Accumulation Period or any
Initial Amortization Period, the Servicer will allocate to Series 1999-1 an
amount equal to the sum of (1) the product of (x) the Floating Allocation
Percentage for such date and (y) the aggregate amount of Non-Principal
Collections on such date and (2) the Series 1999-1 Available Retained
Collections for such date (such amount for any such date, the "DAILY
ALLOCATION"), and of that allocation, the Servicer will deposit and retain in
the Collection Account an amount equal to the lesser of (a) the Daily Allocation
on such date and (b) the difference between (I) the sum of the amounts required
to be
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distributed on the related Distribution Date pursuant to clauses (i) through
(viii) under "Distributions from the Collection Account; Reserve Fund--
Non-Principal Collections" below (provided that if BCI is the Servicer, such
amounts shall not include the Monthly Servicing Fee) and (II) the sum of the
Daily Allocations previously deposited in the Collection Account for the current
Collection Period, and the remainder of such Daily Allocation will be retained
by the Servicer for application as described herein. During the Early
Amortization Period, the entire Daily Allocation for each date will be deposited
and retained in the Collection Account.
On each Determination Date with respect to the Revolving Period, the
Controlled Accumulation Period or any Initial Amortization Period, the Servicer
will deposit in the Collection Account an amount equal to the excess, if any, of
any Daily Allocation retained by the Servicer and not deposited in the
Collection Account during the related Collection Period over the amounts
required to be distributed on the related Distribution Date pursuant to clauses
(i) through (viii) under "Distributions from the Collection Account; Reserve
Fund--Non-Principal Collections" below, provided that if BCI is the Servicer,
BCI may make such deposit net of the Monthly Servicing Fee and the amounts
payable from Series 1999-1 Available Retained Collections on the related
Distribution Date as described under "Distributions from the Collection Account;
Reserve Fund; Principal Account" below.
"AVAILABLE RETAINED COLLECTIONS" for any date on which the Servicer
receives collections (each, a "DEPOSIT DATE") means the sum of (a) the Available
Retained Non-Principal Collections for such date and (b) the Available Retained
Principal Collections for such date; provided, however, that the Available
Retained Collections will be zero for any Collection Period with respect to
which the Available Subordinated Amount is zero for the Distribution Date
occurring in such Collection Period.
"AVAILABLE RETAINED NON-PRINCIPAL COLLECTIONS" for any Deposit Date
means an amount equal to the product of (a) the excess of (i) the Retained
Percentage for the related such Deposit Date over (ii) the Excess Retained
Percentage for such Deposit Date multiplied by (b) Non-Principal Collections for
such date.
"AVAILABLE RETAINED PRINCIPAL COLLECTIONS" for any Deposit Date means
an amount equal to the product of (a) the excess of (i) the Retained Percentage
for such Deposit Date over (ii) the Excess Retained Percentage for such Deposit
Date and (b) Principal Collections for such date.
"SERIES 1999-1 AVAILABLE RETAINED COLLECTIONS" means, for any Deposit
Date, an amount equal to the product of (a) the Available Retained Collections
for such day and (b) a fraction, the numerator of which is the Available
Subordinated Amount and the denominator of which is the Pool Available
Subordinated Amount, in each case on such day.
"EXCESS RETAINED PERCENTAGE" for any date of determination, (x) the
Retained Percentage for such date minus (y) the percentage equivalent of a
fraction, the numerator of
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which is equal to the Pool Available Subordinated Amount as of the end of the
immediately preceding day and the denominator of which is the Pool Balance as of
the end of the immediately preceding day.
"RETAINED PERCENTAGE" for any date of determination, means 100% minus
(a) when used with respect to Non-Principal Collections, the sum of (i) the
aggregate of the floating allocation percentages for each outstanding Series
(including the Certificates) and (ii) the Variable Funding Percentage for such
date of determination and (b) when used with respect to Principal Collections,
the sum of (i) the aggregate of the floating allocation percentages for each
outstanding Series (including the Certificates, if applicable) in its revolving
period, (ii) the aggregate of the principal allocation percentages for each
outstanding Series (including the Certificates, if applicable) in its
amortization, accumulation or early amortization period and (iii) the Variable
Funding Percentage for such date of determination, but in each case the Retained
Percentage shall not be less than 0%.
"VARIABLE FUNDING PERCENTAGE" for any date of determination, means a
percentage (which percentage shall never be less than 0% nor more than 100%)
equal to the Variable Funding Amount as of such day divided by the Pool Balance
as of the close of business on the day preceding such day; provided, however,
that for purposes of allocating Principal Collections following the occurrence
of a Liquidation Event, the Variable Funding Percentage will be calculated on
the basis of the Variable Funding Amount as of the last day immediately
preceding the date of such Liquidation Event; provided, further, that following
a Liquidation Event, the relative interest of the Variable Funding Certificate
in further allocations of Non-Principal Collections will not be less than the
relative interest thereof as of the Liquidation Event.
Limited Subordination of Retained Interest. A portion of the Retained
Participation Amount up to the Available Subordinated Amount will be available
to fund payment of principal and interest on the Certificates in the event that
the proportionate interests of the Certificates in collections received with
respect to the Receivables during any particular Collection Period are less than
the required distributions thereon. The following paragraphs describe the extent
to which collections otherwise allocable to the BCRC Certificate will be
available to satisfy shortfalls with respect to the payment of principal and
interest on the Certificates.
Deficiency Amount. For each Distribution Date, the Servicer will
determine for the Certificates the amount (the "DEFICIENCY AMOUNT"), if any, by
which (a) the sum of (i) Monthly Interest for such Distribution Date, (ii)
Monthly Interest accrued but not paid with respect to prior Distribution Dates
(and interest thereon), (iii) the Net Servicing Fee for such Distribution Date,
(iv) the Investor Default Amount for such Distribution Date, and (v) the Series
1999-1 Investor Allocation Percentage of any Adjustment Payment for such
Distribution Date that has not been deposited in the Collection Account as
required under the Pooling and Servicing Agreement, exceeds (b) the sum of (i)
Investor Non-Principal Collections and Investment Proceeds for such Distribution
Date and (ii) the amount of funds in the Reserve Fund on such Distribution Date
available to fund the amount by which the amount in clause (a) exceeds the
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amount in clause (b) (i) as described below under "Distributions from the
Collection Account; Reserve Fund--Non-Principal Collections." The lesser of the
Deficiency Amount and the Available Subordinated Amount is the "Required
Subordination Draw Amount."
"CLASS A MONTHLY INTEREST" for any Distribution Date means an amount
equal to the product of (x) the actual number of days elapsed in the related
Interest Period divided by 360 days and (y) the product of (i) the Class A
Certificate Rate and (ii) the outstanding principal balance of the Class A
Certificates as of the close of business on the preceding Distribution Date (or
for the first Distribution Date, the Closing Date) after giving effect to any
payments of principal on the Class A Certificates on such preceding Distribution
Date.
"CLASS B MONTHLY INTEREST" for any Distribution Date means an amount
equal to the product of (x) the actual number of days elapsed in the related
Interest Period divided by 360 days and (y) the product of (i) the Class B
Certificate Rate and (ii) the outstanding principal balance of Class B
Certificates as of the close of business on the preceding Distribution Date (or
for the first Distribution Date, the Closing Date) after giving effect to any
payments of principal on the Class B Certificates on such preceding Distribution
Date.
"MONTHLY INTEREST" for any Distribution Date means the sum of the Class
A Monthly Interest and the Class B Monthly Interest with respect to such
Distribution Date.
Required Subordinated Amount. The "REQUIRED SUBORDINATED AMOUNT" means,
as of any date of determination, the sum of (i) the product of (A) the
Subordinated Percentage and (B) the Invested Amount and (ii) the Incremental
Subordinated Amount for the immediately preceding Distribution Date or, if such
date of determination is a Distribution Date, for such date; provided, however,
that for any date prior to the end of the Revolving Period, the Required
Subordinated Amount shall in no event be less than an amount equal to the sum of
(x) [3.75]% of the Initial Principal Amount of the Certificates and (y) the
Incremental Subordinated Amount for the immediately preceding Distribution Date
or, if such date of determination is a Distribution Date, for such date;
provided further, that upon the commencement of the Initial Amortization Period
or the Controlled Accumulation Period or if an Early Amortization Event occurs,
the Required Subordinated Amount for each date of determination thereafter will
equal the Required Subordinated Amount as of the close of business on the day
preceding the first day of the Initial Amortization Period or the Controlled
Accumulation Period or the day on which such Early Amortization Event occurs.
Available Subordinated Amount. The "AVAILABLE SUBORDINATED AMOUNT" for
any date of determination after the first Distribution Date means an amount
equal to the sum of: (i) the lesser of: (a) the Available Subordinated Amount
for the preceding Distribution Date, minus, with certain limitations, the
Required Subordination Draw Amount for the preceding Distribution Date or, if
such date of determination is a Distribution Date, such Distribution Date, minus
the amount of any deposits in the Reserve Fund from Series 1999-1 Available
Retained Collections for the purpose of reimbursing funds withdrawn from the
Reserve Fund applied to cover any
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portion of the Investor Default Amount on the preceding Distribution Date or, if
such date of determination is a Distribution Date, such Distribution Date, minus
an amount equal to the Defaulted Amount for the immediately preceding Collection
Period multiplied by a fraction, the numerator of which is the Available
Subordinated Amount as of the last day of the preceding Collection Period (or in
the case of the first Distribution Date, the Required Subordinated Amount as of
the Closing Date) and the denominator of which is the Pool Balance as of the
last day of the preceding Collection Period (or in the case of the first
Distribution Date, the Pool Balance as of the Closing Date), plus the aggregate
amount of Excess Servicing paid to the holder of the BCRC Certificate on the
previous Distribution Date as described below under "Distributions from the
Collection Account; Reserve Fund--Excess Servicing," minus the Incremental
Subordinated Amount for the second preceding Distribution Date or if such date
of determination is a Distribution Date, the preceding Distribution Date, plus
the Incremental Subordinated Amount for the immediately preceding Distribution
Date, or if such date of determination is a Distribution Date, such Distribution
Date plus the Subordinated Percentage multiplied by the aggregate amount of any
increases in the Invested Amount resulting from any withdrawals from the Excess
Funding Account since the preceding Distribution Date; and (b) the Required
Subordinated Amount for such date of determination; and (ii) the amount of any
optional increase in the Available Subordinated Amount exercised by BCRC as
described below in the final paragraph of this section "Allocation of
Collections; Deposits in Collection Account; Limited Subordination of the
Retained Interest--Available Subordinated Amount." The Available Subordinated
Amount for any date of determination during the period from the Closing Date
through the first Distribution Date is equal to the Required Subordinated Amount
as of such date of determination, which will equal at least $_________ on the
Closing Date.
The "SUBORDINATED PERCENTAGE" will equal the percentage equivalent of a
fraction, the numerator of which is [5.5]% and the denominator of which will be
the excess of 100% over [5.5]%.
The "INCREMENTAL SUBORDINATED AMOUNt" on any Distribution Date will
equal the product of (a) a fraction, the numerator of which is the sum of the
Invested Amount on the last day of the immediately preceding Collection Period
(or with respect to the first Distribution Date, the Invested Amount on the
Closing Date) and the Available Subordinated Amount for such Distribution Date
(calculated without subtracting or adding the Incremental Subordinated Amount
for such Distribution Date as described in clause (a) of the definition of
Available Subordinated Amount or clause (ii) of the definition of Required
Subordinated Amount), and the denominator of which is the Pool Balance on such
last day and (b) the Overconcentration Amount on such Distribution Date.
"OBLIGOR OVERCONCENTRATIONS" on any Distribution Date means, with
respect to any Account, the excess of (x) the aggregate principal amount of
Eligible Receivables in such Account on the last day of the Collection Period
immediately preceding such Distribution Date over (y) [2]% of the Pool Balance
with respect to Specified Obligors and [1.5]% of the Pool Balance with respect
to all other Obligors, in each case on the last day of such immediately
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preceding Collection Period. As used in this definition, "SPECIFIED OBLIGORS"
means any Obligor with respect to the six largest Accounts in the Trust
calculated on the basis of the amount of Principal Receivables in such Account.
The percentages set forth in this description of Obligor Overconcentrations and
the manner of determining the Specified Obligors may be adjusted from time to
time without the consent of the Certificateholders if the Rating Agency
Condition is satisfied.
"MANUFACTURER OVERCONCENTRATIONS" on any Distribution Date means the
excess of (x) the aggregate amount of Eligible Receivables created in connection
with the financing of products manufactured by any single manufacturing entity
(other than the Designated Manufacturer described below in the definition of
Designated Manufacturer Overconcentrations) which Eligible Receivables are in
the Pool on the last day of the Collection Period immediately preceding such
Distribution Date over (y) [15]% of the Pool Balance on the last day of such
immediately preceding Collection Period; provided, however, that the percentage
specified in clause (y) may be adjusted from time to time without the consent of
the Certificateholders, if the Rating Agency Condition is satisfied.
"DESIGNATED MANUFACTURER OVERCONCENTRATIONS" on any Distribution Date
means the excess of (x) the aggregate amount of Eligible Receivables created in
connection with the financing of products manufactured by the Designated
Manufacturer which Eligible Receivables are in the Pool on the last day of the
Collection Period immediately preceding such Distribution Date over (y) [50]% of
the Pool Balance on the last day of such immediately preceding Collection Period
where the "Designated Manufacturer" is collectively Bombardier Inc. and its
subsidiaries; provided, however, that the percentage specified in clause (y) and
the entities included as Designated Manufacturer may be adjusted from time to
time without the consent of the Certificateholders, if the Rating Agency
Condition is satisfied.
"INDUSTRY OVERCONCENTRATIONS" on any Distribution Date means the excess
of (x) the aggregate amount of Eligible Receivables created in connection with
the financing of products manufactured by manufacturing entities that are part
of the same industry (i.e., producing the same principal product, provided that
products manufactured by Bombardier Inc. and its affiliates will not be included
in the calculation of Industry Overconcentration) which Eligible Receivables are
in the Pool on the last day of the Collection Period immediately preceding such
Distribution Date over (y) an amount equal to __% of the Pool Balance on the
last day of such immediately preceding Collection Period; provided, however,
that with respect to each industry specified below, the percentage in clause (y)
of this definition shall be deemed to equal the percentage set forth opposite
such industry:
<TABLE>
<CAPTION>
Industry Percentage
-------- ----------
<S> <C>
Marine Products............................. __%
Recreational Vehicles....................... __%
Lawn and Garden............................. __%
Consumer Electronics and Appliances......... __%
</TABLE>
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Some or all of the percentages specified in this description of
Industry Overconcentrations may be adjusted from time to time without the
consent of the Certificateholders, if the Rating Agency Condition is satisfied.
"OVERCONCENTRATION AMOUNT" on any Distribution Date means the sum of
(without duplication) the Obligor Overconcentrations, the Manufacturer
Overconcentrations, the Designated Manufacturer Overconcentrations and the
Industry Overconcentrations on such Distribution Date.
If the Available Subordinated Amount for any Distribution Date is less
than the Required Subordinated Amount for such Distribution Date, an Early
Amortization Event will occur. The holder of the BCRC Certificate could elect to
increase the Available Subordinated Amount (but the aggregate amount of such
increases may not exceed an amount equal to 1% of the Initial Principal Amount
of the Certificates) at the time such an Early Amortization Event would
otherwise occur, thus preventing or delaying the occurrence of such Early
Amortization Event.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND; PRINCIPAL ACCOUNT
Distributions on the Certificates will be made monthly on the 15th day
of each month, or if such day is not a business day, on the next succeeding
business day (each, a "DISTRIBUTION DATE"), commencing [[month] 15, 1999].
Non-Principal Collections. On each Distribution Date, the Trustee will
apply Investor Non-Principal Collections and Investment Proceeds for such
Distribution Date to make the following distributions in the following order of
priority:
(i) an amount equal to Class A Monthly Interest for such Distribution
Date, plus the amount of any Class A Monthly Interest previously due but not
distributed on a prior Distribution Date (plus, but only to the extent permitted
under applicable law, interest at the Class A Certificate Rate on Class A
Monthly Interest previously due but not distributed), shall be distributed on
the Class A Certificates;
(ii) an amount equal to Class B Monthly Interest for such Distribution
Date, plus the amount of any Class B Monthly Interest previously due but not
distributed on a prior Distribution Date (plus, but only to the extent permitted
under applicable law, interest at the Class B Certificate Rate on Class B
Monthly Interest previously due but not distributed) shall be distributed on the
Class B Certificates;
(iii) an amount equal to the Net Servicing Fee for such Distribution
Date shall be distributed to the Servicer (unless such amount has been deducted
from amounts that would otherwise be deposited to the Collection Account as
described above under "Allocation of
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Collections; Deposits in Collection Account; Limited Subordination of the
Retained Interest" or waived as described under "Servicing Compensation and
Payment of Expenses" below);
(iv) an amount equal to the Reserve Fund Deposit Amount, if any, for
such Distribution Date shall be deposited in the Reserve Fund;
(v) an amount equal to the Investor Default Amount, if any, for such
Distribution Date shall be treated as a portion of Available Investor Principal
Collections for such Distribution Date and shall be allocated by the Trustee in
the manner described under "Principal Collections" below;
(vi) an amount equal to the remainder of the Monthly Servicing Fee for
such Distribution Date, if any, due but not paid the Servicer shall be paid to
the Servicer (unless such amount has been deducted from amounts that would
otherwise be deposited to the Collection Account as described above under
"Allocation of Collections; Deposits in Collection Account; Limited
Subordination of the Retained Interest" or waived as described under "Servicing
Compensation and Payment of Expenses" below);
(vii) any Class A Carry-Over Amount for such Distribution Date, plus
the amount of any Class A Carry-Over Amount previously due but not distributed
on a previous Distribution Date, shall be distributed to the Class A
Certificateholders;
(viii) any Class B Carry-Over Amount for such Distribution Date, plus
the amount of any Class B Carry-Over Amount previously due but not distributed
on a previous Distribution Date, shall be distributed to the Class B
Certificateholders; and
(ix) the balance, if any, shall constitute Excess Servicing and shall
be allocated by the Trustee in the manner described under "Excess Servicing"
below.
If such Investor Non-Principal Collections and Investment Proceeds are
not sufficient to make the distributions required by clauses (i), (ii), (iii)
and (v), the Trustee shall withdraw funds from the Reserve Fund and apply such
funds to complete, to the extent available, the distributions pursuant to such
clauses (i), (ii), (iii) and (v) in the numerical order thereof.
If there is a Deficiency Amount for such Distribution Date, the
Servicer will apply or cause the Trustee to apply the aggregate amount of Series
1999-1 Available Retained Collections for the related Collection Period on such
Distribution Date, but only up to the Required Subordination Draw Amount, to
make the distributions required by clauses (i), (ii), (iii) and (v) above that
have not been made through the application of funds from the Reserve Fund as
described in the preceding paragraph. Any such Series 1999-1 Available Retained
Collections remaining after the application thereof pursuant to the preceding
sentence shall be treated as a portion of the Available Investor Principal
Collections, but only up to the amount of unpaid Adjustment Payments allocated
to the Certificates. The holder of the BCRC Certificate may elect
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to increase the Available Subordinated Amount, up to a maximum aggregate
increase equal to 1% of the Initial Principal Amount of the Certificates, in
order to avoid the occurrence of an Early Amortization Event.
"NON-PRINCIPAL COLLECTIONS" means collections of interest and other
non-principal charges (including amounts recovered with respect to Defaulted
Receivables and insurance proceeds) with respect to the Receivables.
"INVESTOR NON-PRINCIPAL COLLECTIONS" for any Distribution Date means
the portion of Non-Principal Collections for the related Collection Period
allocated to the Certificates as described above under "Allocation
Percentages--Allocation to the Certificates" and "Allocation of Collections;
Deposits in Collection Account; Limited Subordination of the Retained Interest."
