<PAGE>
As filed with the Securities and Exchange Commission on August 10, 1999
Registration No. 333-77091
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
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)
--------------------
GEORGE W. CALVER
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)
--------------------
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>
--------------------
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.[ ]
--------------------
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 $278.00
=============================================================================================================================
</TABLE>
(*) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457 under the Securities Act of 1933.
(**) The registration fee has been previously paid.
<PAGE>
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.
<PAGE>
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
---------------------------
The certificates represent
obligations of the trust
only and do not represent
interests in or obligations
of Bombardier Credit
Receivables Corporation,
Bombardier Capital Inc. or
any of their affiliates. The
certificates will not be
insured or guaranteed by
any governmental agency.
INVESTING IN THE
CERTIFICATES INVOLVES RISKS.
YOU SHOULD CONSIDER
CAREFULLY THE INFORMATION
UNDER THE CAPTION "RISK
FACTORS" BEGINNING ON
PAGE __.
The certificates will represent interests in a pool of receivables due
from dealers of consumer, recreational and commercial products under
financing arrangements.
<TABLE>
<CAPTION>
Class A Class B Total
<S> <C> <C> <C>
Initial certificate
balance $__________ $__________ $_________
Certificate rate Libor + ___% Libor + ___% __________%
Price to public $__________ $__________ $_________
Underwriting
discounts and
commissions __________% __________% $_________
Proceeds to
depositor __________% __________% $_________
First interest
payment date [Sept. 15], 1999 [Sept. 15], 1999
</TABLE>
The interest rates for the certificates for any interest period will be the
variable rates shown above, subject to a maximum interest rate, as
described in this prospectus under "Description of the
Certificates -- Distributions from the Collection Account; Reserve Fund;
Principal Account." The price to public will include any accrued interest
at the applicable certificate rate from ____________, 1999. The proceeds
are calculated before deducting expenses payable by the depositor which are
estimated to be $700,000.
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.
<PAGE>
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. Bombardier Credit Receivables Corporation has 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. Bombardier
Credit Receivables Corporation is not offering these certificates in any state
where the offer is not permitted.
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.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary.......................................................................................... 5
Risk Factors................................................................................................ 11
The Depositor and the Trust................................................................................. 21
The Depositor...................................................................................... 21
The Trust.......................................................................................... 22
Use of Proceeds............................................................................................. 23
The Floorplan and Asset-Based Financing Business ........................................................... 23
General .......................................................................................... 23
Creation of the Receivables........................................................................ 26
Credit Underwriting Process and Security........................................................... 27
Payment Terms...................................................................................... 29
Billing and Collection Procedures.................................................................. 30
Revenue Experience................................................................................. 30
Relationship with Manufacturers, Importers and Distributors........................................ 31
Monitoring......................................................................................... 33
Collection Activity................................................................................ 34
Participation Arrangements......................................................................... 35
The Accounts................................................................................................ 35
General .......................................................................................... 35
Historical Size.................................................................................... 39
Delinquency........................................................................................ 40
Loss Experience.................................................................................... 40
Product Mix........................................................................................ 41
Aging Experience................................................................................... 44
Geographic Distribution............................................................................ 45
Bombardier Capital Inc...................................................................................... 46
Maturity and Principal Payment Considerations............................................................... 47
Description of the Certificates............................................................................. 49
General .......................................................................................... 49
Interest .......................................................................................... 50
Principal.......................................................................................... 51
Extension of Initial Principal Payment Date........................................................ 53
Book-entry Registration............................................................................ 53
Definitive Certificates............................................................................ 57
Retained Interest and Variable Funding Certificate................................................. 58
New Issuances...................................................................................... 60
Supplemental Certificate........................................................................... 62
Conveyance of Receivables and Collateral Security.................................................. 63
Representations and Warranties..................................................................... 64
Eligible Accounts and Eligible Receivables......................................................... 67
Ineligible Receivables............................................................................. 70
Addition of Accounts............................................................................... 70
Removal of Accounts and Assignment of Receivables.................................................. 72
Credit Support for the Certificates................................................................ 75
Collection Account................................................................................. 75
Excess Funding Account............................................................................. 75
Allocation Percentages............................................................................. 76
Deposits in Collection Account..................................................................... 79
Daily Allocations.................................................................................. 80
Limited Subordination of Retained Interest......................................................... 81
Distributions from the Collection Account; Reserve Fund; Principal Account......................... 84
Discount Option................................................................................... 88
Defaulted Receivables and Recoveries.............................................................. 89
Investor Charge-Offs.............................................................................. 90
Optional Repurchase............................................................................... 90
Early Amortization Events......................................................................... 90
Termination....................................................................................... 94
Indemnification................................................................................... 95
Collection and Other Servicing Procedures......................................................... 96
Servicer Covenants................................................................................ 97
Servicing Compensation and Payment of Expenses.................................................... 98
Matters Regarding the Servicer.................................................................... 98
Servicer Default.................................................................................. 99
Reports ........................................................................................ 100
Evidence as to Compliance........................................................................ 102
Amendments....................................................................................... 102
List of Certificateholders....................................................................... 103
The Trustee...................................................................................... 104
Description of the Receivables Purchase Agreement......................................................... 104
Sale and Transfer of Receivables................................................................. 105
Representations and Warranties................................................................... 106
Covenants........................................................................................ 107
Termination...................................................................................... 107
Material Legal Aspects of the Receivables................................................................. 107
Transfer of Receivables and Certificates......................................................... 107
Material Matters Relating to Bankruptcy.......................................................... 110
Material Federal Income Tax Consequences.................................................................. 112
Characterization of the Certificates and the Trust............................................... 112
Possible Characterization of the Trust as a Partnership.......................................... 113
Possible Characterization of the Trust as a Corporation.......................................... 113
Taxation of Interest Income to Certificateholders................................................ 114
Sale or Exchange of Certificates................................................................. 115
Foreign Investors................................................................................ 115
Information Reporting and Backup Withholding..................................................... 116
State and Local Taxation......................................................................... 116
Underwriting.............................................................................................. 117
Legal Matters............................................................................................. 118
Where You Can Find More Information....................................................................... 118
Reports to Certificateholders............................................................................. 119
</TABLE>
3
<PAGE>
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 by 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 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: $[300,000,000] $[20,339,000]
Certificate rate: LIBOR + __% LIBOR +__%
Ratings
(S&P/Moody's): AAA/Aaa _________
First interest
payment date: [Sept. 15, 1999] [Sept. 15, 1999]
Scheduled principal
payment date: __________ _________
Legal final
payment date: __________ _________
</TABLE>
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. ] Bombardier Credit Receivables
Corporation's address is P.O. Box 5544, Burlington, Vermont 05402 and its
telephone number is (802) 655-2824. See "The Depositor and the Trust -- The
Depositor" in this prospectus.
Servicer: Bombardier Capital Inc. services 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 by inventory security 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 receivables generated in removed accounts or ineligible accounts,
receivables removed from the trust from time to time and any undivided
interest in the receivables that has been transferred to a third party;
4
<PAGE>
all funds collected or to be collected with respect of the receivables;
all funds on deposit in all accounts of the trust, including the reserve
funds, the excess funding accounts, 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 any enhancement for another series; and
an assignment of any security interests in] 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.
Bombardier Credit Receivables Corporation may, at its option, add accounts to
the trust including accounts established in connection with the extension of
credit to dealers to finance working capital needs and to manufacturers and
distributors to finance the production, manufacturing and inventory of consumer,
recreational and commercial products. If receivables in the trust fall below
required levels, Bombardier Credit Receivables Corporation may be required to
designate additional accounts. 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 designated accounts during the term of the
trust will be transferred by Bombardier Credit Receivables Corporation 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 [___________]. Bombardier Credit Receivables Corporation
has summarized information concerning the outstanding prior series in Annex I to
this prospectus. Annex I is hereby incorporated by reference into this
prospectus. Bombardier Credit Receivables Corporation may cause the trust to
issue one or more new series of investor certificates. See "Description of the
Certificates--New Issuances."
Distribution Date
All distributions on your certificates will be made on the 15th day of each
month with the first interest distribution to be made on [September 15], 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 principal payments to
you.
The certificates will be in the revolving period from the issuance date to
[DATE] unless an initial amortization period or early amortization period
occurs. During the revolving period, principal collections allocable to your
certificates will generally be allocated to the BCRC Certificate, the excess
funding account or other outstanding series.
The certificates will be in the controlled accumulation period from [DATE] to
the date which you have received all payments due to you, unless an initial
amortization period or early amortization period occurs. During the
controlled accumulation period, in each month a specified amount of principal
collections allocable to your certificates will be deposited into the
principal
5
<PAGE>
account until the amount on deposit is sufficient to pay the principal amount
on your certificates.
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 specified triggering events occur
with respect to the trust assets, the servicer or to Bombardier Credit
Receivables Corporation. See "Description of the Certificates--Early
Amortization Events" for a discussion of these triggers.
During either the initial amortization period or an early amortization period,
principal collections allocable to your certificates will be deposited into the
collection account for distribution as principal payments on your certificates,
until the outstanding principal balance of your certificates has been reduced to
zero or until the __________ distribution date. Under limited circumstances an
early amortization period may end and the revolving period, the initial
amortization period or controlled accumulation period will begin. See
"Description of the Certificates--Early Amortization Events."
Allocations of Collections of Receivables and Defaulted Receivables
Varying percentages of non-principal collections, principal collections and
defaulted receivables for each calendar month will be allocated to Series
1999-1. See "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 daily based on the floating allocation percentage. 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 by the total principal amount of receivables
in the trust as of that day.