"INVESTMENT PROCEEDS" for any Distribution Date means an amount equal
to the sum of (a) all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Reserve Fund, the Excess Funding
Account and the Principal Account and (b) the Series 1999-1 Investor Allocation
Percentage of net investment earnings credited to the Collection Account on the
second Business Day prior to the Distribution Date with respect to funds held in
the Collection Account.
"EXCESS SERVICING" for any Distribution Date means the amount described
in clause (ix) above.
Reserve Fund. An Eligible Deposit Account will be established and
maintained in the name of the Trustee for the benefit of the Certificateholders
(the "RESERVE FUND"). BCRC will make an initial deposit into the Reserve Fund on
the Closing Date in an amount equal to $________. The "RESERVE FUND REQUIRED
AMOUNT" means an amount which on any Distribution Date will equal [0.50]% of the
outstanding principal balance of the Certificates on such Distribution Date
(after giving effect to any reduction thereof on such Distribution Date). If,
after giving effect to the allocations, distributions and deposits in the
Reserve Fund described herein under the caption "Non-Principal Collections," the
amount in the Reserve Fund is less than the Reserve Fund Required Amount for
such Distribution Date, the Trustee shall deposit any remaining Series 1999-1
Available Retained Collections (to the extent of the Available Subordinated
Amount) for the related Collection Period into the Reserve Fund until the amount
in the Reserve Fund is equal to the Reserve Fund Required Amount. The "RESERVE
FUND DEPOSIT AMOUNT" means, with respect to any Distribution Date, the amount,
if any, by which the Reserve Fund Required Amount for such Distribution Date
exceeds the amount on deposit in the Reserve Fund after giving effect to any
withdrawal therefrom on such Distribution Date. Funds in the Reserve Fund will
be invested in the same manner in which funds in the Collection Account may be
invested. On each Distribution Date, the Servicer will credit to the Collection
Account any investment earnings (net of losses and investment expenses) with
respect to the Reserve Fund. After the payment in full of the aggregate
principal balance of the Certificates,
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any funds remaining on deposit in the Reserve Fund will be paid to the holder of
the BCRC Certificate.
If, for any Distribution Date with respect to an Early Amortization
Period, after giving effect to the allocations, distributions and deposits
described in the preceding paragraph, the amount in the Reserve Fund is less
than the Excess Reserve Fund Required Amount as of such Distribution Date, the
Trustee shall deposit the remaining Series 1999-1 Available Retained Collections
(to the extent of the Available Subordinated Amount) for the related Collection
Period into the Reserve Fund until the amount in the Reserve Fund is equal to
such Excess Reserve Fund Required Amount. The "EXCESS RESERVE FUND REQUIRED
AMOUNT" for any Distribution Date with respect to an Early Amortization Period,
means an amount equal to the greater of (a) 5% of the Initial Principal Amount
of the Certificates and (b) the excess of (i) the Required Pool Balance (after
giving effect to any changes thereto on such Distribution Date) over (ii) the
Pool Balance (after giving effect to changes thereto on such Distribution Date);
provided that the Excess Reserve Fund Required Amount shall in no event exceed
the Available Subordinated Amount for such Distribution Date.
Excess Servicing. On each Distribution Date, the Trustee will allocate
Excess Servicing with respect to the Collection Period immediately preceding
such Distribution Date, in the following order of priority:
(a) an amount equal to the aggregate amount of Investor Charge-Offs
which have not been previously reimbursed (after giving effect to the allocation
on such Distribution Date of the Series 1999-1 Investor Allocation Percentage of
Miscellaneous Payments with respect to such Distribution Date) will be included
in Available Investor Principal Collections for such Distribution Date;
(b) an amount equal to the aggregate outstanding amounts of the Monthly
Servicing Fee which have been previously waived as described below under
"Servicing Compensation and Payment of Expenses" will be distributed to the
Servicer; and
(c) the balance, if any, shall be distributed (or made available) to
the holder of the BCRC Certificate and shall also increase the Available
Subordinated Amount to the extent described in the definition thereof.
Principal Account. An Eligible Deposit Account will be established and
maintained in the name of the Trustee for the benefit of the Series 1999-1
Certificateholders (the "PRINCIPAL ACCOUNT"). Funds on deposit in the Principal
Account will be invested at the direction of the Servicer in Eligible
Investments. On each Distribution Date, the Servicer will credit to the
Collection Account any investment earnings (net of losses and investment
expenses) with respect to the Principal Account. After the payment in full of
the aggregate principal balance of the Certificates, any funds remaining on
deposit in the Principal Account will be paid to the holder of the BCRC
Certificate.
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Principal Collections. The Trustee will apply Available Investor
Principal Collections as follows:
(a) on each business day, with respect to the Revolving Period, first,
to make a deposit to the Excess Funding Account if the Pool Balance at the end
of the preceding business day was less than the Required Pool Balance for such
day (calculated as provided above under "Excess Funding Account") and, second,
to Excess Principal Collections as described above under "Allocation
Percentages--Principal Collections for all Series";
(b) for each Distribution Date with respect to the Controlled
Accumulation Period:
(A) if such Distribution Date is not the Scheduled Payment Date;
(i) an amount equal to the Controlled Deposit Amount will be
deposited into the Principal Account; and
(ii) an amount, if any, equal to the difference between the
Excess Funding Amount and the amount then on deposit in the Excess Funding
Account shall be deposited into the Excess Funding Account; and
(iii) the balance, if any, will be allocated to Excess
Principal Collections; and
(B) if such Distribution Date is the Scheduled Payment Date,
(i) then first to the holders of Class A Certificates until
the principal amount thereof is reduced to zero and then to holders of the
Class B Certificates until the principal amount thereof is reduced to zero; and
(ii) the balance, if any, will be allocated to Excess
Principal Collections;
and
(c) for each Distribution Date with respect to any Initial Amortization
Period or Early Amortization Period:
(i) an amount equal to Monthly Principal for such Distribution
Date will be distributed first to the holders of Class A Certificates until the
principal amount thereof is reduced to zero and then to holders of the Class B
Certificates until the principal amount thereof is reduced to zero; and
(ii) the balance, if any, will be allocated to Excess
Principal Collections.
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In the event that the Invested Amount is greater than zero on the
Series 1999-1 Termination Date, any funds remaining in the Reserve Fund (after
the application of funds in the Reserve Fund as described above under "Non-
Principal Collections") will be treated as a portion of Available Investor
Principal Collections for the Distribution Date occurring on the Series 1999-1
Termination Date.
"PRINCIPAL COLLECTIONS" means collections of principal on the
Receivables.
"AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" for any Distribution Date
means the sum of (a) the product of (i) the Floating Allocation Percentage, with
respect to the Revolving Period, or the Principal Allocation Percentage, with
respect to the Controlled Accumulation Period, any Initial Amortization Period
or any Early Amortization Period, for the related Collection Period and (ii)
Principal Collections for the related Collection Period, (b) the amount, if any,
of Investor Non-Principal Collections, funds in the Reserve Fund and Series
1999-1 Available Retained Collections allocated to cover any Investor Default
Amount or any unpaid Adjustment Payments allocated to the Certificates or to
reimburse Investor Charge-Offs, (c) the Series 1999-1 Investor Allocation
Percentage of Miscellaneous Payments for such Distribution Date, (d) Excess
Principal Collections, if any, from other Series allocated to the Certificates,
(e) if an Initial Amortization Period or an Early Amortization Period began
during the related Collection Period, any amounts on deposit in the Excess
Funding Account, (f) on the Series 1999-1 Termination Date, any funds remaining
in the Reserve Fund (after the application of funds in the Reserve Fund as
described above under "Non-Principal Collections"), and (g) with respect to the
Scheduled Payment Date, any Initial Amortization Period or any Early
Amortization Period, any funds on deposit in the Principal Account..
If the sum of the Floating Allocation Percentage (during the Revolving
Period) or the Principal Allocation Percentage (during the Early Amortization
Period, Initial Amortization Period or Controlled Accumulation Period), the
floating allocation percentages for all other outstanding Series of investor
certificates in their revolving periods and the principal allocation percentages
for all other outstanding Series in their amortization or early amortization
periods exceeds 100%, then the Principal Collections shall be allocated among
all Series pro rata on the basis of such floating allocation percentages and
principal allocation percentages.
"MONTHLY PRINCIPAL" with respect to any Distribution Date relating to
any Initial Amortization Period or Early Amortization Period will equal
Available Investor Principal Collections for such Distribution Date; provided,
however, that Monthly Principal will not exceed the applicable outstanding
principal balances of the Class A and Class B Certificates, respectively.
"ACCUMULATION PERIOD LENGTH" means the one, two, three, four, five or
six month(s) period, determined on __________, and shall be calculated as the
product, rounded upwards to the nearest integer, of (a) four and (b) a fraction,
the numerator of which is the Invested Amount as of _____________ (after giving
effect to all changes therein on such date) and the
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denominator of which is the sum of such Invested Amount and the invested amounts
as of _____________ (after giving effect to all changes therein on such date) of
all other outstanding Series whose respective revolving periods are not
scheduled to end before the last day of the ___________ Collection Period.
"ACCUMULATION SHORTFALL" means, for the succeeding Monthly Period, the
amount by which the Controlled Deposit Amount exceeds the amount deposited in
the Principal Account for any Monthly Period.
"CONTROLLED ACCUMULATION AMOUNT" means an amount sufficient to amortize
the Invested Amount given the Accumulation Period Length.
"CONTROLLED ACCUMULATION PERIOD" means, unless an Early Amortization
Event has occurred, the period commencing on the Accumulation Period
Commencement Date and ending upon the earliest to occur of (i) the commencement
of the Early Amortization Period or any Initial Amortization Period, (ii)
payment to the Investor Certificateholders of the full Invested Amount, and
(iii) the Series 1999-1 Termination Date.
"CONTROLLED DEPOSIT AMOUNT" means, for any Monthly Period, the sum of
the (i) Controlled Accumulation Amount for such Monthly Period plus (ii) the
Accumulation Shortfall for the related Monthly Period.
"CLASS A EXPECTED FINAL PAYMENT DATE" means the __________ Distribution
Date.
"CLASS B EXPECTED PAYMENT DATE" means the __________ Distribution Date.
"SCHEDULED PAYMENT DATE" means the ____________ Distribution Date.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that BCRC may at any time
designate a fixed percentage of the amount of collections in respect of
Receivables arising in the Accounts on and after the date of such designation
that otherwise would be treated as Principal Collections to be treated as
Non-Principal Collections. BCRC must provide 10 days' prior written notice to
the Servicer, the Trustee and each Rating Agency of any such designation, and
such designation will become effective on the date specified therein only if (i)
an officer's certificate is delivered to the Trustee to the effect that in the
reasonable belief of BCRC such designation would not result in an Early
Amortization Event or have a materially adverse effect on the certificateholders
and (ii) the Rating Agency Condition shall have been satisfied.
DEFAULTED RECEIVABLES AND RECOVERIES
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"DEFAULTED RECEIVABLES" on any Distribution Date are (i) all
Receivables (other than Receivables that were designated as Ineligible
Receivables at the time of transfer to the Trust and Receivables which became
Ineligible Receivables because they were not paid in full within 491 days after
the origination thereof) which were charged off by the Servicer as uncollectible
in respect of the immediately preceding Collection Period, (ii) all Receivables
that have been SAU for more than 60 days, [(iii) all Receivables in an Account
in which interest in the amount of $150 or more has been delinquent for 90 days
or more, and (iv)] all Receivables which were Eligible Receivables when
transferred to the Trust, which arose in an Account which became an Ineligible
Account and which were not Eligible Receivables for any six consecutive
Distribution Dates after such Account became an Ineligible Account. (Receivables
are not Defaulted Receivables merely because they become Ineligible
Receivables.)
The "DEFAULTED AMOUNT" for any Collection Period will be an amount
(which shall not be less than zero) equal to (a) the aggregate principal amount
of Receivables that became Defaulted Receivables during the preceding Collection
Period less (b) the full amount of any Defaulted Receivables subject to
retransfer from the Trust to BCRC or purchase by the Servicer for such
Collection Period unless certain events of bankruptcy, insolvency, or
receivership have occurred with respect to either of BCRC or the Servicer (or
unless a Liquidation Event has occurred), in which event the Defaulted Amount
will not be reduced for those Defaulted Receivables. Receivables will be charged
off as uncollectible in accordance with the written policies of BCI and its
affiliates and otherwise in accordance with procedures that are customary and
usual in the industry. A portion of the Defaulted Amount equal to the product of
(x) the Defaulted Amount for such Collection Period and (y) the Floating
Allocation Percentage for such Collection Period will be allocated to the
Certificates. The portion of the Defaulted Amount allocated to the Certificates
is referred to as the "INVESTOR DEFAULT AMOUNT."
"SAU" means, with respect to a Receivable, that if such Receivable was
originally secured by a security interest in an Eligible Product, such Eligible
Product has been sold and such Receivable has not been paid in full.
If the Servicer adjusts downward the outstanding principal balance of
any Eligible Receivable because of a rebate, billing error, refund, credit
adjustment or billing error to an Obligor, or because such Receivable was
created in respect of a product which was refused or returned by an Obligor, the
amount of such adjustment will be deducted from the Pool Balance. Furthermore,
to the extent that the reduction in the Pool Balance would reduce the Pool
Balance below the Required Pool Balance on the immediately preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the related Distribution Date), then
unless a Liquidation Event has occurred, the Depositor will be required to
deposit a cash amount equal to such deficiency (up to the amount of such
adjustment) into the Collection Account in immediately available funds (an
"ADJUSTMENT PAYMENT") on the day on which such adjustment occurs.
INVESTOR CHARGE-OFFS
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If the Available Subordinated Amount is reduced to zero, and on any
Distribution Date the Deficiency Amount is greater than zero, the Invested
Amount will be reduced by the excess of such Deficiency Amount over any
remaining Available Subordinated Amount on the related Determination Date, but
not by more than the Investor Default Amount for such Distribution Date (an
"INVESTOR CHARGE-OFF"). Any reduction in the Invested Amount may have the effect
of slowing or reducing the return of principal on the Certificates. If the
Invested Amount has been reduced by any Investor Charge-Offs, it will thereafter
be increased on any Distribution Date (but not by an amount in excess of the
aggregate Investor Charge-Offs) by the sum of (a) the Series 1999-1 Investor
Allocation Percentage of Miscellaneous Payments for such Distribution Date and
(b) the amount of Excess Servicing allocated and available for such purpose as
described above.
OPTIONAL REPURCHASE
On any Distribution Date occurring on or after the date on which the
Invested Amount is reduced to 10% or less of the initial aggregate principal
balance of the Certificates, BCRC will have the option, subject to certain
conditions, to repurchase the entire amount of the Certificates. The purchase
price will be equal to the sum of the aggregate principal balance of the
Certificates on such Distribution Date, accrued and unpaid interest due on the
Certificates (together with interest on overdue Monthly Interest to the extent
lawfully payable) on the date of such repurchase and any Class A Carry-Over
Amount or Class B Carry-Over Amount for such Distribution Date or previously due
but not distributed on a prior Distribution Date. The purchase price will be
deposited in the Collection Account in immediately available funds on the
Distribution Date on which BCRC exercises such option. Following any such
deposit, the Certificateholders will have no further rights with respect to the
Certificates, other than the right to receive the final distribution on the
Certificates. In the event that BCRC fails for any reason to deposit such
purchase price, payments will continue to be allocated to the Certificates as
described above under "Distributions from the Collection Account; Reserve Fund;
Principal Account."
EARLY AMORTIZATION EVENTS
Commencing on the first Distribution Date following the Collection
Period in which an Early Amortization Event has occurred, Principal Collections
allocable to the Certificates will no longer be allocated to any other Series or
the BCRC Certificate but instead will be allocated to the Certificates monthly
on each Distribution Date, except as described below. An "EARLY AMORTIZATION
EVENT" refers to any of the following events:
(a) a failure by BCRC to convey Receivables in Additional Accounts to
the Trust within five business days after the day on which it is required to
convey such Receivables pursuant to the Pooling and Servicing Agreement;
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(b) failure on the part of BCRC, the Servicer or BCI, as applicable,
(i) to make any payment or deposit required by the terms of the Pooling and
Servicing Agreement, including but not limited to any Transfer Deposit Amount or
Adjustment Payment, on or before the date occurring five (5) business days after
the date such payment or deposit is required to be made, which failure is not
cured within five business days after notice from the Trustee of such failure;
(ii) with respect to any Series, to deliver a Distribution Date Statement within
ten business days after notice from the Trustee of such failure; (iii) to duly
comply with, observe or perform in any material respect the covenant of the
Depositor not to create any lien (other than tax and certain other statutory
liens (including liens in favor of the Pension Benefit Guaranty Corporation) and
certain other liens and interests permitted by the Pooling and Servicing
Agreement on any Receivable which failure has a material adverse effect on the
holders of the investor certificates or the holder of the Variable Funding
Certificate and which continues unremedied for a period of 60 days after written
notice of such failure, requiring the same to be remedied, has been given to the
Depositor by the Trustee or any Enhancement Provider; provided, however, that an
Early Amortization Event shall not be deemed to have occurred if the Depositor
shall have repurchased the related Receivables or, if applicable, all the
Receivables during such period in accordance with the provisions of the Pooling
and Servicing Agreement; or (iv) to duly observe or perform in any material
respect any other of its covenants or agreements set forth in the Pooling and
Servicing Agreement, which failure has a materially adverse effect on the
holders of the investor certificates or the holder of the Variable Funding
Certificate and which continues unremedied for a period of 45 days after written
notice of such failure, requiring the same to be remedied, shall have been given
to the Depositor by the Trustee or any Enhancement Provider;
(c) any representation or warranty made by BCRC in the Pooling and
Servicing Agreement or any information required to be given by BCRC to the
Trustee to identify the Accounts proves to have been incorrect in any material
respect when made or when delivered and continues to be incorrect in any
material respect for a period of 60 days after written notice (or within such
longer period as may be specified in such notice) of such failure, requiring the
same to be remedied, shall have been given to BCRC by the Trustee, and as a
result the interests of the holders of the investor certificates or the holder
of the Variable Funding Certificate are materially and adversely affected
(excluding, however, any representation or warranty made by BCRC that the
Pooling and Servicing Agreement constitutes, or the transfer of the Receivables
to the Trust is, a valid sale, transfer and assignment to the Trust of all
right, title and interest of BCRC in the Receivables and the Collateral Security
if the Pooling and Servicing Agreement constitutes the grant of a security
interest in the Receivables and Collateral Security); provided, however, that an
Early Amortization Event shall not be deemed to occur thereunder if BCRC has
repurchased the related Receivables or all such Receivables, if applicable,
during such period in accordance with the provisions of the Pooling and
Servicing Agreement;
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to any of Bombardier Corporation, the Depositor or the
Servicer (or BCI if it is not the Servicer);
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(e) BCRC or the Trust becomes an investment company within the meaning
of the Investment Company Act of 1940, as amended;
(f) on any Distribution Date, the Available Subordinated Amount is less
than the Required Subordinated Amount after giving effect to the distributions
to be made on such Distribution Date;
(g) on any Distribution Date, the balance of the Reserve Fund is less
than the Reserve Fund Required Amount, in each case after giving effect to all
deposits and distributions on such Distribution Date;
(h) any Servicer Default occurs;
(i) any Class A Carry-Over Amount or Class B Carry-Over Amount, as
applicable, is outstanding on six consecutive Distribution Dates, where the
"CLASS A CARRY-OVER AMOUNT" for any Distribution Date on which the Class A
Certificate Rate is calculated on the basis of the Net Receivables Rate, is the
excess of (x) Class A Monthly Interest for such Distribution Date determined as
if the Class A Certificate Rate were based on the LIBOR formula set forth in the
definition of "Class A Certificate Rate" over (y) the actual Class A Monthly
Interest for such Distribution Date and the "CLASS B CARRY-OVER AMOUNT" for any
Distribution Date on which the Class B Certificate Rate is calculated on the
basis of the Net Receivables Rate, is the excess of (x) Class B Monthly Interest
for such Distribution Date determined as if the Class B Certificate Rate were
based on the LIBOR formula set forth in the definition of "Class B Certificate
Rate" over (y) the actual Class B Monthly Interest for such Distribution Date;
(j) the ratio (expressed as a percentage) of (x) the average for each
month of the net losses on the Receivables in the Pool (i.e., gross losses less
recoveries on any Receivables (including, without limitation, recoveries from
Collateral Security in addition to the products financed by the Receivables,
recoveries from manufacturers, distributors or importers and insurance
proceeds)) during any three consecutive calendar months to (y) the average of
the month-end Pool Balances for such three-month period, exceeds 5% on an
annualized basis; provided, that this clause (j) may be revised or waived
without the consent of the Certificateholders if the Rating Agency Condition is
satisfied;
(k) the average Monthly Payment Rate (x) with respect to the three
Collection Periods included in the period from January through March of any
calendar year is less than 12% and (y) with respect to any other three
consecutive Collection Periods is less than 14%, where the "MONTHLY PAYMENT
RATE" for a Collection Period is the percentage obtained by dividing the
aggregate Principal Collections for such Collection Period by the average daily
Pool Balance for such Collection Period; provided, that this clause (k) may be
revised or waived without the consent of the Certificateholders if the Rating
Agency Condition is satisfied;
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(l) the failure to pay the outstanding principal amount of the Class A
Certificates on the Class A Expected Final Payment Date or the failure to pay
the outstanding principal amount of the Class B Certificates on the Class B
Expected Payment Date;
(m) a Liquidation Event occurs; at all times the term "LIQUIDATION
EVENT" will refer to certain events of bankruptcy, insolvency or receivership
relating to BCI or BCRC;
(n) the sum of all Eligible Investments and amounts on deposit in the
Excess Funding Account and excess funding accounts for all other Series
represents more than 50% of the total assets of the Trust on each of six or more
consecutive Distribution Dates, after giving effect to all payments made or to
be made on such Distribution Date: or
(o) [more than 10% of the aggregate principal amount of Domestic
Inventory Receivables originated and transferred to the Trust during the four
month period commencing 16 months prior to such Origination Period and are then
owned by the Trust have not been paid in full within 491 days following the date
of origination thereof.]
Upon the occurrence of any event described above, an Early Amortization
Event will be deemed to have occurred without any notice or other action on the
part of any other party immediately upon the occurrence of such event. The
"EARLY AMORTIZATION PERIOD" will commence as of the day on which the Early
Amortization Event occurs. Monthly distributions of principal on the
Certificates will begin on the first Distribution Date following the Collection
Period in which an Early Amortization Period has commenced.
If an Early Amortization Period results from the failure by BCRC to
convey Receivables in Additional Accounts to the Trust as described in clause
(a) above during the Revolving Period and no other Early Amortization Event has
occurred, the Early Amortization Period resulting from such failure will
terminate and the Revolving Period will recommence (unless the scheduled
termination date of the Revolving Period has occurred) as of the end of the
first Collection Period during which an Early Amortization Event would no longer
be deemed to exist as described in clause (a) above. An Early Amortization Event
would no longer be deemed to exist as described in clause (a) above as a result
of a reduction in the Invested Amount or the invested amounts of other Series
occurring due to principal payments distributed on the Certificates and the
certificates at other outstanding Series during the Early Amortization Period or
as a result of the subsequent addition of Receivables to the Trust.
In addition to the consequences of an Early Amortization Event
discussed above, if a Liquidation Event occurs, or BCRC violates its covenant
set forth in clause (b)(iii) above (and such violation of such covenant becomes
an "Early Amortization Event" as described in clause (b)(iii) above), on the day
of such Liquidation Event or such Early Amortization Event occurring because of
such violation, as applicable, BCRC will immediately cease to transfer
Receivables to the Trust and promptly give notice to the Trustee of such
Liquidation Event or Early Amortization Event occurring because of such
violation, as applicable. Furthermore, under the
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terms of the Pooling and Servicing Agreement, within 15 days following an
insolvency event with respect to BCRC or an Early Amortization Event as
described in the preceding sentence as a result of the occurrence of a violation
set forth in (b)(iii) above, the Trustee will publish a notice of such
insolvency event or Early Amortization Event occurring because of such violation
stating that the Trustee intends to sell, liquidate or otherwise dispose of all
Receivables in the Trust in a commercially reasonable manner and on commercially
reasonable terms and, unless within a specified period of time holders of
Certificates and certificates of each other outstanding Series representing more
than 50% of the aggregate outstanding principal balance of the certificates of
each such Series (or, with respect to any Series with two or more classes, the
certificates of each such class) and the holder of the Variable Funding
Certificate, instruct the Trustee not to sell, liquidate or dispose of the
Receivables in the Trust, the Trustee will proceed to dispose of the
Receivables.
In the event of any such sale, liquidation or disposition, the related
proceeds will be allocated pro rata (based on the applicable allocation
percentages for each Series and the Variable Funding Percentage) among the
Certificates, any other outstanding Series and the interest represented by the
Variable Funding Certificate. If the portion of such proceeds allocated to the
Certificates and the proceeds of any collections on the Receivables in the
Collection Account allocable to the Certificates are not sufficient to pay the
aggregate unpaid principal balance of the Certificates in full plus accrued and
unpaid interest thereon, Certificateholders will incur a loss. Notwithstanding
the above, in the case of the violation of the covenant described in clause
(b)(iii) above, the Trustee will not sell the Receivables upon an Early
Amortization Event occurring because of such violation unless the proceeds
allocable to the Certificates are sufficient to pay the aggregate unpaid
principal balance of each Series of certificates in full plus accrued and unpaid
interest thereon.
TERMINATION
The Trust and the respective obligations and responsibilities of the
Depositor, the Servicer and the Trustee created by the Pooling and Servicing
Agreement will terminate on the earlier to occur of (a) the day following the
Distribution Date on which the aggregate of the invested amounts for all Series
is zero and (b) _________ (the "TERMINATION DATE"). Upon termination of the
Trust, all right, title and interest in the Receivables and the Collateral
Security and other funds related thereto (other than amounts in the Collection
Account for the final distribution of principal and interest to
certificateholders) will be conveyed and transferred to the Depositor.
In any event, the last payment of principal and interest on the
Certificates will be due and payable no later than the Series 1999-1 Termination
Date. In the event that the Invested Amount is greater than zero on the Series
1999-1 Termination Date, the Trustee will use its best efforts to sell or cause
to be sold an interest in the Pool Balance then represented by the Certificates.
The net proceeds of such sale will be paid pro rata to Certificateholders as of
the Series 1999-1
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Termination Date, up to the amount necessary to pay principal of and accrued and
unpaid interest on outstanding Certificates, as the final payment of the
Certificates.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that (x) the Depositor
will indemnify the Trust and the Trustee from and against any loss, liability,
reasonable expense, damage or injury suffered or sustained by reason of any acts
or omissions or alleged acts or omissions arising out of or based upon the
arrangement created by the Pooling and Servicing Agreement, including any
judgment, general settlement, reasonable attorneys' fees and other costs and
expenses incurred by the Trustee in connection with the defense of any actual or
threatened action, proceeding or claim (other than any losses on Receivables and
amounts due with respect thereto) and (y) the Servicer will indemnify (i) the
Trust and the Trustee from and against any loss, liability, reasonable expense,
damage or injury suffered or sustained by the Trust or the Trustee arising out
of or based upon the arrangement created by the Pooling and Servicing Agreement,
including any judgment, general settlement, reasonable attorney fees and other
costs and expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim (other than losses on Receivables and
amounts due with respect thereto) and (ii) the Trustee and its officers,
directors, employees and agents from and against any loss, liability, reasonable
expense, damage or injury suffered or sustained by reason of the acceptance of
the Trust by the Trustee, the issuance by the Trust of the Certificates or any
of the other matters contemplated in the Pooling and Servicing Agreement or in
any Supplement thereto (other than losses on Receivables and amounts due with
respect thereto); provided that, in any such case, the Trust, the Trustee, and
its officers, directors, employees and agents will not be so indemnified if such
acts or omissions constitute, or such actual or threatened action, proceeding or
claim arises out of, or such loss, liability, expense, damage or injury is
caused by, fraud, gross negligence, breach of fiduciary duty or willful
misconduct by the Trustee and provided further that neither BCRC nor the
Servicer shall be liable, directly or indirectly, for or in respect of any
indebtedness or obligation evidenced or created by any certificate, recourse as
to which is limited solely to the assets of the Trust allocated for the payment
thereof as provided in the Pooling and Servicing Agreement and any applicable
Supplement.
In addition, neither the Servicer nor the Depositor will indemnify the
Trust, the Trustee or the certificateholders or any other beneficiaries of the
Trust for any action taken by the Trustee at the request of the
certificateholders to the extent, in the case of the Servicer, the Trustee is
fully indemnified by such certificateholders or other beneficiaries with respect
to such action or for any federal, state or local income or franchise tax (or
any interest or penalties with respect thereto) required to be paid by the Trust
or the certificateholders or any other beneficiaries. Furthermore, any such
indemnification by the Depositor will only be from assets of the Depositor not
pledged to third parties or otherwise encumbered as permitted under the
Depositor's certificate of incorporation and will be made only after the deposit
by the Depositor of any amounts required to be made in the Collection Account.
Any indemnification by the Servicer shall not be payable from the assets of the
Trust.
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The Pooling and Servicing Agreement provides that, except as described
above and with certain other specified exceptions, neither the Servicer nor BCRC
nor any of their affiliates, directors, officers, employees, stockholders,
agents, representatives or advisors will be under any liability to the Trustee
or any other person for taking any action, or for refraining from taking any
action, pursuant to the Pooling and Servicing Agreement or otherwise. However,
neither the Servicer nor BCRC will be protected against any liability which
would otherwise be imposed by reason of their willful misfeasance, bad faith or
gross negligence.
In addition, the Pooling and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute or defend any legal
action other than as part of the good faith performance of its servicing
obligations. The Servicer may, in its sole discretion, undertake any such legal
action which it may deem necessary or desirable for the benefit of the Trust.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer is
responsible for servicing, collecting, enforcing and administering the
Receivables in accordance with procedures that are customary and usual in the
industry for servicing receivables comparable to such Receivables, except where
the failure to so act would not materially and adversely affect the rights of
the Trust or any beneficiaries thereof. BCI has delegated certain of its
servicing, collection, enforcement and administrative duties to third parties
and BCI may from time to time in the future delegate all or a portion of such
duties to third parties in accordance with the terms of the Pooling and
Servicing Agreement, provided that no such delegation will relieve BCI of its
responsibilities as Servicer with respect to such duties.
Subject to compliance with all requirements of law, the Servicer (or
BCI) and any affiliate of BCI may change the terms and provisions of the
Accounts, including the inventory security agreements and other floorplan
financing agreements and the financing guidelines, in any respect (including the
calculation of the amount or the timing of charge-offs and the rate of the
finance charge) only if, in the Servicer's reasonable judgment, no Early
Amortization Event will occur as a result of the change.
Servicing activities to be performed by the Servicer include collecting
and recording payments, communicating with Obligors, investigating payment
delinquencies, evaluating the increase of credit limits, and maintaining
internal records with respect to each Account. Managerial and custodial services
performed by the Servicer include providing assistance in any inspections of the
documents and records relating to the Accounts and Receivables by BCRC or the
Trustee (on behalf of the Certificateholders), maintaining the agreements,
documents and files relating to the Accounts and Receivables as custodian and
providing related data processing and reporting services for holders of
certificates and on behalf of the Trustee.
SERVICER COVENANTS
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In the Pooling and Servicing Agreement the Servicer covenants that: (a)
it will duly satisfy all obligations on its part to be fulfilled under or in
connection with the Receivables and Accounts, will maintain in effect all
qualifications required in order to service properly the Receivables and the
Accounts and will comply in all material respects with all requirements of law
in connection with servicing the Receivables and the Accounts, except where the
failure to do any of the foregoing would not have a material adverse effect on
the beneficiaries of the Trust; (b) it will do nothing to impair the rights of
the beneficiaries of the Trust in the Receivables or in the certificates; and
(c) it will not reschedule, revise, defer, cancel or settle payments due on any
Receivable except in accordance with sound industry practices for servicing
receivables comparable to the Receivables.
Under the terms of the Pooling and Servicing Agreement, if the
Depositor or the Servicer receives written notice from the Trustee or any
Enhancement Provider that any covenant of the Servicer set forth above has not
been complied with in all material respects and such noncompliance has not been
cured within 30 days thereafter (or such longer period as the Trustee may agree
to) and has a materially adverse effect on the interests of all
certificateholders or the Variable Funding Interest in any Receivable or
Account, then, unless a Liquidation Event has occurred, the Servicer will
purchase such Receivable or all Receivables in such Account, as applicable. Such
purchase will be made on the Determination Date following the expiration of the
30-day cure period by deposit into the Collection Account of an amount equal to
the amount of such Receivable or Receivables plus accrued and unpaid interest
thereon. The amount of such deposit shall be deemed a Transfer Deposit Amount.
The purchase by the Servicer constitutes the sole remedy available to
certificateholders if such covenant or warranty of the Servicer is not satisfied
and such purchased Receivables shall be automatically assigned to the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities under the
Pooling and Servicing Agreement and reimbursement for its expenses will be a
monthly servicing fee (the "SERVICING FEE") in an amount payable in arrears on
each Distribution Date on or prior to the Termination Date equal to the
aggregate of the monthly servicing fees specified in the Supplements. The share
of the Servicing Fee allocable to the Certificates with respect to any
Distribution Date (the "MONTHLY SERVICING FEE") will generally be equal to
one-twelfth of the product of (a) 2% or, for any Distribution Date in respect of
which the Monthly Servicing Fee has been waived, 0% (the "SERVICING FEE RATE")
and (b) the Invested Amount as of the last day of the second preceding
Collection Period, provided that the Monthly Servicing Fee for the first
Distribution Date will be equal to $_________. A portion of the Monthly
Servicing Fee (the "NET SERVICING FEE") will be payable in the priority set
forth above in "Description of the Certificates--Distribution from the
Collection Account; Reserve Fund; Principal Account" and will generally be equal
to one-twelfth of the product of (a) 1%, if BCI is the Servicer, or 2%, if BCI
is not the Servicer, or for any Distribution Date in respect of which the
Monthly Servicing Fee has been waived, 0% (the "NET SERVICING FEE RATE") and (b)
the Invested Amount as of the last day of the second preceding
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Collection Period, provided that the Net Servicing Fee for the first
Distribution Date will be equal to $_________.
The portion of the Monthly Servicing Fee in excess of the Net Servicing
Fee will be payable at a lower priority level after provision is made for any
required deposit to the Reserve Fund and for allocations with respect to any
Investor Default Amount as set forth above in "Description of the
Certificates--Distribution from the Collection Account; Reserve Fund; Principal
Account." The remainder of the Servicing Fee not allocable to the Certificates
shall be paid by the holders of the Variable Funding Certificate and the BCRC
Certificate and the holders of the certificates of other outstanding Series. The
Monthly Servicing Fee shall be payable to the Servicer solely to the extent
amounts are available for distribution therefor in accordance with the terms of
the Series 1999-1 Supplement.
The Servicer will be permitted to waive its right to receive the
Monthly Servicing Fee on any Distribution Date, so long as it believes that
sufficient Non-Principal Collections will be available on a future Distribution
Date to pay the Monthly Servicing Fee relating to the amount thereof so waived,
in which case the Monthly Servicing Fee (including the Net Servicing Fee) for
such Distribution Date shall be deemed to be zero.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Accounts and the Receivables
including, without limitation, payment of fees and disbursements of the Trustee
and independent accountants and all other fees and expenses which are not
expressly stated in the Pooling and Servicing Agreement to be payable by the
Trust or the certificateholders other than federal, state and local income and
franchise taxes, if any, of the Trust or the certificateholders.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that such duties are
no longer permissible under applicable law. No such resignation will become
effective until the Trustee or a successor to the Servicer has assumed the
Servicer's responsibilities and obligations under the Pooling and Servicing
Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Pooling and Servicing Agreement.
SERVICER DEFAULT
In the event and during the continuance of any Servicer Default, the
Trustee by written notice to the Servicer, may terminate all of the rights and
obligations of the Servicer, as servicer,
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under the Pooling and Servicing Agreement and in and to the Receivables and the
proceeds thereof and appoint a new Servicer (a "SERVICE TRANSFER"). The Trustee
shall as promptly as possible appoint a successor Servicer and if no successor
Servicer has been appointed by the Trustee and has accepted such appointment by
the time the Servicer ceases to act as Servicer, all rights, authority, power
and obligations of the Servicer under the Pooling and Servicing Agreement shall
pass to and be vested in the Trustee. Prior to any Service Transfer, the Trustee
will review any bids obtained from potential servicers meeting certain
eligibility requirements set forth in the Pooling and Servicing Agreement to
serve as successor Servicer for servicing compensation not in excess of the
Servicing Fee (provided that if all such bids exceed the Servicing Fee, the
Depositor at its own expense will pay when due the amount of any compensation in
excess of the Servicing Fee).
A "SERVICER DEFAULT" refers to any of the following events:
(a) failure by the Servicer to make any payment, transfer or deposit
into the Trust (or into any Series Account), on or before the date the Servicer
is required to do so under the Pooling and Servicing Agreement, which failure is
not cured within a five business day grace period after notice from the Trustee
of such failure;
(b) failure on the part of the Servicer duly to observe or perform (x)
its covenant not to create any lien on any Receivable which failure has a
material adverse effect on the certificateholders and which continues unremedied
for a period of 60 days after written notice to it; provided, however, that a
Servicer Default shall not be deemed to have occurred if BCRC or the Servicer
shall have repurchased the related Receivables or, if applicable, all the
Receivables during such period in accordance with the terms and provisions of
the Pooling and Servicing Agreement or (y) any other covenants or agreements of
the Servicer in the Pooling and Servicing Agreement (exclusive of breaches of
covenants in respect of which the Servicer repurchases the related Receivables,
as described above under "--Servicer Covenants") which failure has a materially
adverse effect on the certificateholders or the holder of the Variable Funding
Certificate and which continues unremedied for a period of 30 days after written
notice thereof to the Servicer;
(c) any representation, warranty or certification made by the Servicer
in the Pooling and Servicing Agreement or in any certificate delivered pursuant
to the Pooling and Servicing Agreement proves to have been incorrect when made
and continues to be incorrect in any material respect for a period of 60 days
after written notice thereof has been given to the Servicer by the Trustee and
as a result the interests of the certificateholders or the holder of the
Variable Funding Certificate are materially and adversely affected; provided,
however, that a Servicer Default shall not be deemed to have occurred if BCRC
shall have repurchased the related Receivables or, if applicable, all the
Receivables during such period in accordance with the provisions of the Pooling
and Servicing Agreement; or
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(d) the occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of up to ten business days after
the applicable grace period or a delay in or failure of performance (or the
continuance of any such delay or failure) referred to under clauses (b) or (c)
for a period of up to 60 business days, shall not constitute a Servicer Default
if such delay or failure or continuance was caused by an act of God or other
similar occurrence. Upon the occurrence of any such event, the Servicer shall
not be relieved from using its best efforts to perform its obligations in a
timely manner in accordance with the terms of the Pooling and Servicing
Agreement and the Servicer shall provide the Trustee, any Enhancement Provider
and BCRC prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. In addition, the
Servicer shall immediately notify the Trustee in writing of any Servicer
Default.