During the revolving period principal collections allocable to the Series 1999-1
Certificates and not necessary for any deposit or payment with respect 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,"; "Deposits in Collection Account,"
"--Limited Subordination of the Retained Interest" and "--Distributions from the
Collection Account; Reserve Fund; Principal Account."
During the controlled accumulation period 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 principal 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
[September 15], 1999. The certificates will accrue interest beginning on the
preceding distribution date to but excluding the distribution date on which this
interest is due. In the case of the first distribution date, interest will
accrue beginning on ____________, 1999 to but excluding the first distribution
date. Interest will be calculated based on the actual number of days
6
<PAGE>
elapsed during the related interest period and a 360-day year.
Subject to a variable cap,
the Class A certificate
rate will equal: LIBOR + ___%
Subject to a variable cap,
the Class B certificate
rate will equal: LIBOR + ___%
The trustee will calculate LIBOR as described in "Description of the
Certificates--Interest". 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 rate. You may be reimbursed for any reduction due to this cap
on subsequent distribution dates 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 available retained
collections which are a portion of the collections allocated to the BCRC
Certificate. See "Description of the Certificates--Interest."
Principal Payments
Bombardier Credit Receivables Corporation expects the Class A certificates to
receive one principal distribution equal to the full principal amount of the
Class A certificates on the _________ distribution date.
Bombardier Credit Receivables Corporation expects 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
as described in "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 that account will be made available for payment on the
Series 1999-1 Certificates as described under "Description of
Certificates--Credit Support for the Certificates--Excess Funding 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 other amounts allocable to other series during
any amortization or accumulation
7
<PAGE>
period to the extent they are not needed to make payment with respect to these
other series, may be applied as principal distributions or principal
accumulation on your certificates. See "Description of the
Certificates--Allocation Percentages--Principal Collections for all Series."
Credit Enhancement
Retained Interest: A portion of the collections allocated to the interest in the
trust represented by the BCRC Certificate retained by Bombardier Credit
Receivables Corporation will be available 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."
If the non-principal collections, investment proceeds, amounts in the reserve
fund and 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;
the amount of overdue interest and the interest due on this amount, if any;
the net servicing fee;
any allocations to the Series 1999-1 Certificates of defaults on the
receivables; and
any amounts required to be paid by Bombardier Credit Receivables
Corporation with respect to adjustments to the balances of the receivables,
a portion of the collections allocated to the retained interest represented by
the BCRC Certificate will be applied to make up the deficiency.
Collections of receivables are allocated to our interest as well as to the
interests in the trust owned by you and other holders of investors'
certificates. A portion of the amounts allocated to our retained interests is,
however, subordinated and, if needed will be diverted to make payments on the
investors' certificates. The portion of our interest, which is subordinated, is
the available subordinated amount.
It is expected that the available subordinated amount for the first distribution
date will be no less than $[18,643,730]. The available subordinated amount for
subsequent distribution dates will fluctuate as described under "Description of
the Certificates--Limited Subordination of the Retained Interest."
Subject to 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;" "--Available Subordination
Amount."
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 date the
certificates are issued, Bombardier Credit Receivables Corporation will deposit
in the reserve fund an amount no less than $[1,601,695]. Any amounts on deposit
in the reserve fund will be withdrawn to make payments [of interest] on the
Series 1999-1 Certificates , 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. 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
8
<PAGE>
The material tax consequences to you are described under "Material Federal
Income Tax Consequences." As more fully set forth in that section, Morgan,
Lewis & Bockius LLP, special U.S. tax counsel to the depositor and trust, is of
the opinion that, although no transaction closely comparable to the issuance of
the certificates has been the subject of any Treasury regulation, public ruling
or judicial decision, for federal income tax purposes, the certificates will be
characterized as indebtedness of the depositor secured by the Receivables, and
the trust will be treated as a mere security device and will not be subject to
tax. You will agree by accepting the certificates to treat the certificates as
debt for federal income tax purposes.
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
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."
9
<PAGE>
Risk Factors
The Certificates May Lack Liquidity Which May Limit Your Ability to Sell Your
Certificates
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.
You May Not Receive Payments Of Your Certificates When You Expect Or Your
Payments May Be Reduced If The Transfer of Receivables To The Trust Is Not
Considered A Sale In The Event Of Bankruptcy
Bombardier Capital Inc. will treat the sale of the receivables to
Bombardier Credit Receivables Corporation as a sale and Bombardier Credit
Receivables Corporation will treat the transfer of the receivables to the trust
as a sale. Furthermore, the trust has been created to be bankruptcy remote from
Bombardier Capital Inc. However, in the event that Bombardier Capital Inc.
or Bombardier Credit Receivables Corporation or one of their 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 losses 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.
Delayed Funding Receivables May Not Be Collectible If Bombardier Capital Inc.
Does Not Pay Manufacturers Thus Increasing The Risk Of Loss On Your Certificates
Bombardier Credit Receivables Corporation sells 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 pay the
manufacturer, importer or distributor. If for this or any other reason
Bombardier Capital Inc. does not pay, the unfunded receivables may not be
collected from the dealer and 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 these receivables. This could cause
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a loss on your certificates. See "The Floorplan and Asset-Based Financing
Business -- Creation of the Receivables."
The Possibility Of Bankruptcy Events Related To Bombardier Capital Inc. Or
Bombardier Capital Receivables Corporation And The Uncertain Timing Of Obligor
Repayments Render The Life Of Your Certificates Uncertain And Therefore You May
Receive Principal On Dates Other Than When You Anticipate
Early amortization events will cause the revolving period of the trust
to end and collections of principal to be used to amortize certificates issued
by the trust. An early amortization event may cause you to receive principal
payments sooner than you anticipate. Thus you could lose the right to future
payments of interest, and might suffer reinvestment loss in a lower interest
rate environment. If bankruptcy events related to Bombardier Capital Inc. or
Bombardier Credit Receivables Corporation were to occur, then an early
amortization event would occur and additional receivables may no longer be
transferred to the trust. Therefore in the event of a bankruptcy of Bombardier
Credit Receivables Corporation or Bombardier Capital Inc. the timing of
principal payments to you may be subject to the actions of a bankruptcy trustee,
receiver or conservator. See " Material Legal Aspects of the
Receivables--Transfer of Receivables and Certificates" and "--Material Matters
Relating to Bankruptcy."
Domestic inventory receivables are generally payable by dealers either
upon the sale by the dealer of the product or, in some cases, in accordance with
a payment schedule. 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. Because
payment of principal on the certificates is dependent on obligor repayments, the
certificates may not be fully amortized on ___________. This could delay the
return of principal on your certificates thus extending their maturity and
increasing their exposure to losses in the trust. See "Description of the
Certificates--Termination."
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
and your receiving principal sooner than you expect.
State And Federal Law May Limit The Abilities Of The Servicer To
Realize On Receivables Thus Causing Losses On Your Certificates
Application of federal and state bankruptcy and debtor relief laws
could affect your interest in the receivables if these or similar laws result in
any receivables being reduced or written off as uncollectible or result in
delays in payments due on these receivables. See "Description of the
Certificates--Defaulted Receivables and Recoveries."
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If a Dealer Fails To Remit Amounts Owed For Sold Products The Servicer May Fail
To Realize On The Receivables Thus Causing Losses On Your Certificate
Bombardier Capital Inc. and Bombardier Credit Receivables Corporation
represent and warrant that each eligible domestic inventory receivable
originated by an inventory security agreement is at the time of creation secured
by a first priority perfected security interest in the related product.
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 these security interest in the related eligible products.
However, at the time any of these products is sold by the dealer, the security
interest in the product will terminate. Therefore, if a dealer fails to remit
amounts owed for products that have been sold, the related receivables will no
longer be secured by those products.
If asset-based receivables are added to the trust, they 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 related obligor.
In the event that asset-based receivables are secured by assets that are
subsequently sold by an 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
Thus Limiting Your Ability To Assess Your Risk Of Loss On Your Certificates
Bombardier Credit Receivables Corporation expects and in some cases
will be obligated, to designate additional accounts, the receivables in which
will be conveyed to the trust. Although these 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. In addition, there
is no limitation on the number of additional accounts which may be delinquent.
These additional accounts may also provide financing for types of products
different from those currently included in the trust and if the required
conditions are met, 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. On the date of the issuance of the
certificates no more than 5% of the accounts in the trust will be different
from those described in this prospectus.
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Bombardier Capital Inc. Has Limited Experience With Asset-Based Receivables
Thus Limiting Your Ability To Assess Your Risk Of Loss On Your
Certificates
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 performance characteristics with respect to these
additional accounts may be different from the accounts currently held by the
trust. There can be no assurance that the performance characteristics 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.
Social, Economic And Other Factors May Cause Dealers To Be Unable To Sell
Products Securing Receivables Causing Losses On Receivables And Thus Your
Certificates Or Accelerating Payments Of Principal To You
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 like 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, thus
increasing the risk of loss on your certificates. Similar issues relate to the
asset-based receivables.
If Bombardier Credit Receivables Corporation And Bombardier Capital Inc. Are
Unable To Generate And Transfer Sufficient Receivables To The Trust You Will
Receive Principal Sooner Than You May Expect
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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
receivables from the trust due to the failure to comply with specific covenants
or the breach by Bombardier Credit Receivables Corporation or Bombardier Capital
Inc. of representations and warranties, as described below and under
"Description of the Certificates--Representations and Warranties" and
"--Servicer Covenants," and other than affiliate support agreements relating to
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 as well as competition from other financing sources. There can
therefore be no assurance that Bombardier Capital Inc. will continue to generate
receivables at the same rate as in prior years. If sufficient sales do not occur
an amortization event may occur and you could receive principal sooner than you
expect. Thus you could lose the right to future payments of interest, and might
suffer reinvestment loss in a lower interest rate environment. See "Maturity and
Principal Payment Considerations."