REPORTS
On each Distribution Date, the Trustee will forward (or cause to be
forwarded) to each Certificateholder of record (which is expected to be Cede, as
nominee for DTC, unless Definitive Certificates are issued) a statement (the
"DISTRIBUTION DATE STATEMENT") prepared by the Servicer setting forth the
following information (which, where appropriate, will be stated on the basis of
an original principal amount of $1,000 per Certificate if the Controlled
Accumulation Period, an Initial Amortization Period or an Early Amortization
Period has commenced): (a) the aggregate amount of principal paid or distributed
on the Certificates and the aggregate amount of interest paid or distributed on
the Certificates on such Distribution Date; (b) the average for the Deposit
Dates in such Collection Period of Floating Allocation Percentage and the
Principal Allocation Percentage; (c) the Investor Default Amount for such
Distribution Date; (d) the Required Subordination Draw Amount, if any, for such
Distribution Date); (e) the amount of the Investor Charge-Offs and the amounts
of reimbursements thereof for the preceding Collection Period; (f) the amount of
Class A Carry-Over Amount, if any, and the amount of Class B CarryOver Amount,
if any, being paid and the amount remaining unpaid; (g) the Pool Balance; (h)
the outstanding principal amount of Class A Certificates and Class B
Certificates after giving effect to distributions on such date; (i) the
applicable Class A Certificate Rate and Class B Certificate Rate; (j) the amount
of the Monthly Servicing Fee for the preceding Collection Period; (k) the "POOL
FACTOR" for the Certificates as of such Distribution Date (consisting of an
eleven-digit decimal expressing the Invested Amount as of such Distribution Date
(determined after taking into account any reduction in the Invested Amount which
will occur on such Distribution Date) as a percentage of the Adjusted Invested
Amount); (l) the Available Subordinated Amount for such Distribution Date; (m)
the Reserve Fund balance for such Distribution Date; (n) the Excess Funding
Account balance; (o) the Collection Account balance with respect to such
Distribution Date; (p) the Principal Account balance and (q) whether an Early
Amortization Event has occurred or whether BCI has elected to not extend the
Initial Principal Payment Date.
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On or before January 31 of each calendar year, beginning with
___________, the Trustee will furnish (or cause to be furnished) to each person
who at any time during the preceding calendar year was a Certificateholder of
record (which is expected to be Cede, as nominee for DTC, unless Definitive
Certificates are issued) a statement prepared by the Servicer containing the
information that is required to be contained in the Distribution Date Statement,
aggregated for such calendar year, together with information required to be
provided by an issuer of indebtedness under the Code for such preceding calendar
year or the applicable portion thereof during which such person was a
Certificateholder, together with such other customary information as is
necessary to enable the Certificateholders to prepare their tax returns. In
addition, the Trustee from time to time will furnish to each Certificateholder
of record information furnished by the Servicer regarding material changes in
the servicing or crediting procedures required under the Pooling and Servicing
Agreement. As long as the Certificateholder of record is Cede, as nominee for
DTC, Certificate Owners will receive tax and other information from Participants
and Indirect Participants rather than from the Trustee. See "Certain Federal
Income Tax Consequences."
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before April 30
of each calendar year the Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or BCRC) to furnish a report relating to certain matters in connection
with the servicing of BCI's portfolio of Receivables.
The Pooling and Servicing Agreement provides for delivery to the
Trustee on or before April 30 of each calendar year of a statement signed by an
officer of the Servicer to the effect that the Servicer has fully performed, or
caused to be fully performed its obligations in all material respects under the
Pooling and Servicing Agreement throughout the preceding year or, if there has
been a default in the performance of any such obligation, specifying the nature
and status of the default.
Copies of all statements, certificates and reports furnished to the
Trustee may be obtained by any Certificateholder (which is expected to be Cede,
as nominee for DTC, unless Definitive Certificates are issued), upon request in
writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement may be amended from time to time
(including in connection with the issuance of a Supplemental Certificate) by
BCRC, the Servicer, the Trustee and BCI (if BCI is not then the Servicer),
without additional consent, so long as any such action shall not, as evidenced
by an opinion of counsel, adversely affect in any material respect the interests
of the certificateholders or the holder of the Variable Funding Certificate. In
addition, the Pooling and Servicing Agreement may be amended by BCRC, the
Servicer, the Trustee and BCI (if BCI is not then the Servicer) to conform the
provisions regarding removal of Accounts
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with those in effect prior to the Closing Date to allow for the removal of
existing Receivables in Removed Accounts (including all amounts then held or
thereafter received in respect of such Receivables) if, at the time of such
amendment, such provisions will be consistent with sale treatment of the
Receivables by BCRC under generally accepted accounting principles.
Notwithstanding the above, the Trustee, with the consent on any Enhancement
Providers, may at any time and from time to time amend, modify or supplement the
form of Distribution Date Statement.
The Pooling and Servicing Agreement may also be amended by BCRC, the
Servicer, the Trustee and BCI (if not the Servicer) with the consent of the
holder of the Variable Funding Certificate, if it would be adversely affected by
such amendment, and holders of certificates evidencing not less than a majority
of the aggregate unpaid principal amount of the certificates of all adversely
affected Series for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Pooling and Servicing
Agreement or of modifying in any manner the rights of the certificateholders. No
such amendment, however, may (a) reduce in any manner the amount of, or delay
the timing of, distributions required to be made on any certificate (including
the Variable Funding Certificate) or the deposits to be made therefor, (b)
change the definition or the manner of calculating interest on any certificate,
(c) reduce the amount available under any Enhancement, (d) adversely affect the
rating of any Series or class by any Rating Agency which rated such Series or
class or (e) reduce the percentage of the unpaid principal balance of
certificates the holders of which are required to consent to any such amendment,
without, in the case of (a), (b), (c) or (e) the consent of each affected
certificateholder or the Variable Funding Certificate, as applicable and, in the
case of (d), the consent of the holders of certificates of such Series or class
evidencing not less than 66 2/3% of the aggregate unpaid principal amount of the
certificates of such Series or class. Promptly following the execution of any
amendment to the Pooling and Servicing Agreement (other than an amendment
described in the preceding paragraph), the Trustee will furnish notice of the
substance of such amendment to each certificateholder.
The Pooling and Servicing Agreement may not be amended in any manner
which materially adversely affects the interests of any Enhancement Provider
without its prior consent.
LIST OF CERTIFICATEHOLDERS
Upon written request of any three or more certificateholders of record,
the Trustee will afford such certificateholders access during business hours to
the current list of registered certificateholders of a Series or of all Series,
as applicable, for purposes of communicating with other certificateholders with
respect to their rights under the Pooling and Servicing Agreement. It is
anticipated that the only Certificateholder will be Cede, as nominee of DTC, and
that Certificate Owners will not be recognized by the Trustee as
Certificateholders for this purpose. See "Book-Entry Registration" and
"Definitive Certificates" above.
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The Pooling and Servicing Agreement does not provide for any annual or
other meetings of Certificateholders.
THE TRUSTEE
Bankers Trust Company, a New York banking corporation, is Trustee under
the Pooling and Servicing Agreement. The Trustee is located at Four Albany
Street, New York, New York 10006. BCI and BCRC and their respective affiliates
may from time to time enter into other banking and trustee relationships with
the Trustee and its affiliates. The Trustee may hold Certificates in its own
name and may deal with BCRC, the Servicer or any Enhancement Provider with the
same rights it would have if it were not the Trustee. In addition, for purposes
of meeting the legal requirements of certain local jurisdictions, the Trustee
shall have the power to appoint a co-trustee or separate trustees of all or a
part of the Trust. In the event of such appointments, all rights, powers, duties
and obligations shall be conferred or imposed upon the Trustee and such separate
trustee or co-trustee jointly, or, in any jurisdiction in which the Trustee
shall be incompetent or unqualified to perform certain acts, singly upon such
separate trustee or co-trustee, who shall exercise and perform such rights,
powers, duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event BCRC will be
obligated to appoint a successor Trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Servicer may appoint a successor Trustee. Any resignation or
removal of the Trustee and appointment of a successor Trustee does not become
effective until the acceptance of the appointment by the successor Trustee. See
"Description of the Certificates--Indemnification."
The fees and expenses of the Trustee will be paid by the Servicer out
of its servicing compensation. See "Description of the Certificates--Servicing
Compensation and Payment of Expenses."
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The Receivables transferred and to be transferred to the Trust have
been and will be acquired by BCRC from BCI pursuant to the Receivables Purchase
Agreement, dated as of January 1, 1994, between BCI, as seller, and BCRC, as
purchaser, filed as an exhibit to the Registration Statement of which this
Prospectus is a part (as amended by Amendment Number 1 dated as of January 1,
1997 to the Receivables Purchase Agreement ("RPA AMENDMENT NUMBER 1") and as
otherwise supplemented or amended from time to time, the "Receivables Purchase
Agreement"). The Receivables Purchase Agreement provides that it is governed by
New York law. The following discussion represents a summary of certain terms of
the Receivables Purchase Agreement relating to the sale or contribution of the
Receivables to BCRC and does not purport to provide a complete description. For
further information, owners and
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prospective owners of Certificates are advised to examine the Receivables
Purchase Agreement, a copy of which (without certain exhibits or schedules)
including RPA Amendment Number 1, will be made available by the Trustee upon
written request.
SALE AND TRANSFER OF RECEIVABLES
Pursuant to the Receivables Purchase Agreement, BCI has sold and
transferred to BCRC all of its right, title and interest in and to all of the
Domestic Inventory Receivables and the Collateral Security (and the related
repurchase agreements and other agreements with manufacturers, importers or
distributors) relating to the Accounts as of the Initial Cut-Off Date and from
time to time has sold and transferred and will sell or contribute and transfer
to BCRC Domestic Inventory Receivables created thereafter (and the related
Collateral Security) with respect to the Accounts and Additional Accounts and
subject to satisfaction of the Rating Agency Condition, may sell or contribute
and transfer Asset-Based Receivables in Accounts designated for the Trust.
Under the Receivables Purchase Agreement, BCI has transferred and will
continue to transfer the Receivables to BCRC in exchange for (i) the net cash
proceeds received by BCRC from the sale of the investor certificates (which
proceeds equals the proceeds, after expenses, raised from the sale of the
investor certificates), less any amounts deposited by BCRC in the Reserve Fund
and (ii) a promissory note (the "NOTE") issued by BCRC in favor of BCI. The
value of and the purchase price in the case of sales of Eligible Receivables
transferred will be deemed to equal the principal amount of such Receivables
plus accrued and unpaid interest thereon on the date of transfer (less, if
applicable, the amount of principal and interest allocable to any Participation
Interest). The value of and the purchase price in the case of sales with respect
to Ineligible Receivables transferred will equal the net book value of such
Receivables (less, if applicable, the amount of principal and interest allocable
to any Participation Interest). With respect to Receivables which are sold to
BCRC, the principal amount of the Note will be increased from time to time in
connection with the sale of additional Receivables by BCI to BCRC for inclusion
in the Trust pursuant to the Receivables Purchase Agreement to the extent the
purchase price for such Receivables is not paid in cash by BCRC.
As security for the Note, BCRC has pledged to BCI the Variable Funding
Certificate held by BCRC. Principal and interest payable on the Note may be paid
by BCRC from time to time out of monies available to BCRC from any source
(including through BCRC's interest in the BCRC Certificate and Variable Funding
Certificate). Interest on the Note will accrue at a rate per annum equal to 15%.
[In the event of a bankruptcy where BCRC and the Trust are substantively
consolidated or in any other instance where the holder of the Note and the
holders of the investor certificates will be claiming against a common fund, the
portion of the aggregate amounts then due under the Note in excess of the amount
by which (x) the Variable Funding Amount plus the Retained Participation Amount
exceeds (y) the Available Subordinated Amount will be subordinate to the prior
indefeasible payment in full of the investor certificates. In addition to the
sale of Receivables by BCI to BCRC, BCI may transfer the Receivables to BCRC as
a capital
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contribution. When Receivables are transferred by contribution, BCRC will not be
required to pay cash to BCI or to increase the amount of the Note as
consideration for such Receivables.
In connection with the sale or contribution of the Receivables to BCRC,
BCI will indicate in its computer files that the Receivables have been
transferred to BCRC, and that BCRC has transferred its interest therein to the
Trust. In addition, BCI will provide to BCRC and the Trustee a computer file or
microfiche or written list containing a true and complete list of all Accounts,
identifying the balances of the Receivables as of the Initial Cut-Off Date and
Receivables in the Additional Account as of the applicable Additional Cut-Off
Date. The records and agreements relating to the Accounts and Receivables have
not been, and will not be, segregated by BCI from other documents and agreements
relating to other accounts and receivables and will not be stamped or marked to
reflect the sale of the Receivables, but the computer records of BCI have been
marked to evidence such transfer. BCI has filed and will file UCC financing
statements with respect to the sale or contribution of the Receivables meeting
the requirements of Vermont state law. See "Risk Factors--State and Federal Law
May Limit the Abilities of the Servicer to Realize on Receivables" and "Certain
Legal Aspects of the Receivables--Transfer of Receivables and Certificates."
REPRESENTATIONS AND WARRANTIES
BCI makes certain representations and warranties to BCRC to the effect
that, among other things, as of the Closing Date and each Series Issuance Date,
it was duly incorporated and in good standing and that it has the authority to
consummate the transactions contemplated by the Receivables Purchase Agreement.
BCI also makes representations and warranties to BCRC relating to the
Receivables to the effect that, among other things, as of the Initial Cut-Off
Date, the Closing Date and each Series Issuance Date each Account is an Eligible
Account and, in the case of Additional Accounts, as of the Additional Cut-Off
Date and each Addition Date, each such Additional Account is an Eligible
Account. In the event of a breach of any representation and warranty set forth
in this paragraph which results in the requirement that BCRC accept retransfer
of Receivables from the Trust pursuant to the Pooling and Servicing Agreement,
then BCI shall, unless a Liquidation Event has occurred, repurchase such
Receivables from BCRC. The purchase price for such Receivables shall be the
principal balance thereof (together with accrued interest), which amount shall
be paid by BCI in immediately available funds on the business day preceding the
date of such retransfer.
BCI also makes representations and warranties to BCRC to the effect,
among other things, that as of the Initial Closing Date, the Closing Date and
each Series Issuance Date (a) the Receivables Purchase Agreement constitutes a
legal, valid and binding obligation of BCI and (b) the Receivables Purchase
Agreement constitutes a valid sale to BCRC of all right, title and interest of
BCI in and to the Receivables, whether then existing or thereafter created in
the Accounts, the Collateral Security and, with certain exceptions, the proceeds
thereof which is
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effective as to each Receivable upon the creation thereof. If the breach of any
of the representations and warranties described in this paragraph results in the
obligation of BCRC under the Pooling and Servicing Agreement to repurchase an
interest in Receivables from the Trust, BCI will be obligated to repurchase such
interest retransferred to BCRC for the amount which BCRC was required to pay to
the Trust in connection with such retransfer.
CERTAIN COVENANTS
BCI has covenanted that, except for the sale or contribution and
conveyances under the Receivables Purchase Agreement, BCI will not sell, pledge,
assign or transfer any interest in the Receivables (except for certain tax and
governmental and other statutory liens) being transferred to BCRC to any other
person; provided that, BCRC may remove Receivables from the Trust for the
purpose of assigning or selling such Receivables to a third party and may grant
Participation Interests in the Receivables. See "The Floorplan and Asset-Based
Financing Business -- Participation Arrangements" and "Description of the
Certificates--Removal of Accounts and Assignment of Receivables." BCI also has
covenanted to defend and indemnify BCRC for any loss, liability or expense
incurred by BCRC in connection with a breach by BCI of certain of its
representations, warranties or covenants contained in the Receivables Purchase
Agreement.
In addition, BCI has expressly acknowledged and consented to BCRC's
assignment of its rights relating to the Receivables under the Pooling and
Servicing Agreement to the Trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after the
Trust terminates. In addition, if BCI becomes party to any bankruptcy or similar
proceeding (other than as a claimant) and, if such proceeding either is
voluntary or is involuntary and, in the case of an involuntary proceeding, such
involuntary proceeding is not dismissed within 60 days of its institution, BCI
will immediately cease to sell or transfer Receivables to BCRC and will promptly
give notice of such event to BCRC and the Trustee.
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES AND CERTIFICATES
In connection with any Receivables sold or contributed and assigned by
BCI to BCRC, BCI represents and warrants that such transfer constitutes a valid
transfer and assignment to BCRC of all right, title and interest in and to the
Receivables and that, under the UCC (as in effect in Vermont), there exists in
favor of BCRC a valid, subsisting and enforceable first priority perfected
ownership interest in the Pool of Receivables transferred to BCRC. BCI also
represents and warrants with respect to any Receivables subsequently created in
the Accounts or Additional Accounts transferred to BCRC that there exists in
favor of BCRC a valid, subsisting and enforceable first priority perfected
ownership interest in all such Receivables subsequently
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created in such Accounts or Additional Accounts on and after their creation. For
a discussion of BCRC's rights arising from these representations and warranties
not being satisfied, see "Description of the Certificates--Representations and
Warranties."
Each of BCI and BCRC have represented that the Receivables are either
"accounts" or "chattel paper" for purposes of the UCC as in effect in Vermont.
If the Receivables are deemed to be either accounts or chattel paper, the UCC as
in effect in Vermont applies and the transferee must (i) in the case of
Receivables that are deemed to be accounts, file an appropriate financing
statement or statements and (ii) in the case of Receivables that are deemed to
be chattel paper, either take possession of the chattel paper or file an
appropriate financing statement or statements, in order to perfect its interest
therein. Financing statements relating to the transfer of the Receivables have
been filed under the UCC as in effect in Vermont by BCI and BCRC to perfect the
interests of BCRC and the Trust, respectively, in the Receivables. Continuation
statements will be filed as required to continue the perfection of such
interests. The Receivables will not be stamped to indicate the interest of BCRC
or the Trust.
In addition, in connection with any Domestic Inventory Receivables
conveyed to the Trust BCI represents and warrants in the Receivables Purchase
Agreement, and BCRC represents and warrants in the Pooling and Servicing
Agreement, that except for certain liens permitted by the Pooling and Servicing
Agreement each such Domestic Inventory Receivable included in the Pool Balance
is and will be secured by a first priority perfected security interest in the
related Eligible Product and if Asset-Based Receivables are included in the
Trust, the obligations with respect thereto will be secured by a first priority
perfected security interest in goods, accounts, work in process, raw materials,
component parts or other assets of the Obligor. However, when an Eligible
Product is sold by an Obligor, BCI's security interest in the Eligible Product
will terminate in most instances. Therefore, if an Obligor fails to remit to BCI
amounts owed with respect to Eligible Products that have been sold, the related
Domestic Inventory Receivables may no longer be secured by Eligible Products,
although they may, in certain circumstances, still be secured by the proceeds of
such Eligible Products. In the event that Asset-Based Receivables are included
in the Trust, the same issues discussed above with respect to Domestic Inventory
Receivables may exist with respect to Asset-Based Receivables.
There are certain limited circumstances under the UCC and applicable
federal law in which prior or subsequent transferees of Receivables could have
an interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables who gives new value and takes possession of the
instruments which evidence the Receivables (i.e., the chattel paper) in the
ordinary course of such purchaser's business may, under certain circumstances
(e.g., where the purchaser is without notice of any adverse claim), have
priority over the interest of the Trust in the Receivables. The failure to stamp
the Receivables to indicate the interest of BCRC and the Trust therein, as
described above, could support a claim by a subsequent purchaser of the
Receivables that such purchaser acted without notice of any claim by BCRC or the
Trust with respect to the Receivables. A tax or other government lien or
non-consensual lien on property of
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BCI or BCRC arising prior to the time a Receivable is conveyed to the Trust may
also have priority over the interest of the Trust in such Receivable.
Under the Receivables Purchase Agreement, in connection with any
Receivables sold or contributed and assigned by BCI to BCRC, BCI warrants to
BCRC that the Receivables have been transferred free and clear of the lien of
any third party except for tax and other statutory liens (including liens in
favor of the Pension Benefit Guaranty Corporation) and any Participation
Interests. Under the Pooling and Servicing Agreement, BCRC warrants to the Trust
that, except for the conveyances contemplated by the Pooling and Servicing
Agreement, the Receivables have been transferred to the Trust free and clear of
the lien of any third party, except for tax and other statutory liens (including
liens in favor of the Pension Benefit Guaranty Corporation) and any
Participation Interests. Each of BCI and BCRC also has covenanted that it will
not sell, pledge, assign, transfer or grant any lien on any Receivable included
in the Trust other than to BCRC and the Trust and except (i) for tax and other
statutory liens (including liens in favor of the Pension Benefit Guaranty
Corporation) and (ii) that BCRC and BCI may assign or participate out a portion
of the Receivables. See "Floorplan and Asset-Based Financing Business--
Participation Arrangements" and "Description of the Certificates--Removal of
Accounts and Assignment of Receivables." In addition, while BCI is the Servicer,
cash collections on the Receivables may be commingled with the funds of BCI
prior to each Distribution Date and, in the event of the bankruptcy of BCI, the
Trust may not have a perfected interest in such collections. In the event of
such commingling, the amount so commingled at any given time (and to which the
Certificateholders would otherwise be entitled) may exceed the amount
distributable to Certificateholders on the following Distribution Date.
BCRC has represented and warranted to the Trustee that the transfer of
the Receivables on the Initial Closing Date constitutes, and the transfer of
BCRC's right to any subsequent Receivables in the Accounts (and in any
Additional Accounts) will constitute, a valid transfer and assignment to the
Trust of all right, title and interest of BCRC in and to the Receivables,
including any additional Receivables thereafter created in the Accounts (and in
any Additional Accounts) (except for certain tax and governmental liens and
claims), all monies due or to become due thereon and, with certain exceptions,
the proceeds thereof which is effective as to each Receivable upon the transfer
thereof to the Trust.
Tax and certain other statutory liabilities, such as liabilities to the
Pension Benefit Guaranty Corporation relating to the underfunding of pension
plans of Bombardier Inc. or any of its subsidiaries including Bombardier
Corporation and BCI, can be asserted against the Depositor. To the extent that
any such liabilities arise after the transfer of Receivables to the Trust, the
Trust's interest in the Receivables would be prior to the interest of the
claimant with respect to any such liabilities. However, the existence of a claim
against the Depositor could permit the claimant to subject the Depositor to an
involuntary proceeding under the Bankruptcy Code or other Insolvency Law.
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A case decided in 1993 by the United States Court of Appeals for the
Tenth Circuit concluded that accounts receivable sold by a debtor prior to a
filing for bankruptcy remain property of the debtor's bankruptcy estate. If,
following a bankruptcy of BCI or BCRC, a court were to follow the reasoning of
the Tenth Circuit, delays in distributions of collections on or in respect of
the Receivables could occur, and reductions (which, in certain circumstances,
could be substantial) in the amount of payments to Certificateholders could
result.
MATERIAL MATTERS RELATING TO BANKRUPTCY
In connection with any Receivables sold or contributed and assigned by
BCI to BCRC under the Receivables Purchase Agreement, BCI warrants to BCRC in
the Receivables Purchase Agreement that the sale of such Receivables by it to
BCRC is a valid sale of such Receivables. In addition, BCI and BCRC have agreed
to treat the transfer of Receivables by BCI to BCRC under the Receivables
Purchase Agreement as a sale of the Receivables to BCRC, and BCI has or will
take all actions that are required under Vermont law to perfect BCRC's ownership
interest in the Receivables. Notwithstanding the foregoing, if BCI were to
become a debtor in a bankruptcy case and a bankruptcy trustee for BCI as
debtor-in-possession or a creditor of BCI were to take the position that the
sale of Receivables from BCI to BCRC under the Receivables Purchase Agreement
should be recharacterized as a pledge of such Receivables to secure a borrowing
by BCI, then delays in payments of collections of Receivables to BCRC could
occur or (should the court rule in favor of any such trustee, debtor in
possession or creditor) reductions (which, in certain circumstances, could be
substantial) in the amount of such payments could result.
In addition, if BCI were to become a debtor in a bankruptcy case and a
creditor or bankruptcy trustee of such debtor or such debtor itself were to
request a court to order that BCI should be substantively consolidated with
BCRC, delays in payments on the Receivables and, accordingly, the Certificates
could result. Should the bankruptcy court rule in favor of any such creditor,
bankruptcy trustee or such debtor, reductions (which, in certain circumstances
could be substantial) in the amount of such payments could result.
BCRC represents and warrants to the Trustee in connection with the
transfer of any Receivables to the Trust that the transfer of such Receivables
to the Trust and of BCRC's right to additional Receivables will constitute a
valid transfer and assignment to the Trust of all right, title and interest of
BCRC in and to the Receivables, including any additional Receivables thereafter
created (except for certain tax and government liens and claims), all monies due
or to become due thereon and, with certain exceptions, the proceeds thereof
which is effective as to each Receivable upon the transfer thereof to the Trust.
BCRC's certificate of incorporation provides that BCRC is required to
have two independent directors and that it shall not file a voluntary
application for relief under Title 11 of the United States Code (the "BANKRUPTCY
CODE") without the affirmative vote of its two independent directors. Pursuant
to the Pooling and Servicing Agreement, BCI, the Servicer and any Enhancement
Provider covenant that they will not at any time institute against BCRC any
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bankruptcy, reorganization or other proceedings under any federal or state
bankruptcy or similar law. In addition, certain other steps have been taken to
avoid BCRC's becoming a debtor in a bankruptcy case. Notwithstanding such steps,
if BCRC were to become a debtor in a bankruptcy case, and a bankruptcy trustee
for BCRC or BCRC as debtor in possession or a creditor of BCRC were to take the
position that the transfer of the Receivables from BCRC to the Trust should be
recharacterized as a pledge of the Receivables, then delays in payments on the
Certificates or (should the court rule in favor of any such trustee, debtor in
possession or creditor) reductions (which, in certain circumstances, could be
substantial) in the amount of such payments could result.
BCRC does not intend to file, and BCI has agreed that it will not cause
BCRC to file, a voluntary or involuntary petition for relief under the
Bankruptcy Code or any similar applicable state law with respect to BCRC so long
as BCRC is solvent and does not foresee becoming insolvent. If BCI were to
become a debtor under the Bankruptcy Code, the applicable bankruptcy court might
hold unenforceable or invalid BCI's agreement not to cause BCRC to file any such
petition and permit BCI as creditor of BCRC (on account of the Note issued by
BCRC to BCI as partial consideration for the transfer of the Receivables to BCRC
and on account of the related pledge of the Variable Funding Certificate as
security for the Note) to commence an involuntary petition against BCRC.
If BCI or BCRC were to become a debtor in a bankruptcy case causing an
Early Amortization Event to occur, then, pursuant to the Pooling and Servicing
Agreement and the Receivables Purchase Agreement, new Receivables would no
longer be transferred to BCRC by BCI and, pursuant to the Pooling and Servicing
Agreement, only collections on Receivables theretofore sold to BCRC and
transferred to the Trust would be available to be applied to pay interest
accruing on the Certificates and to pay the principal amount of the
Certificates. Under such circumstances, the Servicer is obligated to allocate
all principal collections on Receivables to the oldest principal balance first.
If such allocation method were to be altered by the bankruptcy court, the rate
of payment on the Certificates might be adversely affected.
The occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer will result in a Servicer Default,
which Servicer Default, in turn, will result in an Early Amortization Event. If
no other Servicer Default other than the commencement of such bankruptcy or
similar event exists, a bankruptcy trustee of the Servicer may have the power to
prevent either the Trustee or the Certificateholders from appointing a successor
Servicer.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of material United States federal
income tax consequences relating to the purchase, ownership and disposition of
the Certificates. This discussion is based on current law, which is subject to
retroactive or prospective change, either of which could adversely affect the
tax consequences described herein. The discussion does not address all of the
tax consequences that may be relevant to a particular Certificateholder in light
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of its own circumstances (for example, banks, insurance companies, tax-exempt
organizations and persons whose functional currency is not the U.S. dollar), and
some Certificateholders may be subject to special tax rules and limitations not
discussed herein. Prospective purchasers are urged to consult their own tax
advisors as to the federal, state, local, foreign and other tax consequences to
them of the purchase, ownership and disposition of the Certificates.
CHARACTERIZATION OF THE CERTIFICATES AND THE TRUST
Although no transaction closely comparable to the issuance of the
Certificates has been the subject of any Treasury regulation, public ruling or
judicial decision, Morgan, Lewis & Bockius LLP, special U.S. tax counsel to BCRC
and the Trust ("SPECIAL U.S. TAX COUNSEL") is of the opinion that, for federal
income tax purposes, the Certificates will be characterized as indebtedness of
BCRC secured by the Receivables, and the Trust will be treated as a mere
security device. The Internal Revenue Service ("IRS") could assert that the
Certificates are not indebtedness but rather are an interest in the nature of an
equity interest and that the Trust is not a mere component of a security device
but rather is either a partnership (between BCRC and some or all classes of
Certificateholders) or a publicly traded partnership taxable as a corporation
(in which BCRC owns common stock and some or all classes of Certificateholders
own preferred stock).
Because BCRC will retain the benefits of ownership and most of the risk
of loss with respect to the Receivables, and the Certificateholders will be
entitled only to the payment of a fixed return on their investments and the
repayment of those investments (which payments and repayments will be adequately
secured by the Receivables, and other collateral to be held by the Trust),
Special U.S. Tax Counsel is of the opinion that the IRS would not prevail in any
attempt to characterize the Certificates as other than indebtedness.
Accordingly, notwithstanding that the transaction will be treated as a sale of
the Receivables for regulatory and financial accounting purposes, Special U.S.
Tax Counsel is of the opinion that such treatment will not apply for U.S.
federal income tax purposes.
POSSIBLE CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
If (contrary to the views expressed above) some or all classes of
Certificates were characterized as interests in the nature of equity interests,
then the Trust could be characterized as a partnership or a publicly traded
partnership ("PTP"). If the Trust were treated as a partnership (other than a
PTP taxable as a corporation), such partnership would not be subject to federal
income tax. Instead, each item of income, gain, deduction and loss generated
through the partnership's ownership and servicing of the Receivables would be
taken into account directly in computing the taxable income of BCRC and the
Certificateholders treated as partners, in accordance with their respective
ownership of the interests of such partnership. The amount and timing of the
items of income and deductions of the Certificateholders could differ if the
Certificates were held to constitute partnership interests, rather than
indebtedness of BCRC. In addition, if the Trust were treated as a partnership,
income derived from the partnership by a
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<PAGE>
Certificateholder that is a pension fund or other tax-exempt entity treated as a
partner may be treated as unrelated business taxable income. Partnership
characterization also may have adverse state and local income or franchise tax
consequences for a Certificateholder.
POSSIBLE CHARACTERIZATION OF THE TRUST AS A CORPORATION
If the Trust were treated in whole or in part as a partnership in which
some or all of the Certificateholders were treated as partners rather than
holders of indebtedness, that deemed partnership could be classified as a PTP
taxable as a corporation. In that event the Trust would be subject to federal
income tax at corporate rates on the taxable income that the Trust derives from
the Receivables. Such tax would reduce the amounts available for distribution to
the Certificateholders. Cash distributions to the Certificateholders would be
treated as dividends for tax purposes to the extent of the Trust's earnings and
profits (and, for corporate Certificateholders, eligible for the dividends
received deduction, subject to limitations). Moreover, the amounts available for
distribution to Certificateholders would be substantially diminished by the
taxes imposed on the Trust.
The remainder of this section assumes that, for U.S. federal income tax
purposes, the Certificates will be characterized as indebtedness of BCRC secured
by the Receivables. BCRC and the Certificateholders have agreed to treat the
Certificates as indebtedness for federal income tax purposes and neither the
Trustee nor BCRC will comply with the reporting requirements applicable to
corporations, PTPs or partnerships.
TAXATION OF INTEREST INCOME TO CERTIFICATEHOLDERS
General. In general, stated interest, original issue discount and
market discount received or accrued on a Certificate will be ordinary income,
and principal payments on a Certificate will be a return of capital to the
extent of the Certificateholder's basis in the Certificate allocable to those
payments. A holder of a Certificate issued with original issue discount must use
the accrual method of accounting with respect to original issue discount
accruing on such Certificate regardless of its regular method of accounting.
Original Issue Discount. It is not anticipated that the Certificates
will be issued with original issue discount ("OID"). However, because the
failure to pay interest currently on the Certificates does not give rise to any
remedy to compel payment, the IRS may take the position on the basis of Treasury
regulations that all of the interest payments on the Certificates should be
treated as payments of principal and the Certificates should be treated as
having OID. A holder of a Certificate having OID generally must include OID in
ordinary income as it accrues in advance of receipt of the cash attributable to
the discount, regardless of the holder's regular method of accounting.
The amount of OID on a Certificate is the excess of its "stated
redemption price at maturity" over its "issue price." The issue price of a
Certificate in a particular class is the price at
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<PAGE>
which a substantial amount of the Certificates of that class are first sold to
the public. The stated redemption price at maturity of a Certificate is the
total of all payments on the Certificate other than "qualified stated interest"
payments. A qualified stated interest payment generally is stated interest that
is unconditionally payable in cash or in property at least annually at a single
fixed rate, a single objective rate or one or more qualified floating rates.
A Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions" of the OID that occur on the
Certificate for each day during the Certificateholder's taxable year on which
the Certificate is held. A calculation will be made of the portion of the OID
that accrues on each Certificate during each "accrual period," which in general
is the period corresponding to the period between Distribution Dates. The OID
accruing during any accrual period is divided by the number of days in the
period to determine the daily portion of OID for each day in the period. The
amount of OID that accrues in each year will be computed under a constant yield
method, with the consequence that a United States holder will include in gross
income progressively larger amounts of OID over time.
Market Discount. A Certificateholder who purchases a Certificate at
more than a de minimis discount may be subject to the "market discount" rules of
Section 1276 through 1278 of the Code. These rules provide, in part, that gain
on the sale or other disposition of a Certificate and partial principal payments
on a Certificate are treated as ordinary income to the extent of accrued market
discount. The market discount rules also provide for deferral of a portion of
interest deductions with respect to debt incurred to purchase or carry a
Certificate that has market discount. Alternatively, a Certificateholder may
elect to include market discount in income as it accrues in lieu of the tax
treatment described in the two preceding sentences.
Market Premium. A Certificateholder who purchases a Certificate at a
premium price may elect to offset the premium against interest income over the
remaining term of the Certificate in accordance with the provisions of Section
171 of the Code.
SALE OR EXCHANGE OF CERTIFICATES
Upon a sale of a Certificate, a Certificateholder generally will
recognize gain or loss equal to the difference between the amount realized on
the sale or exchange and the Certificateholder's adjusted basis in the
Certificate. The adjusted basis in the Certificate will equal its cost,
increased by any OID or market discount includible in income with respect to the
Certificate prior to its sale, and reduced by any principal payments previously
received with respect to the Certificate and any amortized premium. Generally,
gain or loss will be capital gain or loss if the Certificate was held as a
capital asset, and will be long-term gain or loss if held for more than one
year. Generally, capital losses may be used only to offset capital gains.
FOREIGN INVESTORS
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<PAGE>
In general, a Certificateholder that is not (A) a citizen or resident
of the United States, (B) a domestic partnership, (C) a domestic corporation,
(D) a domestic estate or domestic trust or (E) any other person or entity whose
income in respect of a Certificate is "effectively connected" with a United
States trade or business (a "NON-U.S. CERTIFICATEHOLDER") will not be subject to
U.S. federal income tax on interest (including original issue discount) on a
Certificate unless the non-U.S. Certificateholder is a direct or indirect 10
percent or greater shareholder of, or a controlled foreign corporation related
to, BCRC. To qualify for the exemption from taxation, the last U.S. Person in
the chain of payment prior to payment to a non-U.S. Certificateholder (the
"WITHHOLDING AGENT") must have received (in the year in which a payment of
interest or principal occurs, or in either of the two preceding years) a
statement that (i) is signed by the non-U.S. Certificateholder under penalties
of perjury, (ii) certifies that the non-U.S. Certificateholder is not a U.S.
Person and (iii) provides the name and address of the non-U.S.
Certificateholder. The statement may be made on an IRS Form W-8 or substantially
similar substitute form, and the non-U.S. Certificateholder must inform the
Withholding Agent of any change in the information on the statement within 30
days of the change. If a Certificate is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However, in
that case, the signed statement must be accompanied by an IRS Form W-8 or
substitute form provided by the non-U.S. Certificateholder to the organization
or institution holding the Certificate on behalf of the non-U.S.
Certificateholder.
Generally, any gain or income realized by a non-U.S. Certificateholder
upon retirement or disposition of a Certificate will not be subject to U.S.
federal income tax, provided that (i) in the case of a Certificateholder that is
an individual, such Certificateholder is not present in the United States for
183 days or more during the taxable year in which such retirement or disposition
occurs (or satisfies a "substantial presence" test for such year) and (ii) in
the case of gain representing accrued interest, the conditions described in the
preceding paragraph for exemption from withholding are satisfied. Certain
exceptions may be applicable, and an individual non-U.S. Certificateholder
should consult a tax adviser.
A Certificate will not be includible in the estate of a non-U.S.
Certificateholder unless the non-U.S. Certificateholder is a direct or indirect
10 percent or greater shareholder of BCRC.
If the Certificates were treated as an interest in a partnership, the
recharacterization could cause a non-U.S. Certificateholder to be treated as
engaged in a trade or business in the United States. In that event, the non-
U.S. Certificateholder would be required to file a federal income tax return
and, in general, would be subject to U.S. federal income tax (including the
branch profits tax) on its net income from the partnership. Further, certain
withholding obligations apply with respect to income allocable or distributions
made to a foreign partner. That withholding may be at a rate as high as 39.6
percent. If the Certificates were treated as stock in a corporation,
distributions to a non-U.S. Certificateholder, to the extent treated as
dividends, generally would be subject to withholding of tax at the rate of 30
percent, unless that rate were reduced by an applicable tax treaty.
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<PAGE>
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under certain circumstances interest (including OID), principal or
proceeds of the sale of a Certificate may be subject to information reporting or
to "backup withholding" of United States federal income tax at a 31% rate.
Information reporting and backup withholding generally do not apply to
corporations and certain other exempt recipients, which may be required to
establish their exempt status. Backup withholding generally applies if, among
other circumstances, a non-exempt United States person holding a Certificate
fails to furnish that person's correct social security number or other taxpayer
identification number. Information reporting and backup withholding generally do
not apply to a non-United States person holding a Certificate who satisfies the
applicable identification requirements.
STATE AND LOCAL TAXATION
The discussion above does not address the tax consequences of purchase,
ownership or disposition of the Certificates under any state or local tax law.
Investors should consult their own tax advisers regarding state and local tax
consequences.
ALL INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL OR FOREIGN INCOME
OR ESTATE TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF THE CERTIFICATES.