Your Certificates Have Limited Credit Enhancement Increasing The Risk Of Loss On
The Certificates
Credit enhancement of the certificates will be provided by a fraction
of the retained interest and by amounts in the reserve fund. The Class A
certificates will also have the benefit of the subordination of the Class B
certificates. The amount of credit enhancement is limited and will be reduced
from time to time as described in this prospectus. See "Description of the
Certificates--Allocation of Collections; Deposits in Collection Account; Limited
Subordination of the Retained Interest."
Subordination Increases Risk Of Loss On Class B 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 reductions of this
type 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 Increasing The Risk That You Will Not
Receive All Payments Due To You
Funds, if any, deposited in the excess funding account will be subject
to specified 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
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which funds are on deposit in the excess funding account, these 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 Actions
With Respect To The Trust Beneficial To You
The consent or approval of the holders of a specified percentage of all
outstanding certificates of all outstanding series will be required to permit or
to take specified actions that affect all series, including amending the
agreement which created the trust in some circumstances and directing a
reassignment of the entire portfolio of the receivables. In addition, following
the occurrence of an insolvency event of Bombardier Credit Receivables
Corporation or an early amortization event as a result of Bombardier Credit
Receivables Corporation's violating its 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 the trustee not to sell or otherwise
liquidate the receivables .
Existence Of Other Series Of Certificates May Affect When You Receive Principal
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.
There can be no assurance 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 Limitation Which May
Limit The Interest You Receive
For each interest period, your certificates will bear interest at a
rate equal to the lesser of the net receivables rate and LIBOR plus __%, for
Class A certificates, or the net receivables rate and LIBOR plus __%, for Class
B certificates. The net receivables rate is determined based upon the weighted
average interest rates borne by the receivables in the trust less 2% if
Bombardier Capital Inc. is the servicer and less 3% if Bombardier Capital Inc.
is not the servicer. Fluctuations in interest rates, particularly reductions in
the yield on the receivables in the trust or increases in LIBOR without
corresponding increases in the yield on the receivables in the trust may result
in limitations on the rate of interest paid on your certificates.
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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 April 30, 1999, from -1.0% to 8.5%. Movements in LIBOR and in the
prime rate are not always equivalent. Also, Bombardier Capital Inc. may, at any
time, reduce the interest rates applicable to any of the receivables.
Furthermore, as of April 30, 1999, approximately 0.46% 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 limitation
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 interest due 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 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 it 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 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 And 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
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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 Of Loss On Your
Certificates
As of April 30, 1999, approximately 9.29%, 8.64%, 8.61%, 7.17%, 6.12%
5.26% and 4.42% of the obligors under the receivables by aggregate principal
balance as of the cut-off date were located in the States of Texas, Florida,
North Carolina, Georgia, California, Arizona and South Carolina, 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 these states. Because a material
percentage of the obligors are located in the southern states of the United
States, an economic downturn in that region may have a disproportionately
material adverse effect on the receivables and your certificates.
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 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.
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Additionally, The Depository Trust Company's plan includes a testing phase,
which is expected to be completed within appropriate time frames. Bombardier
Credit Receivables Corporation 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. The 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 their services being year
2000 compliant; and
determine the extent of their efforts for year 2000
remediation, and, as appropriate, testing, of their services.
In addition, The Depository Trust Company has stated that it is in the process
of developing these 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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Capitalized Terms
For purposes of clarity, a number of terms used in this prospectus have
been assigned specialized definitions. These terms appear throughout this
prospectus as capitalized words and phrases. Definitions for these terms may be
found in the glossary at the back of this prospectus.
Forward-Looking Statements
In this prospectus, Bombardier Credit Receivables Corporation uses
forward-looking statements. These forward-looking statements are found in the
material, including each of the tables, set forth under "Risk Factors" and
"Maturity and Principal Payment Considerations." Forward-looking statements are
also found elsewhere in this prospectus and include words like "expects,"
"intends," "anticipates," "estimates" and other similar words. These statements
are inherently subject to a variety of risks and uncertainties. Actual results
differ materially from those we anticipate due to changes in, among other
things:
economic conditions and industry competition;
political, social and economic conditions;
the law and government regulatory initiatives; and
interest rate fluctuations.
Bombardier Credit Receivables Corporation will not update or revise any
forward-looking statements to reflect changes in its expectations or changes in
the conditions or circumstances on which the statements were originally based.
Origination of Receivables
Bombardier Capital Inc. provides floorplan financing to dealers for
eligible products. The dealers are obligated to repay BCI for advances made by
BCI to or for the benefit of the dealer. The dealers are also obligated to pay
interest on the advances to the extent required by the agreement with BCI. In
addition to dealer floorplan financing originated directly by BCI, BCI also
acquires dealer floorplan accounts and the receivables therein originated by
affiliates of BCI or by nonaffiliated entities. BCI has selected accounts from
its portfolio and sold or contributed the receivables in the selected accounts
to Bombardier Credit Receivables Corporation as the depositor under the terms of
a Receivables Purchase Agreement between BCI and the depositor. The Receivables
Purchase Agreement is dated as of January 1, 1994 and was amended as of January
1, 1997 by Amendment Number 1. BCI expects that it will, from time to time,
select additional accounts and sell or contribute the receivables in the
additional accounts to the depositor.
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BCI also provides asset based financing. Asset based financing refers
to loans made to dealers to finance working capital needs and loans made to
manufacturers and distributors to finance manufacturing, production or inventory
of consumer, recreational or commercial products. The Receivables Purchase
Agreement permits BCI to sell or contribute to the depositor receivables arising
from asset-based loans. The Pooling and Servicing Agreement also permits
asset-based receivables to be included in the trust. The Pooling and Servicing
Agreement includes conditions which must be met before asset-based receivables
can first be included in the trust. As of the date of this prospectus, no
asset-based receivables have been added to the trust.
The Depositor and the Trust
The Depositor
Bombardier Credit Receivables Corporation is the depositor to the
trust. The depositor is a wholly-owned subsidiary of BCI and an indirect
wholly-owned subsidiary of Bombardier Inc. The depositor was incorporated on
November 9, 1993. The depositor was organized for limited purposes. The purposes
include purchasing receivables, beneficial ownership interests and participation
interests in receivables, debt obligations secured by receivables and other
forms of indebtedness and transferring these receivables, interests, debt
obligations and indebtedness to third parties. The purposes also include
activities incidental to and necessary or convenient for the accomplishment of
the primary purposes.
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 United States bankruptcy code or other bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally 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. The depositor's certificate of
incorporation contains limitations on the nature of the depositor's business 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 requires that
at least two of its directors 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 other statutory liabilities, like liabilities to
the Pension Benefit Guaranty Corporation relating to the underfunding of pension
plans of Bombardier Inc. or any of
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its subsidiaries including Bombardier Corporation and BCI, can be asserted
against the depositor. To the extent that these or similar 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
of these 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.
The Trust
The trust is the Bombardier Receivables Master Trust I. It was formed
under, and is administered in accordance with, the laws of the State of New York
by the Pooling and Servicing Agreement. The depositor conveys the Receivables to
the trust, without recourse.
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 . 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 Receivables existing in the Additional Accounts added since
the issuance of the Series 1994-1 Certificates as set forth in Annex II hereto
- --which is hereby incorporated by reference into this prospectus--and all
Receivables generated in the Accounts after the applicable cut-off date 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:
(1) Receivables generated in Removed Accounts after the date on which
the transfer of these Receivables has ceased or Receivables generated in
Ineligible Accounts after the removal of these Receivables has begun;
(2) Receivables removed from the trust, and
(3) 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."
In addition to the Receivables, the property of the trust includes:
the security granted to secure the Receivables;
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the depositor's rights, remedies, powers and privileges in the
Receivables under the Receivables Purchase Agreement; except
any repurchase or other agreements with manufacturers,
importers or distributors relating to the obligors;
all funds collected or to be collected in respect of
Receivables;
all funds on deposit in the Collection Account and the
accounts established with respect to any series issued by the
trust; 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 enhancement issued for the benefit of any
other series. See "Description of the Certificates--Addition
of Accounts."
The holders of the Series 1999-1 Certificates will not have any
interest in any series accounts created for other series and 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 like the Series 1994-1 Certificates, the Series 1996-1
Certificates, the Series 1997-1 Certificates, the 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 in this prospectus, but rather will only
acquire and hold the Receivables and the other assets of the trust and proceeds
therefrom, issue the Series 1999-1 Certificates, other series of investor
certificates, the BCRC Certificate and the Variable Funding Certificate, 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.
Use of Proceeds
The net proceeds from the sale of the Certificates will be paid to the
depositor, which will use these 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.
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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
pool of receivables which are assets of the trust consists solely of Domestic
Inventory Receivables. The pool may, in the future, include Asset-Based
Receivables as provided in this section. The descriptions below of practices and
procedures apply to current practices and procedures; these practices and
procedures may change over time. The descriptions below set forth practices with
respect to Domestic Inventory Receivables and Asset Based Receivables under
separate headings when these practices are materially different.
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 the obligors' businesses. In some
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 these types of
arrangements, are expected to change over time, and the relative proportions of
the various 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 designation of Additional Accounts
and the addition of Asset-Based Receivables are subject to satisfaction of
conditions described under "Description of the Certificates--Addition of
Accounts."