Offered Certificates may not be acquired by or for the account of any
employee benefit plan, trust or account (including an individual retirement
account) that is subject to the requirements of Title I of the Employee
Retirement Income Security Act of 1974 or that is described in Section 497(e)(1)
of the Internal Revenue Code of 1986 (each a "Benefit Plan"), or by or for the
account of any entity whose underlying assets include any Benefit Plan assets by
reason of a Benefit Plan's investment in such entity. By accepting and holding
any Offered Certificate, the holder thereof will be deemed to have represented
and warranted that it is not a Benefit Plan, and that its acquisition and
holding thereof is in compliance with the foregoing restrictions on Benefit Plan
assets.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among
the Depositor, BCI and the underwriters named below (the "UNDERWRITERS")
relating to the Certificates (the "UNDERWRITING AGREEMENT"), the Depositor has
agreed to sell to the Underwriters, and each Underwriter has agreed to purchase
the principal amount of Class A and Class B Certificates set forth opposite its
name below.
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<PAGE>
<TABLE>
<CAPTION>
Principal Amount Principal Amount
of Class A of Class B
Underwriter Certificates Certificates
- ------------------------------------------- ------------------- ----------------------
<S> <C> <C>
J.P. Morgan Securities Inc.................
[Underwriter]..............................
-------------------- ----------------------
Total......................................
==================== ======================
</TABLE>
The Depositor has been advised that the Underwriters propose initially
to offer the Certificates to the public at the offering prices set forth below.
The Depositor has been advised that the Underwriters propose initially to offer
the Certificates to certain dealers at such offering prices less a selling
concession not to exceed the percentage of the Certificate denomination set
forth below, and that the Underwriters may allow and such dealers may reallow a
reallowance discount not to exceed the percentage of the Certificate
denomination set forth below:
<TABLE>
<CAPTION>
UNDERWRITING SELLING REALLOWANCE
CLASS OF CERTIFICATE PRICE TO PUBLIC DISCOUNT CONCESSION DISCOUNT
- -------------------- --------------- -------- ---------- --------
<S> <C> <C> <C> <C>
Class A Certificates.... % % % %
Class B Certificates.... % % % %
</TABLE>
After the initial public offering, the public offering price, such
concessions and such discount may be changed.
The Depositor has been advised by each Underwriter that it intends to
make a market in the Certificates, but no Underwriter has any obligation to do
so. There can be no assurance that a secondary market for the Certificates (or
any particular Class thereof) will develop or, if it does develop, that it will
continue or that such market will provide sufficient liquidity to
Certificateholders.
Until the distribution of the Certificates is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Certificates. As an
exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the Certificates. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Certificates.
In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases.
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<PAGE>
Neither the Depositor not any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the prices of the Certificates. In
addition, neither the Depositor nor any of the Underwriters makes any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
The Depositor has agreed to indemnify the Underwriters against, or make
contributions to the Underwriters with respect to, certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the
Trust by Morgan, Lewis & Bockius LLP, New York, New York and for the
Underwriters by Orrick, Herrington & Sutcliffe LLP, Washington, D.C. Certain
federal income tax matters will be passed upon for the Depositor and the Trust
by Morgan, Lewis & Bockius LLP, New York, New York.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement under the Securities Act of
1933, as amended, with the Securities and Exchange Commission with respect to
the certificates offered pursuant to this prospectus. This Prospectus, which
forms part of the registration statement, does not contain all of the
information contained in the registration statement and the exhibits thereto.
For further information, reference is made to the registration statement and
amendments thereof and exhibits thereto, which are available for inspection
without charge at the Public Reference Facilities maintained by the Securities
and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
the Securities and Exchange Commission's regional offices at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of the registration
statement and amendments thereof and exhibits thereto may be obtained from the
Public Reference Section of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Securities and Exchange Commission maintains a public access site on the
Internet through the World Wide Web at which site reports, proxy and information
statements and other information regarding registrants, including all electronic
filings, may be viewed. The Internet address of the Securities and Exchange
Commission's World Wide Web site is http://www.sec.gov.
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued, monthly and annual
unaudited reports, containing information concerning the trust, which reports
will be substantially based upon information provided by the Servicer, will be
sent on behalf of the trust to Cede & Co., as nominee of The Depository Trust
Company and registered holder of the certificates. Such reports
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<PAGE>
may be available to beneficial owners of certificates in accordance with the
regulations and procedures of The Depository Trust Company. See "Description of
the Certificates--Reports" and "--Evidence as to Compliance." Such reports will
not constitute financial statements prepared in accordance with generally
accepted accounting principles. The trust will file with the Securities and
Exchange Commission such periodic reports with respect to the trust as are
required under the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Securities and Exchange Commission thereunder.
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<PAGE>
INDEX OF DEFINED TERMS
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Accounts .................................................................... 65
Accumulation Period Commencement Date.........................................48
Accumulation Period Length....................................................86
Accumulation Shortfall........................................................87
Addition Date.................................................................59
Additional Accounts...........................................................65
Additional Cut-Off Date.......................................................59
Adjusted Invested Amount......................................................73
Adjustment Date...............................................................47
Adjustment Payment............................................................88
Amendment Number 1............................................................45
Appointment Date..............................................................60
Asset-Based Receivables.......................................................22
Automatic Addition Condition..................................................66
Available Investor Principal Collections......................................86
Available Retained Collections................................................76
Available Retained Non-Principal Collections..................................76
Available Retained Principal Collections......................................76
Available Subordinated Amount.................................................78
Bankruptcy Code..............................................................108
BCHI..........................................................................42
BCI...........................................................................19
BCI Domestic Inventory Portfolio..............................................22
BCRC..........................................................................19
Calculation Agent.............................................................47
Cede..........................................................................46
Certificate Rate..............................................................46
Certificates..................................................................21
Citibank......................................................................53
Class A Carry-Over Amount.....................................................91
Class A Certificate Rate......................................................46
Class A Certificates..........................................................21
Class A Expected Final Payment Date...........................................87
Class A Monthly Interest......................................................78
Class B Carry-Over Amount.....................................................91
Class B Certificate Rate......................................................46
</TABLE>
i
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<PAGE>
<TABLE>
<S> <C>
Class B Certificates..........................................................21
Class B Expected Payment Date.................................................87
Class B Monthly Interest......................................................78
Closing Date..................................................................46
Collateral Security...........................................................20
Collection Account............................................................70
Controlled Accumulation Amount................................................87
Controlled Accumulation Period................................................87
Controlled Deposit Amount.....................................................87
Cooperative...................................................................52
Daily Allocation..............................................................75
Defaulted Amount..............................................................88
Defaulted Receivables.........................................................88
Deficiency Amount.............................................................77
Definitive Certificates.......................................................54
Deposit Date..................................................................76
Depositor ....................................................................19
Depository ...................................................................46
Designated Balance............................................................68
Designated Manufacturer Overconcentrations....................................80
Determination Date............................................................62
Distribution Date ............................................................81
Distribution Date Statement...................................................99
Domestic Inventory Receivables................................................22
DTC ..........................................................................46
Early Amortization Event......................................................89
Early Amortization Period.....................................................92
Eligible Account .............................................................62
Eligible Accounts ............................................................22
Eligible Deposit Account......................................................70
Eligible Institution..........................................................70
Eligible Obligor .............................................................63
Eligible Product .............................................................62
Eligible Products ............................................................44
Eligible Receivable...........................................................63
Enhancement ..................................................................20
Enhancement Provider..........................................................61
Euroclear ....................................................................52
Euroclear Operator............................................................52
Euroclear Participants........................................................52
Excess Funded Amount..........................................................71
Excess Funding Account........................................................71
Excess Principal Collections..................................................74
</TABLE>
ii
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Excess Reserve Fund Required Amount..........................................84
Excess Retained Percentage...................................................76
Excess Servicing ............................................................83
Exchange Act ................................................................50
Floating Allocation Percentage...............................................72
Holders .....................................................................54
Incremental Subordinated Amount..............................................79
Index Maturity ..............................................................47
Indirect Participants........................................................50
Industry Overconcentrations..................................................80
Ineligible Receivable........................................................64
Initial Amorization Period...................................................50
Initial Closing Date.........................................................58
Initial Cut-Off Date.........................................................20
Initial Principal Amount.....................................................73
Initial Principal Payment Date...............................................50
Insolvency Laws .............................................................19
Interest Period .............................................................46
Invested Amount .............................................................73
Investment Proceeds..........................................................83
Investor Charge-Off..........................................................89
Investor Default Amount......................................................88
Investor Non-Principal Collections...........................................83
IRS ........................................................................110
LIBOR .......................................................................47
Liquidation Event ...........................................................92
London Business Day..........................................................47
Manufacturer Overconcentrations..............................................80
Miscellaneous Payments.......................................................73
Monthly Interest ............................................................78
Monthly Payment Rate.........................................................91
Monthly Principal ...........................................................86
Monthly Servicing Fee........................................................96
Morgan ......................................................................53
Net Receivables Rate.........................................................47
Net Servicing Fee ...........................................................96
Net Servicing Fee Rate.......................................................96
New Issuance ................................................................56
Non-Principal Collections....................................................83
non-U.S. Certificateholder..................................................113
Note .......................................................................103
Obligor Overconcentrations...................................................79
</TABLE>
iii
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<PAGE>
<TABLE>
<S> <C>
OID ..........................................................................111
Overconcentration Amount.......................................................81
Participants ..................................................................50
Participation Interest.........................................................32
Pool ..........................................................................21
Pool Available Subordinated Amount.............................................73
Pool Balance ..................................................................33
pool factor ...................................................................99
Pool Invested Amount...........................................................73
Principal Account .............................................................84
Principal Allocation Percentage................................................73
Principal Collections..........................................................86
Principal Shortfalls...........................................................74
PTP ..........................................................................110
Rating Agency Condition........................................................66
Receivables ...................................................................20
Receivables Purchase Agreement................................................102
Record Date ...................................................................49
Removal Commencement Date..................................................... 68
Removal Notice ................................................................67
Removal Termination Date.......................................................68
Removed Accounts ..............................................................67
Required Investor Percentage...................................................67
Required Pool Balance..........................................................67
Required Subordinated Amount...................................................78
Reserve Fund ..................................................................83
Reserve Fund Deposit Amount....................................................83
Reserve Fund Required Amount...................................................83
Retained Participation Amount..................................................55
Retained Percentage............................................................77
RPA Amendment Number 1........................................................102
SAU ...........................................................................88
Securities Act ................................................................56
Series ........................................................................20
Series 1991-1 Termination Date.................................................49
Series 1999-1 Available Retained Collections...................................76
Series 1999-1 Investor Allocation Percentage...................................73
Series 1999-1 Required Balance.................................................67
Series 1999-1 Supplement.......................................................66
Series Cut-Off Date............................................................66
Series Issuance Date...........................................................57
Service Transfer .............................................................98
Servicer ......................................................................45
</TABLE>
iv
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<PAGE>
<TABLE>
<S> <C>
Servicer Default .............................................................98
Servicing Fee ................................................................96
Servicing Fee Rate............................................................96
Special U.S. Tax Counsel.....................................................110
Specified Obligors............................................................80
Subordinated Percentage.......................................................79
Supplement ...................................................................56
Supplemental Certificate......................................................58
Tax Opinion ..................................................................57
Telerate Page 3750............................................................47
Termination Date .............................................................93
Transfer Date ................................................................60
Transfer Deposit Amount.......................................................60
Trust ........................................................................19
Trustee ......................................................................45
Unallocated Principal Collections.............................................74
Underwriters ................................................................114
Underwriting Agreement.......................................................114
Variable Funding Amount.......................................................55
Variable Funding Percentage...................................................77
Withholding Agent ...........................................................113
</TABLE>
v
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<PAGE>
ANNEX I
PRIOR SERIES
The Certificates will be the fifth Series to be issued by the Trust.
The table below summarizes certain of the principal characteristics of the
Series 1996-1 Certificates, the Series 1997-1 Certificates and the Series 1997-2
Certificates, issued by the Trust and outstanding. "LIBOR," as used below in
connection with the Series 1997-1 Certificates, shall mean the offered rates for
deposits in United States dollars having a maturity of one-month determined as
set forth in the Supplement relating to the Series 1997-1 Certificates and "Net
Receivables Rate," as used below in connection with the Series 1997-1
Certificates shall have the meaning set forth in the Supplement relating to the
Series 1997-1 Certificates.
<TABLE>
<S> <C>
SERIES 1996-1
Initial Principal Amount...............................................................................$100,000,000
Principal Amount as of December 31, 1998...............................................................$120,000,000
Controlled Amortization Commencement Date...............................................................[June 1999]
Class A Certificate Rate......................................................................Commercial Paper Rate
Series 1996-1 Termination Date.....................................................................December 3, 1999
Series 1996-1 Issuance Date............................................................................May 14, 1996
Series Servicing Fee Rate........................................................................................2%
Initial Available Subordinated Amount...................................................................$23,616,900
SERIES 1997-1
Initial Principal Amount...............................................................................$427,125,000
Principal Amount as of December 31, 1998...............................................................$427,125,000
Controlled Amortization Commencement Date.............................................................November 2001
Class A Interest Rate......................................................Lesser of (i) One month LIBOR plus 0.12%
and (ii) Net Receivables Rate
Class B Interest Rate........................Lesser of (i) one month LIBOR plus 0.33% and (ii) Net Receivables Rate
Series 1997-1 Termination Date.......................................................................April 15, 2004
Series Issuance Date...............................................................................January 23, 1997
Series Servicing Fee Rate........................................................................................2%
Initial Available Subordination Amount..................................................................$24,859,127
SERIES 1997-2
Initial Principal Amount................................................................................$50,000,000
Principal Amount as of December 31, 1998...............................................................$100,000,000
Controlled Amortization Commencement Date...........................................................[December 2000]
Class A Certificate Rate......................................................................Commercial Paper Rate
Series 1997-2 Termination Date..........................................................................May 3, 2001
Series 1997-2 Issuance Date.......................................................................December 12, 1997
</TABLE>
1
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Series Servicing Fee Rate........................................................................................2%
Initial Available Subordinated Amount...................................................................$__________
</TABLE>
2
<PAGE>
<PAGE>
ANNEX II
RECEIVABLES IN ADDITIONAL ACCOUNTS CONVEYED TO THE TRUST BY BCRC
<TABLE>
<CAPTION>
Principal Amount
Assignment Date Receivables Relevant Number of Receivables in
Number Transferred to Trust Cut-Off Date of Accounts Additional Accounts
-------- -------------------- ------------ ----------- -------------------
<S> <C> <C> <C> <C>
[Describe Information with Respect to Additional Accounts]
</TABLE>
3
<PAGE>
<PAGE>
ANNEX III
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
Certificates (the "GLOBAL SECURITIES") will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities through
any of The Depository Trust Company ("DTC"), Cedelbank or Euroclear. The Global
Securities will be tradeable as home market instruments in both the European and
U.S. domestic markets. Initial settlements and all secondary trades will settle
in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedelbank and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations and prior asset-backed certificates issues.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of Cedelbank and Euroclear (in
such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, Cedelbank and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior asset-backed certificates
issues. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global
4
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Securities will be credited to the securities custody accounts on the settlement
date against payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior asset-
backed certificates issues in same-day funds.
Trading between Cedelbank and/or Euroclear Participants. Secondary
market trading between Cedelbank Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedelbank Participant or a Euroclear Participant, the purchaser
will send instructions to Cedelbank or Euroclear through a Cedelbank Participant
or Euroclear Participant at least one business day prior to settlement.
Cedelbank or Euroclear will instruct the respective Depositary, as the case may
be, to receive the Global Securities against payment. Payment will include
interest accrued on the Global Securities from and including the last
Distribution Date (or if the transfer is prior to the first Distribution Date,
the Closing Date) to and excluding the settlement date, on the basis of actual
days elapsed and a year of 360 days. Payment will then be made by the respective
Depositary of the DTC Participant's account against delivery of the Global
Securities. After settlement has been completed, the Global Securities will be
credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the Cedelbank Participant's or
Euroclear Participant's account. The securities credit will appear the next day
(European time) and the cash debt will be back-valued to, and the interest on
the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedelbank or
Euroclear cash debt will be valued instead as of the actual settlement date.
Cedelbank Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear until
the Global Securities are credited to their accounts one day later.
5
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As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank Participants or Euroclear Participants can elect not
to preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedelbank Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the investment income on
the Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will depend
on each Cedelbank Participant's or Euroclear Participant's particular cost of
funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of Cedelbank Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participant a cross-market transaction
will settle no differently than a trade between two DTC Participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedelbank Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedelbank or Euroclear through a Cedelbank Participant or
Euroclear Participant at least one business day prior to settlement. In these
cases, Cedelbank or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last Distribution Date (or if the transfer is prior to
the first Distribution Date, the Closing Date) to and excluding the settlement
date on the basis of actual days elapsed and a year of 360 days. The payment
will then be reflected in the account of the Cedelbank Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedelbank
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York). Should the Cedelbank Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the Cedelbank Participant's or Euroclear Participant's
account would instead be valued as of the actual settlement date.
Finally, day traders that use Cedelbank or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedelbank Participants
or Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
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(a) borrowing through Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedelbank or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the Cedelbank Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside the
U.S.) will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original interest discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons generally can obtain a complete exemption
from the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners residing in
a country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Certificate
Owner or his agent.
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Exemption of U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. PERSON" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States, any state thereof, or any political subdivision of either
(including the District of Columbia), or (iii) an estate or trust the income of
which is includible in gross income for United States tax purposes regardless of
its source. This summary does not deal with all aspects of U.S. Federal income
tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the Global Securities.
The Internal Revenue Service has recently proposed new regulations that would
revise some aspects of the current system for withholding on amounts paid to
foreign persons. Under these proposed regulations, interest or original issue
discount paid or deemed paid to a nonresident alien would continue to be exempt
from United States withholding taxes (including backup withholding) provided
that the holder complies with the new certification procedures.
8
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<PAGE>
$_____________
BOMBARDIER CREDIT RECEIVABLES CORPORATION
SENIOR/SUBORDINATED PASS-THROUGH CERTIFICATES,
SERIES 1999-1
[Bombardier Capital Logo]
BOMBARDIER CREDIT RECEIVABLES CORPORATION
DEPOSITOR
BOMBARDIER CAPITAL INC.
SERVICER
-------------------
PROSPECTUS
-------------------
J.P. MORGAN & CO. [UNDERWRITER]
You should rely on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information.
We are not offering these certificates in any state where the offer is
not permitted.
We represent the accuracy of the information in this prospectus only as
of the dates stated on their respective covers.
Dealers will be required to deliver a prospectus when acting as
underwriters of these certificates and with respect to their unsold allotments
or subscriptions. In addition, all dealers selling these certificates will
deliver a prospectus until _________.
____________, 1999
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Certificates being
registered hereunder, other than underwriting discounts and commissions are
estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee................................................... $ *
Printing and Engraving................................................. $
Legal Fees and Expenses................................................ $
Trustee Fees and Expenses.............................................. $
Blue Sky Fees and Expenses............................................. $
Rating Agency Fees..................................................... $
Accounting Fees and Expenses........................................... $
Miscellaneous.......................................................... $
--------
Total......................................................... $
========
</TABLE>
- -----------------------
* Actual
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Registrant's Certificate of Incorporation provides
for indemnification of directors and officers of the Registrant to the full
extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law provides, in
substance, that Delaware corporations shall have the power, under specified
circumstances, to indemnify their directors, officers, employees and agents in
connection with actions, suits and proceedings brought against them by a third
party or in the right of the corporation, by reason of the fact that they were
or are such directors, officers, employees or agents, against expenses incurred
in any such action, suit or proceeding. The Delaware General Corporation Law
also provides that Delaware corporations may purchase insurance on behalf of any
such director, officer, employee or agent.
Bombardier Inc. has agreed to guarantee the indemnification obligations
of the Registrant with respect to each of its independent directors, subject,
however, to any conditions, limitations, or defenses which the Registrant itself
might have with respect to such indemnified obligations.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The Trust has issued two Series of asset backed certificates in
transactions exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act. On May 14, 1996, the Registrant
sold by private placement to an institutional investor $100,000,000 initial
principal amount of Class A Certificates, Series 1996-1. On December 12, 1997,
the Registrant sold by private placement to an institutional investor
$50,000,000 initial principal amount of Class A Certificates, Series 1997-2.
II-1
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<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation of the Registrant
3.2 Bylaws of the Registrant
4.1 Pooling and Servicing Agreement*
4.2 Amendment No. 1 to Pooling and Servicing Agreement*
4.3 Form of Series 1999-1 Supplement*
4.4 Variable Funding Supplement*
4.5 Receivables Purchase Agreement*
4.6 Amendment No. 1 to Receivables Purchase Agreement*
5.1 Opinion of Morgan, Lewis & Bockius LLP as to legality of the Certificates (including consent of such
firm)*
8.1 Opinion of Morgan, Lewis & Bockius LLP as to certain U.S. tax matters (including consent of such
firm)*
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1)*
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 8.1)*
24.1 Power of Attorney (included on Page II-4)
</TABLE>
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* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
A. Insofar as indemnification for liability arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to provisions described under Item 14 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
B. The undersigned registrant hereby undertakes that:
(1) for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed
as part of a registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective; and
(2) for the purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time and shall be deemed to be the initial bona fide
offering thereof.
II-2
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the town of Colchester,
State of Vermont, on the 26th day of April, 1999.
BOMBARDIER CREDIT RECEIVABLES CORPORATION
By /s/ George W. Calver
---------------------------------------
NAME: GEORGE W. CALVER
TITLE: PRESIDENT
II-3
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<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints George W. Calver and Andrew Baranowsky,
and each of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for and in his or her own name,
place and stead, in any and all capacities to sign any or all amendments
(including post-effective amendments) to this Registration Statement and any or
all other documents in connection therewith, and to file the same, with all
exhibits thereto, with the Securities and Exchange Commission, granting unto
each said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection
with such matters, as fully to all intents and purposes as he or she might or
could do in person, and hereby ratifying and confirming all that each said
attorney-in-fact and agent or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated, on the 26th day of April, 1999.
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ George W. Calver
------------------------------------- President (Principal Executive Officer)
George W. Calver
/s/ Andrew Baranowsky
------------------------------------- Treasurer (Principal Financial and Accounting
Andrew Baranowsky Officer)
------------------------------------- Director
Pierre-Andre Roy
/s/ R. William Crowe
- ------------------------------------- Director
R. William Crowe
/s/ Blaine Filthaut
- ------------------------------------- Director
Blaine Filthaut
- ------------------------------------- Director
Frank C. Killackey
/s/ Margaret L. Montgomery
- ------------------------------------- Director
Margaret L. Montgomery
- ------------------------------------- Director
Helen C. Rowan
/s/ Donald L. Rushford
- ------------------------------------- Director
Donald L. Rushford
</TABLE>
II-4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.1 Form of Underwriting Agreement*
3.1 Certificate of Incorporation of the Registrant
3.2 Bylaws of the Registrant
4.1 Pooling and Servicing Agreement*
4.2 Amendment No. 1 to Pooling and Servicing Agreement*
4.3 Form of Series 1999-1 Supplement*
4.4 Variable Funding Supplement*
4.5 Receivables Purchase Agreement*
4.6 Amendment No. 1 to Receivables Purchase Agreement*
5.1 Opinion of Morgan, Lewis & Bockius LLP as to legality of the Certificates (including
consent of such firm)*
8.1 Opinion of Morgan, Lewis & Bockius LLP as to certain U.S. tax matters (including
consent of such firm)*
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1)*
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 8.1)*
24.1 Power of Attorney (included on Page II-4)
</TABLE>
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* To be filed by amendment.
<PAGE>
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
BOMBARDIER CREDIT RECEIVABLES CORPORATION
The undersigned, a natural person, for the purpose of
organizing a corporation under the General Corporation Law of the State of
Delaware, hereby certifies that:
FIRST: The name of the corporation (hereinafter, the
"Corporation") is "Bombardier Credit Receivables Corporation."
SECOND: The address of the registered office of the
Corporation in the State of Delaware is 1200 Orange Street, City of Wilmington,
County of New Castle. The name of the registered agent of the Corporation at
such address is The Corporation Trust Company.
THIRD: The nature of business or purposes to be conducted or
promoted by the Corporation is to engage solely in the following activities:
a. To acquire, own, hold, sell, transfer, pledge or otherwise
dispose of:
(1) interests in accounts receivable generated from
advances, extensions of credit, revolving credit arrangements
or evidences of indebtedness (the "Receivables"), including,
without limitation, recreational, consumer and commercial
product receivables and other trade receivables; and
(2) loan agreements, promissory notes or other
evidences of indebtedness secured by Receivables or
Participation Interests (defined below) ("Loans"); and
(3) participation interests and pass through
certificates in pools of Receivables ("Participation
Interests"), in each case together with any related collateral
and agreements with dealers (or other obligors), originators
and servicers of such Receivables.
b. To act as settlor or depositor of trusts formed under a
trust agreement, pooling and servicing agreement or other agreement
("Agreements") to issue series (any of which series may be issued in one or more
classes) of trust certificates ("Certificates") representing undivided interests
in Receivables, Loans, Participation Interests, Subordinated Interests (defined
below) and/or Residual Interests (defined below) and/or to issue series (any of
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<PAGE>
which series may be issued in one or more classes) of bonds, notes or other
evidences of indebtedness ("Debt Obligations") collateralized by Receivables,
Loans, Participation Interests, Subordinated Interests and/or Residual Interests
and to enter into any other agreement in connection with the authorization,
issuance, sale and delivery of such Certificates or Debt Obligations.
c. To use proceeds from the Certificates as provided in the
Agreements.
d. To hold, pledge, transfer or otherwise deal with
Certificates and Debt Obligations, including Certificates or Debt Obligations
representing a subordinated interest in Receivables, Loans and/or Participation
Interests ("Subordinated Interests") or a residual interest in Receivables
("Residual Interests").
e. To loan or invest or otherwise apply proceeds from
Receivables, Loans and/or Participation Interests, funds received in respect to
Certificates, Debt Obligations, Subordinated Interests or Residual Interests and
any other income, as determined by the Corporation's Board of Directors.
f. To purchase, hold, and reissue any of the shares of its
capital stock.
g. To engage in any lawful act or activity to exercise any
powers permitted to corporations organized under the General Corporation Law of
the State of Delaware that are incidental to and necessary or convenient for the
accomplishment of the foregoing purposes.
FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is one thousand (1,000) shares, all of
which shall be designated Common Stock, par value one cent ($.01) per share.
FIFTH: The name and the mailing address of the incorporator
are as follows:
<TABLE>
<CAPTION>
Name Mailing Address
- ----- ---------------
<S> <C>
Richard F. Morris c/o Lord Day & Lord, Barrett Smith
1675 Broadway
New York, NY 10019
</TABLE>
SIXTH: The Board of Directors is expressly authorized to
adopt, amend or repeal By-Laws, subject to the reserved power of the
stockholders to amend and repeal any By-Laws adopted by the Board of Directors.
SEVENTH: Unless and except to the extent required by the
By-Laws, the election of directors of the Corporation need not be by written
ballot.
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<PAGE>
EIGHTH: For so long as the Certificates are outstanding, in
order to preserve and ensure its separate and distinct corporate identity, in
addition to the other provisions set forth in this Certificate of Incorporation,
the Corporation shall conduct its affairs in accordance with the following
provisions:
It shall establish and maintain an office through
which its business shall be conducted separate and apart from
those of its parent.
It shall maintain separate corporate records and
books of account from those of its parent and any affiliate
thereof.
At least one director of the Corporation shall not be
a director, officer, or employee of its parent or any
affiliate thereof.
Its Board of Directors shall hold appropriate
meetings (or act by unanimous consent) to authorize all
appropriate corporate actions.
For purposes of this ARTICLE EIGHTH, the following
terms shall have the following meanings:
"affiliate" means any person controlling or
controlled by or under common control with the
parent, but shall not include the Corporation. For
purposes of this definition, "control," when used
with respect to any specified 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.
"parent" means, with respect to the
Corporation, any other corporation owning or
controlling, directly or indirectly, fifty percent
(50%) or more of the voting stock of the Corporation.
"person" means any individual, corporation,
partnership, joint venture, association, joint stock
company, trust (including any beneficiary thereof),
unincorporated organization, or government or any
agency or political subdivision thereof.
NINTH: The Corporation shall not commence any case, proceeding
or other action relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seek to have an order for relief entered with respect to it, or seek
to adjudicate it a bankrupt or insolvent, or seek reorganization, arrangement,
adjustment, winding up, liquidation, dissolution, composition or other relief
with respect to it or its debts or make a general assignment for the benefit of
creditors without the unanimous vote of the entire Board of Directors.
-3-
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TENTH: Meetings of stockholders may be held within or without
the State of Delaware, as the By-Laws may provide. The books of the Corporation
may be kept (subject to any provision contained in the General Corporation Law
of the State of Delaware) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
By-Laws.
ELEVENTH: No person who is or was a director of the
Corporation shall be personally liable to the Corporation for monetary damages
for breach of fiduciary duty as a director unless, and only to the extent that,
such director is liable (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware
or any amendment thereto or successor provision thereto, or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to, repeal or adoption of any provision of this Certificate of
Incorporation inconsistent with this article shall apply to or have any effect
on the liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment, repeal or
adoption of an inconsistent provision.
TWELFTH: Each person who at any time is or shall have been a
director, officer, employee or agent of the Corporation and is threatened to be
or is made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, trustee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall be indemnified
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with any
such action, suit or proceeding to the fullest extent authorized under Section
145 of the General Corporation Law of the State of Delaware. The foregoing right
of indemnification shall in no way be exclusive of any other rights of
indemnification to which such director, officer, employee or agent may be
entitled under any By-Law, agreement, vote of stockholders or disinterested
directors, or otherwise.
THIRTEENTH: Any and all right, title, interest and claim in or
to any dividends declared by the Corporation, whether in cash, stock or
otherwise, which are unclaimed by the stockholder entitled thereto for a period
of six (6) years after the close of business on the payment date, shall be and
be deemed to be extinguished and abandoned, and such unclaimed dividends in the
possession of the Corporation, its transfer agents or other agents or
depositaries, shall at such time become the absolute property of the
Corporation, free and clear of any and all claims of any persons whatsoever.
FOURTEENTH: The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation in the manner now or hereafter prescribed by statute. All rights
at any time conferred upon the stockholders of the Corporation
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by this Certificate of Incorporation are granted subject to the foregoing
reservation; provided that no such amendment of Articles THIRD, EIGHTH, NINTH or
FOURTEENTH shall be effective without the Corporation having received
confirmation from each rating agency rating any outstanding Certificates or Debt
Obligations that such amendment shall not result in the termination or lowering
of the rating of such Certificates or Debt Obligations.
THE UNDERSIGNED, for the purpose of forming a Corporation
under the laws of the State of Delaware, does hereby make, file and record this
Certificate, and certify that the facts herein stated are true, and I have
accordingly set my hand hereto this 9th day of November, 1993.
/s/ Richard F. Morris
------------------------------------------
Richard F. Morris
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CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION OF
BOMBARDIER CREDIT RECEIVABLES CORPORATION
NOVEMBER 24, 1993
BOMBARDIER CREDIT RECEIVABLES CORPORATION (the "Corporation"),
a corporation organized and existing under the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY THAT:
FIRST: Article Eighth of the Corporation's Certificate of
Incorporation is hereby amended to read as follows:
EIGHTH: For so long as the Certificates are
outstanding, in order to preserve and ensure its separate and
distinct corporate identity, in addition to the other
provisions set forth in this Certificate of Incorporation, the
Corporation shall conduct its affairs in accordance with the
following provisions:
It shall establish and maintain an office through
which its business shall be conducted separate and apart from
those of its parent.
It shall maintain separate corporate records and
books of account from those of its parent and any affiliate
thereof.
From and after the time of the initial issuance of
the Certificates (as defined above in Article Third Section
b), at least one director of the Corporation shall not be a
director, officer, or employee of its parent or any affiliate
thereof.
Its Board of Directors shall hold appropriate
meetings (or act by unanimous consent) to authorize all
appropriate corporate actions.
For purposes of this ARTICLE EIGHTH, the following
terms shall have the following meanings:
"affiliate" means any person controlling or
controlled by or under common control with the
parent, but shall not include the Corporation. For
purposes of this definition, "control," when used
with respect to any specified 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.
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"parent" means, with respect to the
Corporation, any other corporation owning or
controlling, directly or indirectly, fifty percent
(50%) or more of the voting stock of the Corporation.
"person" means any individual, corporation,
partnership, joint venture, association, joint stock
company, trust (including any beneficiary thereof),
unincorporated organization, or government or any
agency or political subdivision thereof.
SECOND: The Corporation has not received any payment for any
of its stock.
THIRD: This amendment was duly adopted, by written consent of
the sole incorporator, in accordance with the provisions of Section 241 of the
General Corporation Law of the State of Delaware.
The undersigned sole incorporator of the Corporation does
hereby make, file and record this Certificate of Amendment with respect to the
Corporation's Certificate of Incorporation (the initial directors not having
been yet elected or named), and certifies that the facts stated herein are true
and I have accordingly set my hand hereto this 24th day of November, 1993.
/s/ Richard F. Morris
---------------------------------------
Richard F. Morris
Sole Incorporator of Bombardier Credit
Receivables Corporation
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<PAGE>
CERTIFICATE OF THE AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
BOMBARDIER CREDIT RECEIVABLES CORPORATION
JANUARY 14, 1994
BOMBARDIER CREDIT RECEIVABLES CORPORATION (the "Corporation"),
a corporation organized and existing under the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY THAT:
FIRST: By the written consent of the Board of Directors of the
Corporation resolutions were duly adopted setting forth a proposed amendment of
the Corporation's Certificate of Incorporation, declaring such amendment to be
advisable and soliciting the written consent in lieu of a special meeting of the
sole stockholder of the Corporation to effect the amendment, pursuant to Section
228 of the General Corporation Law of Delaware, the resolution setting forth the
proposed amendment is as follows:
EIGHTH: For so long as the Certificates are outstanding, in
order to preserve and ensure its separate and distinct corporate
identity, in addition to the other provisions set forth in this
Certificate of Incorporation, the Corporation shall conduct its affairs
in accordance with the following provisions:
It shall establish and maintain an office through which its
business shall be conducted separate and apart from those of any
affiliate. If such office is leased from an affiliate, such lease shall
be on terms no more or less favorable to the Corporation than could be
obtained elsewhere and such office shall be conspicuously identified as
the Corporation's office so it can be easily located by outsiders.
It shall maintain full and complete corporate books, records
and financial statements separately from those of any affiliate. The
Corporation's financial statements shall comply with generally accepted
accounting principles. To the extent possible, the Corporation shall
inform any affiliate that includes the Corporation within such
affiliate's consolidated financial statements that the existence of the
Corporation and the ownership of its assets shall be disclosed in a
footnote to such financial statements.
From and after the time of the initial issuance of the
Certificates (as defined above in Article Third Section b), at least
one-fourth of the total number of directors of the Corporation, but no
less than two directors, shall be special directors.
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Its Board of Directors shall hold regular meetings (or act by
unanimous consent) to authorize appropriate corporate action. A quorum
of the Board of Directors must be present in person, and not by means
of conference telephone or similar communications equipment at least
one meeting each year. The Corporation shall keep complete minutes of
all Board of Director and stockholder meetings.
It shall independently make decisions with respect to its
business and daily operations without interference by or from any
affiliate. The Corporation shall not enter into any business
transactions with any affiliate except upon terms that are not more or
less favorable to the Corporation than terms and conditions available
at the time to the Corporation for comparable transactions with
unaffiliated persons and upon the approval of a majority of the Board
of Directors including each director who is a special director. The
declaration of dividends by the Corporation shall be approved by a
majority of the Board of Directors, including each director who is a
special director.
It shall act solely in its own corporate name and through its
own authorized officers and agents. No affiliate shall be appointed
agent of the Corporation except as agent to invoice and service
receivables purchased by the Corporation under agreements authorized in
Article Third Section b.
It shall directly manage its own liabilities, including paying
its own payroll and operating expenses. In the event that employees of
the Corporation participate in pension, insurance and other benefit
plans of an affiliate, the Corporation shall on a current basis
reimburse such affiliate, as the case may be, for the Corporation's pro
rata share of the costs thereof.
It shall not guarantee the debts of any affiliate. The
Corporation's debts shall not be guaranteed by any affiliate. The
Corporation shall not acquire obligations or securities of, or make
loans or advances to, any affiliate.
It shall not commingle any of its money or other assets with
the money or assets of any affiliate. The Corporation shall maintain
bank accounts in its own name separate from any affiliate.
Investment guidelines and criteria shall be established by a
majority of the Board of Directors including at least one director who
is a special director. Investments shall be made by the Corporation
directly or by brokers engaged and paid by the Corporation. Investments
shall be carried by the Corporation in its own name, except to the
extent necessary to perfect the lien thereof in favor of an entity
which purchase receivables pursuant to agreements authorized in Article
Third Section b.
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For purposes of this ARTICLE EIGHT, the following terms shall
have the following meanings:
"affiliate" means any entity other than the Corporation itself
(a) which owns beneficially, directly or indirectly, 10% or more of the
outstanding shares of the common stock of the Corporation, or which is
otherwise in control of the Corporation, (b) of which 10% or more of
the outstanding voting securities are owned beneficially, directly or
indirectly, by any entity described in clause (a) above or (c) which
otherwise controls or is otherwise controlled by any entity described
in clause (a) above. For purposes of this definition of affiliate, the
term "control," when used with respect to any specified 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 term "controlled by" has
meanings correlative to the foregoing.
"person" means individual, corporation, partnership, joint
venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization, or government or any
agency or political subdivision thereof.
"special director" mean a person who is not and has not at any
time within five years preceding been an officer, director, 10 percent
or more stockholder or employee of any Affiliate of the Corporation.
SECOND: The sole stockholder of the Corporation consented in
writing to such amendment, in satisfaction of the requirements of Section 228 of
the General Corporation Law of Delaware.
THIRD: Such amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment to be signed by William P. Brady, its Vice President
and Treasurer, and attested by Andrew Baranowsky, its Assistant Secretary, this
14th day of January, 1994.
BOMBARDIER CREDIT RECEIVABLES
CORPORATION
By /s/ William P. Brady
----------------------------------------
William P. Brady
Vice President and Treasurer
ATTEST:
By /s/ Andrew Baranowsky
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Andrew Baranowsky
Assistant Secretary
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<PAGE>
Exhibit 3.2
BOMBARDIER CREDIT RECEIVABLES
CORPORATION
BY-LAWS
ARTICLE I - STOCKHOLDERS
1. Annual and Special Meetings. The annual meeting of
stockholders for the election of directors and for the transaction of any other
business which may properly come before the meeting shall be held each year on a
business day and at a time designated by the Board of Directors. Special
meetings of stockholders may be called by resolution of the Board of Directors
or by the Chairman of the Board or the President and shall be called at any time
by the Chairman of the Board or the President or the Secretary at the request in
writing of stockholders owning a majority in amount of the entire capital stock
of the Corporation issued and outstanding and who would be entitled to vote at
such meeting. Such request shall state the purpose or purposes of the proposed
meeting.
2. Place of Meetings. The annual and special meetings of
stockholders shall be held at the principal place of business of the
Corporation, or at such other place as shall be determined from time to time by
the Board of Directors, within or without the State of Delaware, except as
otherwise specifically required by statute. The place at which any meeting is to
be held shall be specified in the notice calling such meeting.