The entities to which credit is extended are the obligors. The obligors
include entities engaged in the business of purchasing Eligible Products from a
manufacturer, importer or distributor for sale in the ordinary course of
business and entities that are manufacturers, importers or distributors of
Eligible Products.
Currently, the Receivables sold to the depositor consist solely of
Domestic Inventory Receivables. The Receivables may, however, at the option of
BCI and the depositor subject to conditions specified in the Pooling and
Servicing Agreement, also consist of Asset-Based Receivables. The depositor is
under no obligation to cause Asset-Based Receivables to be included in the
trust. The types of products covered by Domestic Inventory Receivables and
Asset-Based Receivables may change over time, however, any Receivable in the
trust will be denominated in U.S. dollars and will be due from a dealer located
in the United States.
BCI services the Domestic Inventory Receivables, and expects to service
the Asset-Based Receivables, through its executive offices in Colchester,
Vermont.
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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 the trust.
Domestic Inventory Receivables
The Domestic Inventory Receivables are secured by the products financed
by BCI for these dealers and occasionally by, among other things, 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 inventory,
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 these 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 the relevant manufacturer's,
importer's or distributor's dealers. In some cases, BCI has in the past offered,
and BCI may in the future offer, attractive financing rates in order to obtain
captive financing arrangements with some manufacturers, importers or
distributors.
As of April 30, 1999, the loans in the BCI Domestic Inventory Portfolio
were outstanding to 4,036 obligors. As of April 30, 1999, no single obligor
represented more than 3% of the BCI Domestic Inventory Portfolio or 2.72% of the
Receivables in the Trust.
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:
(1) recreational products manufactured by Bombardier Inc. like
Ski-Doo'r' snowmobiles, Sea-Doo'r' personal watercraft,
sport boats, neighborhood vehicles and all-terrain vehicles
and related parts and accessories;
(2) marine products, like boats, motors and trailers, which are
not Bombardier Inc. products;
(3) manufactured housing;
(4) recreational vehicles, trailers and campers and specialty
vehicles; and
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<PAGE>
(5) other recreational and consumer products not manufactured by
Bombardier Inc.
BCI is in the process of developing financing opportunities which may
include those involving consumer electronics and appliances, machine tools and
keyboard musical instruments. As of April 30, 1999, BCI was providing inventory
financing to approximately 4,036 dealers located throughout the United States
for products sold by approximately 645 manufacturers and distributors. BCI
expects to expand the type of products for which it provides domestic inventory
financing in the future. As of April 30, 1999, approximately 25.84% based on
outstanding receivables or 19.29% based on financing volume for the three month
period ended April 30, 1999 of the Domestic Inventory Receivables in the BCI
Domestic Inventory Portfolio were attributable to products manufactured by
Bombardier Inc. or its subsidiaries.
Asset-Based Receivables
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.
The products for which BCI expects to provide dealer, manufacturer or
distributor financing giving 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 their production
and inventory of consumer, recreational and commercial products.
Creation of the Receivables
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 this
inventory to the financed dealers. BCI generally will advance funds directly to
the manufacturer, importer or distributor on behalf of the dealer.
In most 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 70 days for Eligible Products not
manufactured by affiliates of BCI, and ranging up to 30 days for Eligible
Products manufactured by affiliates of BCI, after the date of the invoices. Any
receivable that is funded on a delayed basis will be sold to, paid for by the
trust and included as a Receivable on the date it is added to the trust even
though it is not funded by BCI until a later date, namely, when BCI pays the
advance to the manufacturer in payment of the invoice price. A Receivable funded
on a delayed basis is included as an Eligible Receivable on or after the date
the product is shipped to the dealer for all purposes of the Agreement.
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<PAGE>
BCI and the manufacturer may also agree that BCI may discount the
invoice price of the inventory ordered by the dealer. Under this type of
arrangement, the manufacturer will deem itself paid in full upon receipt of the
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 this dealer from the relevant
manufacturer, importer or distributor, up to the credit limits established from
time to time for this dealer. BCI may limit or cancel this arrangement if the
dealer fails to perform its obligations under its 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 working capital needs and to 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, under
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 begins with a credit underwriting of
the manufacturer, importer or distributor. BCI attempts to obtain a repurchase
agreement from the manufacturer, importer or distributor. Under the repurchase
agreement, the manufacturer, importer or distributor 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
conditions which are contained in the agreements. For further discussion of
repurchase agreements, see "--Relationship with Manufacturers, Importers and
Distributors" below.
After this period, BCI may assist the relevant manufacturer, importer
or distributor, in preparing and distributing promotional material for the
purpose of encouraging all eligible and
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<PAGE>
credit worthy dealers of the relevant manufacturer, importer or distributor to
participate in the program. In some cases, the manufacturer, importer or
distributor is the primary promoter of the program offered by BCI.
When available, a list of dealers together with the recommended credit
line limits for these dealers is 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 this 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 in favor of BCI. Credit
limits are subject to different levels of management approval generally based on
the amount of the proposed credit limit.
Domestic inventory financing originated by BCI is documented by an
inventory security agreement providing for a security interest in favor of BCI
in all inventory of the dealer which was financed or floorplanned by BCI. The
agreements 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 the dealer and other matters relating to the dealer's
inventory and business and BCI's rights. The inventory security agreements
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
this insurance will not be transferred by BCI to the depositor, or by the
depositor to the trust, BCI has agreed under the Pooling and Servicing Agreement
to treat the insurance proceeds received by BCI as collections on the related
Domestic Inventory Receivables.
BCI holds a security interest in each item financed until it is sold by
the dealer. The inventory security agreements also require the dealer to take,
or assist BCI in taking, all actions 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 some 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 according to a payment schedule, the
inventory being financed may be sold before the scheduled payment date of the
related receivable. As a result, BCI would no longer hold a security interest in
the sold inventory.
BCI may also acquire receivables underwritten by third-party lenders.
Although these receivables may not arise in an account under an inventory
security agreement established by BCI, BCI will reunderwrite the account.
BCI maintains an active and ongoing relationship with the dealers to
whom it provides floorplan financing and reevaluates individual dealers' status:
27
<PAGE>
(1) prior to increasing a credit limit;
(2) at least bi-annually; and
(3) if a dealer is experiencing financial difficulties or is not
complying with its obligations under its inventory security
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, BCI may establish a dealer line of credit that would otherwise not
be granted on the strength of dealer credit alone if the manufacturer provides
additional security or recourse that BCI's management deems appropriate. See
"--Relationship with Manufacturers, Importers and Distributors."
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 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 like 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 like 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 so
that, upon any necessary collateral liquidation, BCI would fully recover any
principal dollars advanced on the revolving line of credit.
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.
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<PAGE>
BCI is entitled to receive repayment in full of the related loan upon sale
of the inventory for which floorplan financing has been provided unless the
dealer is permitted to participate in a scheduled payment program. 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 to some manufacturer's,
importer's and distributor's eligible dealers in limited instances where it is
impractical or not customary in the industry to require repayment upon sale .
These dealers may schedule the repayment of financed inventory over several
months, generally 90 to 180 days, whether sold or not. The first payment is
generally due 30 days from the invoice date and subsequent payments are
generally due each 30 days following the due date of the first payment. 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 some instances
interest on the amount advanced to the dealer. In some cases where there is a
scheduled payment program, there is no interest collected on the receivables,
since the advances were made at a discount from the face amount of the
receivables. See "Description of the Certificates--Discount Option."
Asset-Based Receivables.
Obligors on Asset-Based Receivables would be expected to be obligated to
pay interest on outstanding borrowings according to a schedule, which normally
would be expected to be monthly or quarterly. Principal payments and draws would
also be expected to be settled on a periodic basis, 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, that is, 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 mailed or otherwise transmitted to each dealer on a monthly
basis. Each dealer's statement is 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 those amounts are billed. Both interest and other non-principal charges
are billed in arrears. Where practical, dealers remit payments to bank lock
boxes. In cases where a manufacturer, importer or distributor is responsible for
a payment, like interest payments in specified situations, billing
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<PAGE>
goes to the manufacturer, importer or distributor. Exceptions to the procedures
described are made on a case by case basis with management approval.
Revenue Experience
Domestic Inventory Receivables.
BCI generally charges dealers interest at a floating rate determined by BCI
on each business day. BCI's policy is to charge a rate equal to the "prime rate"
designated in the "Wall Street Journal," plus a spread generally ranging from
- -1% 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
accounts included in the BCI Domestic Inventory Portfolio and the average prime
rate as of the end of each month have been averaged for the fiscal quarter ended
April 30, 1999 and 1998 and for the fiscal years ended January 31, 1999, 1998,
1997, 1996 and 1995 and are set forth in the chart below.
Average Spread and Prime Rate
<TABLE>
<CAPTION>
Three Months
Ended April 30 Year Ended January 31
-------------- ---------------------
1999 1998 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Average Spread
over Prime Rate 2.14% 3.44% 3.27% %3.67% 3.87% 3.98% 4.45%
Average Prime
Rate 7.75% 8.50% 8.29% %8.46% 8.25% 8.85% 7.34%
Spread plus Prime
Rate 9.89% 11.94% 11.56% 12.13% 12.12% 12.83% 11.79%
</TABLE>
There is seasonality in the level of outstanding accounts included in the
BCI Domestic Inventory Portfolio and in repayments of principal. Dealer
inventory financed by BCI 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
accounts included in the BCI Domestic Inventory Portfolio related to marine
products and Bombardier products. See "Maturity and Principal Payment
Considerations."
Relationship with Manufacturers, Importers and Distributors
Domestic Inventory Receivables.
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BCI's primary marketing focus is the manufacturer, importer or distributor
of the financed product. Affiliates of BCI manufacture products, including
Ski-Doo'r' snowmobiles, Sea-Doo'r' personal watercraft sport boats, neighborhood
vehicles and all-terrain vehicles, and related parts and accessories, which are
financed directly by BCI. These affiliate manufactured products represented in
the aggregate, as of April 30, 1999, approximately 25.84% of BCI's Domestic
Inventory Receivables Portfolio. With the exception of five independent
manufacturers who accounted, as of April 30, 1999, for approximately, 4.26%,
4.18%, 3.91%, 3.35% and 3.03%, respectively, of BCI's Domestic Inventory
Portfolio, no other manufacturer, importer, or distributor currently accounts
for more than 3% of BCI's Domestic Inventory 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 some 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 these cases, the
manufacturer, importer or distributor makes the interest 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 their products after a dealer defaults. In some cases, these
repurchase obligations lapse when an unsold product reaches a specified age. The
repurchase price to be paid to BCI is generally equal to the unpaid loan balance
with respect to the repossessed goods plus specified costs of repossession less
in some circumstances, a scheduled amount determined according to the age of the
repossessed goods. In some 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 some 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 these repurchase commitments may vary, both by industry and by
manufacturer, importer or distributor. In some 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.
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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, these agreements will, in
accordance with the Receivables Purchase Agreement, be assigned by BCI to the
depositor, but not by the depositor to the trust. BCI agrees under the Pooling
and Servicing Agreement to use reasonable efforts to collect on behalf of the
depositor under these agreements with manufacturers, importers and distributors
with respect to the Domestic Inventory Receivables, and the depositor and BCI
agree to treat these amounts as collections on the related Receivables and to
deposit all of these collections into the trust.
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 the 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 and the
credit line has not been withdrawn, approval will normally be given.
In order to ensure a dealer's compliance with the pay-as-sold program, BCI
periodically conducts audit inspections of dealers. In most cases, inventory is
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 that
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 audit may include:
(1) check the actual inventory;
(2) inspect products for signs of use or excessive wear and tear;
(3) spot check dealer sales orders with respect to manufactured housing
related receivables and spot check contracts pending with respect to
other receivables;
(4) complete condition reports on product that is materially worn or
damaged;
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<PAGE>
(5) inspect the dealer's place of business and report unusual conditions;
(6) attempt collection for principal as needed; and
(7) 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.
BCI Outsources Some Activities.
BCI has delegated some 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 delegation of this sort shall relieve BCI of its
responsibility as servicer with respect to these duties.
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 these instances, if the manufacturer, importer or distributor has
entered into a repurchase agreement, it is generally obligated under the
repurchase agreement to pay BCI the sum of the unpaid principal amount of the
Receivables with respect to the repossessed product plus some of the costs of
repossession and less, in some circumstances, 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
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<PAGE>
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 the 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 this inspection, a decision is generally made
either to extend the payment due date or to institute other collection measures.
Asset-Based Receivables.
If the obligor of an Asset-Based Receivable defaults, BCI will continue its
ongoing assessment of the obligor's financial condition and will determine its
best course of action for collection, including the possibility of immediate
liquidation of all collateral.
Charge-Off Policy.
BCI's historical charge-off policy regarding receivables included in the
BCI Domestic Inventory Portfolio is described under "The Accounts--Loss
Experience." Receivables are charged off with respect to the trust as described
under "Description of the Certificates--Defaulted Receivables and Recoveries."
Receivables will be charged-off in accordance with BCI's policies in effect from
time to time.
Participation Arrangements
From time to time BCI may permit other financing sources to participate in
some of its financing arrangements with obligors. In these cases, BCI will
convey a participation interest to these other financing sources by granting to
or transferring to them an undivided interest in the receivables, related
collateral security and other rights associated therewith. Any undivided
interest in receivables held by a participant is not part of the trust's assets
and does not provide credit support to your Certificates. The documentation for
the underlying line of credit will remain in the name of BCI, as lender and BCI
will be the servicer under this arrangement. In a separate contractual
arrangement with BCI, the holder of the Participation Interest will agree to
provide a portion of the funding for the 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. Subject to the Rating Agency
Condition being satisfied with respect to the form of the documentation under
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.
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<PAGE>
The depositor is permitted to cause the trust to transfer an undivided
interest in specified Receivables, related Collateral Security and other
associated rights included in the trust's assets to the depositor, which
afterwards may transfer the interest in the form of a Participation Interest
subject to the Rating Agency Condition being satisfied with respect to the form
of the documentation under which these Participation Interests are to be
granted. These interests are no longer part of the trust. The depositor has
caused interests in some receivables to be transferred to it from the trust and
the depositor has transferred these 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 in this prospectus. BCI and the depositor have the option, subject to
specified 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 their designation as Accounts. In order to be an Eligible
Account, each Account must meet 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 designated by BCI in accordance with the Receivables
Purchase Agreement to be included as Accounts will be designated by the
depositor as Accounts under the Pooling and Servicing Agreement and the
Receivables in the Accounts will be included as Receivables. 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 from which Receivables will be
transferred to the depositor.
As long as an Account is an Eligible Account, the Receivables in that
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.
35
<PAGE>
The Accounts under which the Domestic Inventory Receivables have been or
will be generated by BCI or an affiliate of BCI are evidenced by inventory
security agreements entered into by dealers with BCI to finance the purchase by
the dealers of inventory.
The accounts under which the Asset-Based Receivables will be generated,
which accounts may in the future also be included in the trust 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 their production, manufacturing and inventory of
consumer, recreational and commercial products. The terms of these revolving
credit arrangements would be generally between BCI or an affiliate of BCI and
the borrower and, therefore, no general form of financing agreement exists with
respect to the Asset-Based Receivables.
Under the Pooling and Servicing Agreement, the depositor has the right,
subject to specified 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 these Additional
Accounts, including Receivables created after this designation. These accounts
must meet the eligibility criteria to qualify as Eligible Accounts as of the
date these accounts are designated as Additional Accounts. Under the Receivables
Purchase Agreement, BCI will from time to time sell or contribute the
Receivables then existing, with some exceptions, or later created under the
Accounts and under any Additional Accounts to the depositor, which will transfer
these Receivables to the trust in accordance with 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 conditions specified in the Pooling and Servicing Agreement,
the depositor 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 trust, the Accounts from which the Receivables
arise will be the Accounts designated by the depositor on January 1, 1994 plus
any Additional Accounts, minus any Accounts removed from the trust.
Under the Pooling and Servicing Agreement, the servicer, which is expected
to be BCI, or any subservicer, which may include a BCI affiliate, may, subject
to specified conditions, change the terms relating to the Accounts and the
Receivables. See "Description of the Certificates--Collection and Other
Servicing Procedures."
36
<PAGE>
Information with respect to the accounts in the trust as of April 30, 1999
is set forth in the charts below. On the date of the issuance of the
certificates no more than 5% of the accounts in the trust will be different from
those described in this prospectus.
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>
$0 to $249,999 $67,513,584 6.31%
$250,000 to $499,999 $172,328,548 16.12%
$500,000 to $999,999 $286,096,770 26.76%
$1,000,000 to $15,000,000 $454,992,896 42.56%
$15,000,001 to $41,000,000 $88,170,418 8.25%
-----------------------------------------------------------------
Totals $1,069,102,216 100%
=================================================================
</TABLE>
Year Accounts Established
<TABLE>
<CAPTION>
Year Account Principal Amount of % of Receivables
Established: Receivables in Trust
- -------------------------------------------------------------------------------
<S> <C> <C>
1999 $71,213,973.40 6.66%
1998 $132,542,536.49 12.40%
1997 $105,638,577.28 9.88%
1996 $88,925,058.24 8.32%
1995 or earlier $670,782,070.81 62.74%
-------------------------------------------------------
Totals $1,069,102,216.22 100%
=======================================================
</TABLE>
As of April 30, 1999:
There were approximately 3519 Accounts which had been designated to the
trust.
Receivables in these Accounts had an aggregate principal balance of
approximately $1,112,500,000.
The average aggregate credit limit per Account was approximately
$559,908.
37
<PAGE>
The average principal balance of Receivables per Account was
approximately $320,059.
The aggregate principal balance of Receivables as a percentage of the
aggregate credit limits of these Eligible Accounts was approximately 57.16%.
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. which was formerly BCI
Recovery Inc. BCI Finance Inc. was incorporated in 1991 and 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 the depositor 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 in
"Historical Size", "Delinquency", "Loss Experience", "Product Mix", "Aging
Experience" and "Geographic Distribution" below may vary significantly over
time.
Historical Size
The 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 in the table below.
The following table sets forth information for the entire BCI Domestic
Inventory Portfolio on the aggregate fiscal year-end and April 30 outstanding
principal balances, average number of dealers financed, average month-end
outstanding principal balance per dealer on receivables and average volume per
dealer for each of the periods shown.