3. Notice of Meetings. Except as otherwise expressly provided
by statute, notice of the place, date, hour and purpose or purposes of the
annual and any special meeting of stockholders shall be in writing and signed by
the Chairman of the Board or the President or any Vice President, or the
Secretary or other person lawfully calling said meeting; a copy thereof shall be
served, either personally or by mail, at least seven days before the meeting,
upon each stockholder of record entitled to vote at such meeting and to any
stockholder who, by reason of any action proposed at such meeting, would be
entitled to have his stock appraised if such action were taken. If mailed, such
notice shall be directed to a stockholder at his address as it appears on the
records of the Corporation. Notice by mail shall be deemed to be given when
deposited, with postage thereon prepaid, in the United States mail. If a meeting
is adjourned to another time, not more than thirty days thereafter, and/or to
another place, and if an announcement of the adjourned time and/or place is made
at the meeting, it shall not be necessary to give notice of the adjourned
meeting unless, after adjournment, a new record date is fixed for the adjourned
meeting.
4. Stockholder List. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a
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<PAGE>
complete list of the stockholders, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city or other municipality or community where the meeting is to be
held, which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place where the meeting is to be held and
during the whole time of the meeting, and may be inspected by any stockholder
who is present.
5. Quorum; Adjournment. Except as otherwise provided by law, a
quorum for the transaction of business at any meeting of stockholders shall
consist of the holders of record of a majority of the issued and outstanding
shares of capital stock of the Corporation entitled to vote at the meeting, in
person or by proxy. In the absence of a quorum at any meeting or any adjournment
thereof, the holders of record of a majority of the shares present in person or
by meeting from time to time, without notice other than announcement at the
meeting, until the requisite number of shares shall be present or represented.
At any such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally called.
6. Conduct of Meetings. Meetings of stockholders shall be
presided over by the Chairman of the Board, the President, a Vice-President, or,
if none of the foregoing is present, by a chairman chosen by the stockholders
entitled to vote who are present in person or by proxy at the meeting. The
Secretary of the Corporation shall act as secretary of every meeting, but if the
Secretary is not present, the presiding officer of the meeting shall appoint any
person present to act as secretary of the meeting.
7. Voting; Proxy Representation. Unless otherwise provided in
the certificate of incorporation or other certificate filed pursuant to law,
every holder of record of Common Stock shall be entitled at every meeting of the
Corporation to one vote, in person or by proxy, for each share of Common Stock
outstanding in his name on the books of the Corporation. Every proxy must be
executed in writing by the stockholder or by his duly authorized attorney. No
proxy shall be valid after the expiration of eleven months from the date of its
execution unless the person executing it shall have specified therein its
duration for a longer period. Unless otherwise provided by law or by the
certificate of incorporation or other certificate filed pursuant to law or these
by-Laws, all questions shall be decided by a majority of a quorum.
8. Stockholder Action Without Meetings. Whenever the vote of
stockholders at a meeting thereof is required or permitted to be taken for or in
connection with any corporate action, the meeting, notice thereof and vote of
stockholders may be dispensed with if holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
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present and voted shall consent in writing to such corporate action being taken.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
ARTICLE II - FIXING DATE FOR DETERMINATION
OF STOCKHOLDERS OF RECORD
In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action.
ARTICLE III - BOARD OF DIRECTORS
1. Number. The business and affairs of the Corporation shall
be managed by and under the discretion of its Board of Directors. The number of
directors constituting the entire Board shall be five (5) otherwise determined
by the Board of Directors.
2. Election. The members of the Board of Directors shall be
elected at the annual meeting of stockholders by a plurality of the votes cast
in such election except for the initial Board of Directors, which shall be
elected by the Incorporator and which shall hold office until the first annual
meeting of stockholders or until their successors are elected and qualified or
until their earlier resignation or removal. Subject to the provisions of
Sections 12 and 13 of this ARTICLE III, each director so elected shall hold
office for one year and until his successor is elected and qualified. A director
need not be a stockholder, a citizen of the United States or a resident of
Delaware. If the members of the Board of Directors are not elected at the annual
meeting of stockholders on the day designated in these by-Laws, the incumbent
directors shall continue to hold office and discharge their respective duties
until successors have been elected.
3. Vacancies. All vacancies on the Board of Directors, whether
caused by resignation, death, disqualification, removal, an increase in the
authorized number of directors between annual meetings of stockholders or
otherwise, may be filled by a majority of the directors in office after the
vacancy has occurred, or, if not so elected prior to the next annual meeting of
the stockholders, by vote, of the stockholders at any special meeting.
4. Annual Meeting. The annual meeting of the Board of
Directors for the election of officers and the transaction of such other
business as may properly come before the meeting, may be held each year without
notice immediately after the annual meeting of
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stockholders at the same place as such meeting of stockholders, or may be called
by any newly- elected director on one day's notice to each director, either
personally or by telegram, telecopier, letter, radio or cable.
5. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place, within or without
notice at such time and place, within or without the United States, as shall
from time to time be determined by resolution of the Board. In case of change in
the time, place or date of any such regular meeting, notice of such change shall
be mailed to each director at least three days prior to the meeting.
6. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board of the
President or by a majority of directors then in office. Notices of special
meetings stating the time, place and purpose of the meeting shall be mailed to
each director at least three days before such meeting. Special meetings may be
held within or without the United States.
7. Board Action Without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting (and any notice of such meeting
may be dispensed with), if all members of the Board or of such committee, as the
case may be, consent thereto in writing and such consent is filed with the
minutes of proceedings of the Board or committee.
8. Quorum. At all meetings of the Board, the presence of a
majority of the directors then in office shall be necessary to constitute a
quorum and shall be sufficient for the transaction of business and any act of a
majority of the directors who are present at a meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation or other
certificate filed pursuant to law or by these by-laws. Any business may be
transacted by the Board at a meeting at which every member of the Board is
present, though held without notice.
9. Committees. The Board of Directors may be resolution or
resolutions passed by a majority of the whole Board designate one or more
committees, each committee to consist of two or more of the directors, which, to
the extent provided in said resolution or resolutions, shall have and may
exercise powers of the Board of Directors in the management of the business and
affairs of the Corporation and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors. All committees so appointed
shall keep regular minutes of the business transaction at their meetings.
10. Organization. At all meetings of the Board of Directors,
the Chairman of the Board, or in his absence, the President, or in his absence
any Vice-President who is a member of the Board of Directors, or in their
absence, a chairman chosen by the directors shall preside.
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The Secretary of the Corporation shall act as secretary at all meetings of the
Board of Directors when present, and, in his absence, the presiding officer may
appoint any person to act as secretary.
11. Salaries. The Directors shall receive such compensation
for their services as may be prescribed by the Board of Directors from time to
time and shall be reimbursed by the Corporation for ordinary and reasonable
expenses incurred in the performance of their duties.
12. Resignation. Any director may resign at any time upon
written notice to the Corporation. Such resignation will take effect upon
receipt thereof by the Corporation unless otherwise stated in the resignation.
13. Removal. Any director may be removed, either with or
without cause, at any special meeting of stockholders by vote of a majority of
the shares of stock outstanding and entitled to vote at an election of
directors, provided that notice of such vote shall have been given in the notice
calling such meeting. If the notice calling such meeting shall so provide, the
vacancy caused by such removal shall be filled at such meeting by the vote of a
majority of the shares of stock outstanding, present and entitled to vote for
the election of directors.
14. Telephone Meetings. Members of the Board of Directors, or
any committee designated by the Board of Directors, may participate in a meeting
of the Board of Directors, or committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at such a meeting.
ARTICLE IV - OFFICERS
1. Election. The officers of the Corporation shall be a
President and a Secretary. The Board of Directors may also elect or appoint a
Chairman of the Board, a Treasurer, one or more Vice-Presidents, one or more
Assistant Treasurers, one or more Assistant Secretaries, and such other
officers, agents and employees as, in the opinion of the Board, the business of
the Corporation requires. Each officer, agent or employee elected or appointed
by the Board of Directors shall have such powers and perform such duties as may
be prescribed by these by-laws and as may be assigned from time to time by the
Board of Directors. Unless otherwise provided in the resolution of election,
each officer shall hold office until the next annual election of directors and
until his successor shall have been qualified or until his earlier resignation
or removal. Any number of offices may be held by the same person.
2. Chairman of the Board of Directors. The Chairman of the
Board, if any, shall have the responsibility of guiding the Board of Directors
in effectively discharging its responsibilities, including, but not limited to,
providing for the execution of the Corporation's objectives; safe-guarding the
furthering shareholders, interests; and appraising the adequacy of
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overall results as reported by the President. The Chairman of the Board of
Directors shall preside at all meetings of the Board of Directors and of the
stockholders at which he is present.
3. President. The President shall be the Chief Executive
Officer and the Chief Operating Officer of the Corporation. The President shall
be responsible for the management of the business affairs and operations of the
Corporation. The President shall also perform all duties incident to the office
of President and such other duties as may from time to time be assigned to him
by the Board of Directors.
4. Vice Presidents. The Vice Presidents, if any, in the order
designated by the Board of Directors, shall, in the absence or disability of the
President, perform the duties and exercise the powers of the President. A Vice
President may execute and deliver contracts and other obligations and
instruments pertaining to the regular course of his duties, and shall perform
such other duties and shall have such other authority as from time to time may
be assigned to him by the Board of Directors or the President.
5. The Secretary. The Secretary shall record all the
proceedings of all sessions of the Board of Directors and all meetings of
stockholders in a book to be kept for that purpose and shall perform like duties
for any committee of the Board of Directors when required, of which he shall be
the custodian. He shall cause to be given notice of all meetings of stockholders
and directors. He shall keep in safe custody the seal of the Corporation and
when authorized by the Board of Directors affix it to any instrument. He shall
have charge of the stock certificate books of the Corporation and such other
books and papers as the Board of Directors may direct. He shall in general
perform all the duties incident to the office of the Secretary and such other
duties as may be assigned to him by the Board of Directors or the President.
6. The Treasurer. Subject to the direction of the Board of
Directors, the Treasurer, if any, shall have the custody of all funds and
securities of the Corporation, except as otherwise provided by the Board of
Directors or any committee thereof, and shall keep full and accurate accounts of
receipts and disbursements. He shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, taking proper vouchers
for such disbursements, and shall render to the President and Directors at the
regular meetings of the Board of Directors or whenever they may require it, an
account of all his transactions as Treasurer and of the financial condition of
the Corporation. The Treasurer shall in general perform all duties incident to
the office of the Treasurer and such other duties as may be assigned to him by
the Board of Directors or the President.
7. Vacancies. Vacancies in any office occurring by death,
resignation, disqualification, removal or otherwise, may be filled by the Board
of Directors at any regular or special meeting.
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8. Resignation. Any officer may resign his Office at any time,
such resignation to take effect upon receipt thereof by the Corporation, unless
otherwise stated in the resignation.
9. Removal. Any officer may be removed at any time, with or
without cause, by the affirmative vote of a majority of the entire Board of
Directors. The power to remove agents and employees, other than officers or
agents elected or appointed by the Board of Directors, may be delegated as the
Board of Directors shall determine.
10. Salaries. Salaries of all officers and agents of the
Corporation shall be fixed from time to time by or in the manner determined by
the Board of Directors.
11. Duties of Officers may be Delegated. In case of the
absence of any officer of the Corporation, or for any other reason that the
Board of Directors may deem sufficient, the Board of Directors may delegate the
powers or duties of such officer to any other officer or to any director for the
time being.
12. Powers with Respect to Ownership of Stock. Unless
otherwise ordered by the Board of Directors, each of the President or any Vice
President shall have full power and authority on behalf of the Corporation to
attend and to vote at any meeting of stockholders of any corporation in which
the Corporation may hold stock, and may exercise on behalf of the Corporation
any and all of the rights and powers incident to the ownership of such stock at
any such meeting, and shall have power and authority to execute and deliver
proxies and consents on behalf of the Corporation in connection with the
exercise by the Corporation of the rights and powers incident to the ownership
of such stock. The Board of Directors, from time to time, may confer like powers
upon any other person or persons.
ARTICLE V - STOCK
1. Issuance of Stock Certificates. Stock of the Corporation
shall be represented by certificates in such form as shall be approved by the
Board of Directors. Each such certificate shall be signed by the Chairman of the
Board of Directors or the President or a Vice President and a Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Such seal may be a facsimile, engraved or printed.
In case any officer who has signed such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the date of its issue.
2. Lost Stock Certificates. The officers of the Corporation
may issue a new certificate of stock in place of any certificate theretofore
issued by the Corporation alleged to have been lost, stolen or destroyed, if the
owner of such certificate or his legal representative shall execute and deliver
to the Corporation and/or its transfer agent and register a satisfactory
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bond sufficient to indemnify the Corporation against any claim that may be made
against it on account of the lost, stolen or destroyed certificate and shall
execute and deliver to the Corporation an affidavit setting forth the facts
regarding such loss, theft or destruction. The foregoing requirements may be
waived in whole or in part by the President or the Board of Directors when, in
his or its judgment, it is proper to do so.
3. Transfer of Stock. Upon compliance with provisions
restricting the transfer or registration of transfer of shares of stock, if any,
transfers or registrations of transfers of shares of stock of the Corporation
shall be made only on the stock transfer books of the Corporation by the person
named in the certificate or by his attorney lawfully constituted and, except in
the case of lost, stolen or destroyed certificates, only upon surrender of the
certificate or certificates therefor properly endorsed and the payment of all
taxes due thereon.
4. Regulations. The Board of Directors shall have power to
make all such regulations as it shall deem expedient concerning the issuance,
transfer, conversion and registration of stock certificates, not inconsistent
with statutory requirements or the certificates of incorporation or other
certificate filed pursuant to law or these by-laws.
ARTICLE VI - SEAL
The seal of the Corporation shall be circular in form and
contain the name of the Corporation, and the words "Corporate Seal, 1993,
Delaware." The seal shall be in the charge of the Secretary to be used as
directed by the Board of Directors.
ARTICLE VII - CHECKS, CONTRACTS, ETC.
All checks, notes, drafts, acceptances, securities, evidences
of indebtedness and contracts of the Corporation shall be signed or endorsed by
or on behalf of the Corporation by such officers, directors, employees or agents
of the Corporation as the Board of Directors from time to time designate. Such
authorization may be general or specific.
ARTICLE VIII - BOOKS OF ACCOUNT AND STOCK BOOK
The Corporation shall keep books of account of all the
business and transactions of the Corporation. A book to be known as the stock
register, containing the names, alphabetically arranged, of all persons who are
stockholders of the Corporation, showing their places of residence, the number
of shares of stock held by them respectively, and the times when they
respectively became the owners thereof, and the amount paid thereon, shall be
kept by the Corporation or its transfer agent.
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ARTICLE IX - FISCAL YEAR
The fiscal year of the Corporation shall end on the 31st day
of January, or otherwise as the Board of Directors may determine.
ARTICLE X - OFFICES
The Corporation may have an office or offices in such place or
places as may be determined from time to time by the Board of Directors.
ARTICLE XI - NOTICES AND WAIVERS
1. Kind of Notice Required. Whenever under the provisions of
these by-laws notice is required to be given to any director, officer or
stockholder, it shall not be construed to mean personal notice, but unless
otherwise expressly stated in these by-laws such notice may be given in writing
by depositing the same in a post-office or letter box in a postpaid sealed
wrapper, addressed to such director officer or stockholder, at such address as
appears on the books of the Corporation, and such notice shall be deemed to have
been given at the time when the same was mailed.
2. Waiver of Notice. Whenever notice is required to be given
under any provision of the certificate of incorporation or these by-laws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice.
ARTICLE XII - INDEMNIFICATION
1. Every person who is or was a director, officer, employee or
agent of the Corporation, or of any other corporation, partnership, joint
venture, trust or other enterprise (hereinafter collectively referred to as an
"other company") which he serves or served as such at the request of the
Corporation, shall, subject to the provisions of Section 2 hereof and except as
prohibited by law, be indemnified by the Corporation against any and all
liabilities and expenses actually and reasonably incurred by him in connection
with any threatened, pending or completed action, suit or proceeding (whether
brought by or in the right of the Corporation or such other company or
otherwise), whether civil, criminal, administrative or investigative, or in
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connection with an appeal relating thereto, in which he was or is a party or is
threatened to be made a party by reason of his being or having been a director,
officer, employee or agent of the Corporation or of such other company, or by
reason of any action taken or not taken in his capacity as such director,
officer, employee or agent, whether or not he continues to be such director,
officer, employee or agent at the time such liabilities or expenses are
incurred, provided such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation or
such other company, as case may be, and, in addition, in any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful;
provided that no indemnification shall be made in respect of any claim, issue or
matter in any action, suit or proceeding by or in the right of the Corporation
or such other company, as the case may be, as to which such person shall have
been adjudged to be liable to the Corporation or such other company, as the case
may be, unless and only to the extent that the Court of Chancery of the State of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite his adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the Court of Chancery or such other court shall
deem proper. As used in this Article, the term "expenses" shall include, but
shall not be limited to, counsel fees and disbursements and the term
"liabilities" shall include, but shall not be limited to, judgments, fines,
penalties and amounts paid in settlement. The termination of any action, suit or
proceeding, civil or criminal, by judgment, order, settlement (whether with or
without court approval) or conviction or upon a plea of guilty or of nolo
contendre, or its equivalent, shall not, of itself, create a presumption that a
director, officer, employee or agent did not meet the standards of conduct set
forth in this Section.
2. Every person referred to in Section 1 hereof who has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Section 1 hereof, or in defense of any claim, issue or
matter therein, shall be deemed to have met the standards of conduct set forth
therein and shall be entitled to indemnification as of right. Except as provided
in the preceding sentence, any indemnification under Section 1 hereof (unless
ordered by a court) shall be made at the discretion of the Corporation, but only
if the determination that the standards of conduct set forth therein have been
met by the person seeking indemnification hereunder is made by either (i) the
Board of Directors, acting by a majority vote of a quorum consisting of
directors who (a) are not parties to such action, suit or proceeding or (b) have
been wholly successful in such respect of such action, suit or proceeding or
(ii) independent legal counsel in a written opinion.
3. Expenses incurred in depending a civil or criminal action,
suit or proceeding may be paid by the Corporation, in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the person to be indemnified to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation.
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4. The rights of indemnification and advancement of expenses
provided in this Article shall be in addition to any rights to which any person
referred to in Section 1 hereof may otherwise be entitled by law or under any
by-law, agreement, vote of stockholders or disinterested directors, or
otherwise, and such rights shall inure to the benefit of his heirs, executors
and administrators.
5. To the extent permitted by law, the foregoing provisions of
this Article shall be applicable to every person (and the heirs, executors and
administrators of such person) who is or was a director, officer, employee or
agent of any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger involving the Corporation, as
well as the resulting or surviving corporation therefrom, and in any such case
the references to "the Corporation" in the foregoing provisions of this Article
shall include, in addition to the Corporation, any such constituent corporation
or any such resulting or surviving corporation, as the case may be.
6. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of any other company, against any liability
or expense asserted against or incurred by him in any such capacity, or arising
out of his status as such, whether or not the Corporation would have the power
to indemnify him against such liability or expense under the provisions of this
Article or otherwise.
ARTICLE XIII - AMENDMENT
The by-laws, regardless of whether made by stockholders or by
the Board of Directors, may be amended, added to or repealed, or new by-laws may
be made, at any meeting of the stockholders, or (except such by-laws or such
amendments as shall have been adopted by the stockholders and at the time of
such adoption expressly designated as revocable only by the stockholders) at a
meeting of the Board of Directors, provided that notice of the proposed change
(unless waived as herein provided by a waiver or presence at the meeting) be
given in notice of the meeting.
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