38
<PAGE>
Size of Portfolio
Size of Portfolio
BCI Domestic Inventory Portfolio
<TABLE>
<CAPTION>
April 30 January 31,
-------------------- --------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
-------------------- --------------------------------------------------------
(U.S. Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Outstanding Principal Balance........ 1,214,473 1,030,197 1,214,066 924,279 1,016,719 759,700 652,800
Average Number of Dealers............ 4,036 3,761 3,785 3,657 3,444 3,377 3,945
Average Month-End
Principal Balances PerDealer......... 308.48 265.16 239.63 249.58 233.11 184.90 131.80
Average Financing Volume
Per Dealer........................... 197.67 144.00 573.53 571.70 673.17 527.70 404.70
</TABLE>
The figures for outstanding principal balance and the average financing volume
per dealer in the table above reflect data for principal balance and number of
dealers existing as of the dates indicated. The figures for average number of
dealers for each of the fiscal years ended January 31 were calculated by taking
the average of the number of dealers at the beginning and end of that fiscal
year. The figures for average number of dealers for the fiscal quarters ended
April 30 reflect data for the number of dealers as of the end of that fiscal
quarter. The figures for average month-end principal balances per dealer
represent the average of the end of month averages of principal balance per
dealer over the course of the three month periods ending April 30 or the one
year periods ending January 31, as applicable.
Delinquency
The following table shows delinquency information for the BCI Domestic
Inventory Portfolio as of the dates shown.
39
<PAGE>
Delinquency Experience
BCI Domestic Inventory Portfolio
<TABLE>
<CAPTION>
April 30 January 31,
-------------------- --------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
-------------------- --------------------------------------------------------
(U.S. Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Outstanding Principal Balance........... $1,214.4 $1,030.1 $1,214.0 $924.2 $1,016.7 $759.7 $652.8
Delinquent Amount ...................... $ 6.17 $ 11.15 $ 8.84 $ 9.84 $ 4.97 $ 4.8 $ 9.6
Delinquent Amount/
Outstanding Principal Balance........... 0.5% 1.1% 0.7% 1.1% 0.5% 0.6% 1.5%
Allowance for Credit Losses on
Losses on BCI's Books................... $ 7.7 $ 15.52 $ 4.85 $13.22 $ 12.0 $ 9.7 $ 12.8
Allowance/Outstanding
Principal Balance....................... 0.6% 1.5% 0.4% 1.43% 1.18% 1.3% 2.0%
</TABLE>
The Delinquent Amount consists of the total principal on receivables which were
unpaid when due as a result of retail sale of the underlying product, that is,
sold out of trust, or were unpaid when due under a scheduled payment program and
with respect to which BCI determined that the payment was undercollateralized
after the due date plus the past due interest on these receivables to the extent
that the receivables are from an account which has past due interest of $1,000
or more. The percentage of outstanding receivables in the BCI Domestic Inventory
Portfolio 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 average principal
receivables balance reflects the average over the relevant period of the
principal balance in the BCI Domestic Inventory Portfolio at the end of each
month during that period. 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 in the table below.
40
<PAGE>
Loss Experience
BCI Domestic Inventory Portfolio
<TABLE>
<CAPTION>
Three Months
Ended April 30, Year Ended January 31,
---------------------- -----------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
---------------------- -----------------------------------------------------------
(U.S. Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Principal Receivables
Balance................................ $1,245.0 $977.3 $907.0 $912.7 $802.8 $624.4 $520.1
Net Losses............................. $ -0.17 $ 0.98 $ 12.7 $ 1.0 $ 1.8 $ 7.1 $ 0.7
Net Losses/Liquidations................ -0.03% 0.22% 0.61% 0.05% 0.09% 0.42% 0.04%
Net Losses/Average Principal -0.01% 0.10% 1.40% 0.11% 0.22% 1.13% 0.13%
Receivables Balance....................
</TABLE>
When reviewing the information in the immediately preceding table, you
should be aware that prior to January 1999, BCI's policy was to charge-off a
receivable based upon management discretion. Beginning in 1999, BCI's policy is
to charge off a principal receivable on or before 90 days after it is discovered
that the product related to that receivable was sold. The change in BCI's
charge-off policy increased the Net Losses, Net Losses/Liquidations and Net
Losses/Average Principal Receivables Balance for 1999. These figures were
negative for April 30, 1999 because recoveries on Receivables previously charged
off exceeded Net Losses. The figures set out under "Average Principal
Receivables Balance" indicate the average of the month-end outstanding principal
balances for the twelve months ending on the last day of the period. The figures
representing net losses in any period were derived by reducing gross losses by
recoveries for that period. Recoveries include recoveries from collateral
security in addition to the products.
See the last two paragraphs under "General" above.
Management Discussion and Analysis
Management believes that portfolio losses and delinquencies have not
deviated significantly over recent years. As noted in the preceding paragraph,
loss and recovery data were affected by Bombardier Capital Inc.'s change in
write-off policy. There can be no assurance that the delinquency and loss
experience on the portfolio will remain consistent with past performance. In
particular, a change in the current economic conditions could have a material
adverse effect on the assets in the trust. Some of the asset types in the trust
may be more sensitive to recessive cycles than others. In addition, unexpected
events may cause an increase in delinquencies and losses. For example, an
increase in the delinquency experience occurred in the first half of 1998
because of the adverse effect on several California dealers of a ban on the use
of personal watercraft on some waterways.
As may be observed from the average spread over prime data, the spread
over prime has decreased. This is known as rate compression and may adversely
affect the yield on the portfolio. Rate compression has occurred in part due
to increased price competition and consolidation in the wholesale finance
industry which can be expected to continue.
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.
41
<PAGE>
Outstanding Receivables
BCI Domestic Inventory Portfolio
<TABLE>
<CAPTION>
January 31,
-----------------------------------------------------------------------------------
Product 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Recreational
Products....................... $ 307,690,567 $ 336,030,779 $ 425,913,649 $291,465,014 $202,823,844
Marine Products
other than Bombardier
Products....................... $ 315,569,409 $ 339,873,244 $ 339,344,956 $270,099,808 $228,946,126
Manufactured Housing .......... $ 399,859,041 $ 130,011,993 $ 143,944,972 $119,500,029 $139,735,673
Recreational Vehicles.......... $ 99,460,273 $ 67,524,207 $ 57,682,597 $ 44,838,513 $ 40,149,670
Other.......................... $ 91,486,875 $ 50,839,216 $ 59,833,013 $ 33,823,269 $ 41,147,314
---------------------------------------------------------------------------------
Totals......................... $1,214,066,165 $ 924,279,439 $1,016,719,187 $759,726,633 $652,802,627
=================================================================================
</TABLE>
<TABLE>
<CAPTION>
April 30, April 30,
---------------------------------------
Product 1999 1998
- ---------------------------------------------------------------------
<S> <C> <C>
Recreational Products......... $ 313,893,215 $ 393,715,815
Marine Products other than
Bombardier Products........... $ 303,411,093 $ 333,268,340
Manufactured Housing ......... $ 381,568,582 $ 159,715,087
Recreational Vehicles......... $ 120,720,401 $ 78,421,506
Other......................... $ 94,880,707 $ 65,076,794
----------------------------------
Totals........................ $1,214,473,998 $1,030,197,542
==================================
</TABLE>
42
<PAGE>
Financing Volume
BCI Domestic Inventory Portfolio
<TABLE>
<CAPTION>
January 31,
-----------------------------------------------------------------------------------------------
Product 1999 1998 1997 1996 1995
- ---------------------- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Recreational
Products.............. $ 785,229,267 $ 966,826,316 $1,146,277,315 $ 837,613,268 $ 539,542,272
Marine Products other
than Bombardier
Products.............. $ 529,938,038 $ 485,264,014 $ 505,727,332 $ 434,175,608 $ 383,848,160
Manufactured
Housing .............. $ 475,987,545 $ 303,678,821 $ 345,244,048 $ 303,200,572 $ 447,885,641
Recreational
Vehicles.............. $ 177,719,671 $ 134,223,576 $ 121,753,617 $ 100,988,542 $ 87,033,102
Other................. $ 201,920,641 $ 200,713,551 $ 199,387,951 $ 106,127,093 $ 138,046,628
--------------------------------------------------------------------------------------------
Totals................ $2,170,795,162 $2,090,706,277 $2,318,390,263 $1,782,105,084 $1,596,355,804
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
April 30, April 30,
---------------------------------
Product 1999 1998
- ----------------------------------------------------------
<S> <C> <C>
Recreational Products.. $153,997,464 $215,787,473
Marine Products other
than Bombardier
Products.............. $133,637,955 $136,432,125
Manufactured
Housing .............. $379,199,432 $101,694,432
Recreational
Vehicles.............. $ 70,470,343 $ 40,304,853
Other................. $ 60,499,679 $ 47,348,946
------------------------------
Totals................ $797,799,872 $541,567,829
==============================
</TABLE>
43
<PAGE>
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'r'
snowmobiles, Sea-Doo'r' personal watercraft, sport boats, neighborhood vehicles
and all-terrain vehicles, and related parts and accessories.
Marine Products Other Than Bombardier Products
As of April 30, 1999, BCI provided inventory finance to approximately
1,370 dealers for purchases of the products of approximately 285 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.
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 April 30, 1999, BCI was financing approximately 723 dealers for
purchases of the products of approximately 116 manufacturers 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$203
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 specified trucks.
Other
BCI also provides inventory financing for motorcycles and hot tubs and
is currently developing other inventory financing opportunities. 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
specified used car dealers. To date, management has elected not to include these
assets in the trust.
See the last two paragraphs under "General" above.
Aging Experience
44
<PAGE>
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 Accounts designated to
the trust will comprise only a portion of the entire BCI Domestic Inventory
Portfolio, which also includes accounts which have not been designated to the
trust, actual age distribution with respect to the Accounts may be different.
Product Age Distribution
BCI Domestic Inventory Portfolio
<TABLE>
<CAPTION>
April 30, April 30, January 31,
------------------------ -----------------------------------------------------------
Days 1999 1998 1999 1998 1997 1996 1995
- --------------------- ------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1-120................ 47.2% 48.9% 52.93% 44.34% 58.50% 61.44% 64.79%
121-180.............. 16.9% 13.8% 14.04% 14.23% 13.42% 13.92% 14.25%
181-270.............. 15.5% 12.6% 11.52% 13.30% 11.26% 9.37% 8.95%
Over 270............. 20.4% 24.7% 21.05% 28.14% 16.83% 15.54% 12.01%
</TABLE>
See the last two paragraphs under "General" above.
Geographic Distribution
The following table provides information concerning those seven states
which have the greatest number of receivables outstanding and the number of
dealers generating these 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.
45
<PAGE>
Geographic Distribution
BCI Domestic Inventory Portfolio
<TABLE>
<CAPTION>
Receivables Percentage of Percentage of
Outstanding (U.S. Receivables Total Number Number of
State Dollars in Thousands) Outstanding of Accounts Accounts
- -------------------------- -------------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Texas..................... 112,858,659 9.29% 300 7.43%
Florida................... 104,934,647 8.64% 233 5.77%
North Carolina............ 104,548,074 8.61% 200 4.96%
Georgia................... 87,052,367 7.17% 165 4.09%
California................ 74,299,164 6.12% 215 5.33%
Arizona................... 63,880,583 5.26% 76 1.88%
South Carolina............ 53,633,456 4.42% 133 3.30%
</TABLE>
No state other than those listed in this table represents more than 4%
of the outstanding receivables in the BCI Domestic Inventory Portfolio.
See the last two paragraphs under "General" above.
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 located in Jacksonville, Florida. Bombardier Capital
Holdings Inc. 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 69.65% of the managed assets of
BCI. The Consumer Finance Division, the Mortgage Division and the Technology
Management and 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
46
<PAGE>
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 $3,655 million, respectively, and
shareholders' equity was approximately $139 million, $159 million and $384
million, respectively. For the fiscal years ended 1997, 1998 and 1999, total BCI
revenues were approximately $110 million, $171 million and $280 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 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 Inc. does not have
securities registered in the United States.
"Sea-Doo'r'", "Ski-Doo'r'" 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 of the Series 1999-1 Certificates is scheduled to be paid on
the _______ distribution date. It is possible, however, that principal on the
Certificates may be paid earlier if
47
<PAGE>
an Early Amortization Event has occurred or if 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. It is expected that a single
principal payment in respect of the Class A Certificates will be made on the
_______ distribution date and that a single principal payment in respect of the
Class B Certificates will also be made on this 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 in this section.
The majority of Domestic Inventory Receivables are payable upon the
retail sale of the related Eligible Product and therefore, the timing of these
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, the depositor may be unable to convey new
Receivables to 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
some circumstances applies to Accounts of the same type or types as are then
included in the trust. Therefore, if the trust includes only Accounts containing
Domestic Inventory Receivables, only Domestic Inventory Receivables would be
required to be added to the trust unless BCI and the depositor, at their
options, and subject to specified conditions, decide to designate accounts
containing Asset-Based Receivables. This failure to convey new Receivables to
the trust on the part of the depositor 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 trust.
Alternatively, the issuance of other series may result in the allocation of
Excess Principal Collections from these 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.
48
<PAGE>
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. The following table sets
forth the highest and lowest monthly payment rates for the BCI Domestic
Inventory 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 this period.
There can be no assurance that the rate of principal collections will be similar
to the historical experience set forth in the table below. Because the Accounts
designated to the trust will comprise only a portion of the entire BCI Domestic
Inventory Portfolio, which includes accounts which have not been designated to
the trust, actual monthly payment rates with respect to the Eligible Accounts
may be different.
Monthly Principal Payment Rates
BCI Domestic Inventory Portfolio
<TABLE>
<CAPTION>
Three Months
Ended April 30, Year Ended January 31,
------------------------ -----------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
-------------------------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Highest Month.............. 22.35% 16.69% 31.14% 29.48% 34.01% 35.9% 37.3%
Lowest Month............... 12.90% 12.30% 10.38% 10.99% 10.54% 11.1% 14.4%
Average of the Months in
the Period................. 16.93% 14.45% 19.32% 19.33% 21.68% 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 _______ distribution date and, in the case of
the Class B Certificates, prior to the _______ distribution date. See
"Description of the Certificates--Early Amortization Events" and "--Extension of
Initial Principal Payment Date."
Description of the Certificates
General
49
<PAGE>
The Certificates will be issued in accordance with the Pooling and
Servicing Agreement 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. The Pooling and Servicing Agreement provides
that it is governed by New York law. The following discussion represents a
summary of the material 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, copies of which, without specified 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 terms
as further described in this section, funds up to, but not in excess of, the
amounts required to make payments of interest on and principal of the
Certificates under the Pooling and Servicing Agreement and the Series 1999-1
supplement to the Pooling and Servicing Agreement. The Series 1999-1
Certificates will be issued in two classes, Class A and Class B. The initial
principal balance of the Class A Certificates will be $[300,000,000] and the
initial principal balance of the Class B Certificates will be $[20,339,000]. The
Certificates will initially be represented by two or more certificates
registered in the name of the nominee of The Depository Trust Company.
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 The Depository Trust Company that its nominee will be Cede &
Co. Accordingly, Cede & Co. is expected to be the holder of record of the
Certificates. No Certificate Owner will be entitled to receive a certificate
representing his or her beneficial interest in the Certificates, unless and
until definitive certificates are issued under the limited circumstances
described under "Definitive Certificates". All references in this prospectus to
actions by Certificateholders shall refer to actions taken by The Depository
Trust Company upon instructions from its Participants, and all references in
this prospectus to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports and statements
to Cede & Co., 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 the Class A Certificate Rate and will be payable to the holders of the
Class A Certificates on each distribution date, commencing [September 15, 1999].
The Class A Certificate Rate for any interest period will be the lesser of LIBOR
plus __________ and the net receivables rate.
Interest on the principal balance of the Class B Certificates will
accrue at the Class B Certificate Rate and will be payable to the holders of the
Class B Certificates on each distribution date, commencing [September 15, 1999].
The Class B Certificate Rate for any interest period will be the lesser of LIBOR
plus __________ and the net receivables rate.
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<PAGE>
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 -- to but
excluding the distribution date on which this interest is due. 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 the amount of this
unpaid interest at the Class A Certificate Rate or Class B Certificate Rate, as
applicable.
Interest payments on the Certificates will be derived solely from:
(1) Non-principal collections on the Receivables allocation to Series
1999-1 for the preceding calendar month;
(2) the amount, if any, then on deposit in the Reserve Fund;
(3) any Investment Proceeds; and
(4) 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.
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.
Principal
No principal payments will be made on the Certificates until the
distribution date in _____________, unless BCI elects not to extend the Initial
Principal Payment Date or an Early Amortization Event, as described under "Early
Amortization Events" below, occurs. If BCI elects not to extend the Initial
Principal Payment Date, principal distributions on the Certificates will begin
on that 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 this event occurs.
During the Revolving Period, principal collections allocated to the
Certificates, subject to limitations, will either:
51
<PAGE>
(1) be deposited in the Excess Funding Account as described under
"Excess Funding Account" below;
(2) be treated as excess principal collections and be allocated to one
or more outstanding series which are in amortization, early amortization or
accumulation periods to cover shortfalls in principal payments due to the
certificateholders of any of these other series or which provide for excess
funding accounts or similar arrangements; or
(3) to the extent the excess principal collections are not needed to
cover principal shortfalls for other outstanding series, 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, if the Pool
Balance does not exceed the Required Pool Balance, be held in the Excess Funding
Account.
See "Allocation Percentages--Principal Collections for all Series" and
"Distributions from the Collection Account; Reserve Fund--Principal Collections"
below.
During the Controlled Accumulation Period, the Initial Amortization
Period or any Early Amortization Period, principal collections allocable to the
Certificates plus 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 the holder
of the BCRC Certificate. Instead, in the case of the Controlled Accumulation
Period, Available Investor Principal Collections for each month will be
deposited into the Principal Account until the amount on deposit equals the
Controlled Deposit Amount, and, 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 Series 1999-1 Termination Date has occurred.
The Controlled Accumulation Period will begin on ________, 200_ or a
later date determined by the servicer on the basis of the Accumulation Period
Length. The Controlled Accumulation Period will continue for one, two, three,
four, five or six months and for each of the months, principal collections
allocated to the Certificates will be deposited into the Principal Account, in
an amount sufficient, when combined with the deposits in all other months, to
pay the Class A Certificates and the Class B Certificates on the Scheduled
Payment Date. 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 amounts accumulated will be paid to the Holders of
the Class A Certificates on the _______ distribution date and that a single
principal payment in respect of the
52
<PAGE>
entire principal balance of the Class B Certificates will be made on the _______
distribution date. 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" in
this prospectus.
If an interest in the Receivables represented by all 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 this 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 holders of Certificates in whose names the Certificates were registered
which is expected to be Cede & Co. as nominee of The Depository Trust Company at
the close of business on the day preceding the relevant distribution date. If
definitive certificates are issued, distributions will be made to the holder of
Certificates in whose names the Certificates were registered on the last day of
the preceding calendar month. However, the final distribution on the
Certificates will be made only upon presentation and surrender of the
Certificates. Distributions will be made to The Depository Trust Company 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 first Initial Principal Payment Date will be
the __________ distribution date, 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. The Initial Principal Payment
Date will not, however, be extended beyond the _______ distribution 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 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 second to the holders of the
Class B Certificates 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.
53
<PAGE>
BCI will cause the trustee to provide a copy of BCI's notice not to
extend the Initial Principal Payment Date to each Certificateholder, the
depositor and the Rating Agencies. The servicer will cause the trustee to mail
this 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
The Depository Trust Company is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, and a "clearing corporation" within the meaning of the UCC and a
"clearing agency" registered according to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. The Depository Trust Company was
created to hold securities for its 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 other organizations. Indirect access to The Depository Trust Company
system also is available to Indirect Participants that clear through or maintain
a custodial relationship with a Participant, either directly or indirectly
Indirect Participants.
If you are not a Participant or Indirect Participant but desire to
purchase, sell or otherwise transfer ownership of, or other interests in,
Certificates you can do so only through Participants and Indirect Participants.
In addition, you will receive all distributions of principal of and interest on
the Certificates from the trustee through The Depository Trust Company and its
Participants. Under a book-entry format, you will receive payments after the
related distribution date because, while payments are required to be forwarded
to Cede & Co., as nominee for The Depository Trust Company, on each of these
dates, The Depository Trust Company will forward these payments to its
Participants which will then be required to forward them to Indirect
Participants or to you as the owner of an interest in the Certificates. It is
anticipated that the only Certificateholder, as defined in the Pooling and
Servicing Agreement, will be Cede & Co., as nominee of The Depository Trust
Company. You will not be recognized by the trustee as Certificateholders under
the Pooling and Servicing Agreement. You will only be permitted to exercise the
rights of Certificateholders under the Pooling and Servicing Agreement
indirectly through The Depository Trust Company and its Participants, who in
turn will exercise their rights through The Depository Trust Company.
Under the rules, regulations and procedures creating and affecting The
Depository Trust Company and its operations, The Depository Trust Company 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
54
<PAGE>
to the Certificates similarly are required to make book-entry transfers and
receive and transmit distributions of principal and interest on behalf of their
respective Certificate Owners.
Because The Depository Trust Company can only act on behalf of
Participants, who in turn act on behalf of Indirect Participants and specified
banks, the ability of a Certificate Owner to pledge Certificates to persons or
entities that do not participate in The Depository Trust Company system, or
otherwise take actions in respect of the Certificates, may be limited due to the
lack of a physical certificate for the Certificates.
The Depository Trust Company has advised the depositor that neither The
Depository Trust Company nor Cede & Co. 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, The
Depository Trust Company mails an omnibus proxy to the issuer as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those Participants to whose accounts the
Certificates are credited on the record date, identified in a listing attached
thereto.
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 is
therefore 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 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 was created in 1968 to hold securities for
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. The Euroclear
55
<PAGE>
System 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 The Depository Trust
Company described above. The Euroclear System is operated by the Euroclear
Operator, under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation. All operations are conducted by the Euroclear Operator,
and all Euroclear System securities clearance accounts and the Euroclear System
cash accounts are accounts with the Euroclear Operator, not Euroclear Clearance
Systems S.C. Euroclear Clearance Systems S.C. establishes policy for the
Euroclear System on behalf of Euroclear Participants, Euroclear Participants,
securities brokers and dealers, other professional financial intermediaries and
banks, including central banks. Indirect access to the Euroclear System 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. For this
reason, 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 . These terms, conditions and procedures govern transfers of securities and
cash within the Euroclear System, withdrawals of securities and cash from the
Euroclear System, and receipts of payments with respect to securities in the
Euroclear System. All securities in the Euroclear System are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts 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 the Euroclear System 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. These
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See " Material 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 to effect these actions on its behalf through The
Depository Trust Company.
Holders of Certificates may hold their Certificates through The
Depository Trust Company in the United States or Cedelbank or the Euroclear
System in Europe if they are
56
<PAGE>
participants of these systems, or indirectly through organizations which are
participants in these systems.
The Certificates will initially be registered in the name of Cede &
Co., the nominee of The Depository Trust Company. Cedelbank and the Euroclear
System 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 these positions in
customers' securities accounts in the depositaries' names on the books of The
Depository Trust Company. Citibank, N.A. will act as depositary for Cedelbank
and Morgan Guaranty Trust Company of New York will act as depositary for the
Euroclear System.
Transfers between Participants will occur in accordance with The
Depository Trust Company 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 The Depository Trust Company, on the one hand, and directly or
indirectly through Cedel Participants or Euroclear Participants, on the other,
will be effected in The Depository Trust Company in accordance with The
Depository Trust Company rules on behalf of the relevant European international
clearing system by its depositary. These cross-market transactions, however,
will require delivery of instructions to the relevant European international
clearing system by the counterparty in that system in accordance with its rules
and procedures and within its established European time deadlines. 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 The Depository Trust Company, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to The
Depository Trust Company. 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 the Euroclear System as a result of a transaction with a
Participant will be made during subsequent securities settlement processing and
dated the business day following The Depository Trust Company settlement date.
These credits or any transactions in these securities settled during this
processing will be reported to the relevant the Euroclear System or Cedelbank
customers on that business day. Cash received in Cedelbank or the Euroclear
System as a result of sales of securities by or through a Cedelbank customer or
Euroclear Participant to a Participant will be received with value on The
Depository Trust Company settlement date but will be available in the relevant
Cedelbank or Euroclear System cash account only as of the business day following
settlement in The Depository Trust Company. For information with respect to tax
documentation procedures relating to the Certificates, see " Material Federal
Income Tax Consequences--Foreign Investors."
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<PAGE>
Although The Depository Trust Company, Cedelbank and the Euroclear
System have agreed to the foregoing procedures in order to facilitate transfers
of Certificates among participants of The Depository Trust Company, Cedelbank
and Euroclear, they are under no obligation to perform or continue to perform
these procedures and these procedures may be discontinued at any time. For a
discussion of issues concerning global clearance, settlement and tax
documentation procedures as they relate to certificates held by The Depository
Trust Company, please see Annex III to this prospectus, which is hereby
incorporated by reference into this prospectus.
Definitive Certificates
The Certificates will be issued in fully registered, certificated form
to you or your nominees rather than to The Depository Trust Company or its
nominee, only if:
(1) the depositor advises the trustee that The Depository
Trust Company is no longer willing or able to
discharge properly its responsibilities with respect
to the Certificates and the depositor is unable to
locate a qualified successor;
(2) the depositor, at its option, advises the trustee
that it elects to terminate the book-entry system
with respect to the Certificates through The
Depository Trust Company; or
(3) 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 The
Depository Trust Company through Participants in
writing that the continuation of a book-entry system
through The Depository Trust Company, or a successor
thereto, is no longer in the best interests of those
Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the trustee is required through The Depository Trust
Company to notify all Certificate Owners of the availability through The
Depository Trust Company of definitive certificates. Upon surrender by The
Depository Trust Company of the certificate or certificates held by it or its
nominee representing the Certificates and instructions for registration, the
trustee will issue the Certificates in the form of definitive certificates, and
after this issuance the trustee will recognize the 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 under the caption "Description of the Certificates--Book-entry
Registration" in this prospectus 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 last
day of the preceding
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<PAGE>
month. 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 that Certificate
on the final payment date at the office or agency as is specified in the notice
of final distribution to Certificateholders. The trustee will provide this
notice to registered Certificateholders not later than the fifth day of the
month of the final distribution.
Definitive Certificates will be transferable or exchangeable at the
offices of the trustee, which shall initially be Bankers Trust Company. 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 in
part to any other series of investor certificates that may be outstanding from
time to time, and the remainder will be allocated to the depositor as holder of
the BCRC Certificate evidencing the Retained Interest and to the holder,
currently the depositor, of the Variable Funding Certificate evidencing the
Variable Funding Interest.
The Retained Interest will consist of
(1) 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, that is, the sum of the Available
Subordinated Amount and the aggregate available subordinated
amounts for all other outstanding series on that date after
giving effect to the allocations, distributions, withdrawals
and deposits to be made on that date; and
(2) with respect to each series on any date of determination,
a percentage, which in the case of the Certificates will
initially be [4]%, of the related adjusted invested amount,
including the Adjusted Invested Amount, of each series, which
will not be subordinated to the Certificates.
As of the date of the issuance of the Certificates, the amount under the
foregoing clause (1) allocable to the Certificates will be no less than
$[18,643,730] and the amount under the foregoing clause (2) allocable to the
Certificates will be $12,815,560.
The Variable Funding Interest will consist of the excess, if any, of
the Pool Balance over the Required Pool Balance 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
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Funding Certificate as of the date of the 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
the Variable Funding Percentage and all Non-Principal Collections and principal
collections.
In accordance with the Pooling and Servicing Agreement, the BCRC
Certificate and the Variable Funding Certificate have been issued to the
depositor. The depositor holds the BCRC Certificate and has pledged its interest
in the Variable Funding Certificate to BCI as security for the Note issued by
the depositor to BCI as part of the consideration for the sale of the
Receivables by BCI to the depositor. Amounts allocated to the depositor with
respect to the Variable Funding Certificate or the BCRC Certificate may be
available to the depositor to pay principal and interest on this Note. See
"Description of the Receivables Purchase Agreement--Sale and Transfer of
Receivables."
Except after the occurrence of a Liquidation Event as described in this
prospectus under the caption "Early Amortization Events" below, 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, according to one or
more supplements thereto, the depositor may cause the trustee to issue one or
more new series. In the supplement, the depositor may specify, among other
things, with respect to the new series:
its name or designation;
its initial principal amount, or the method for calculating
this amount, and the currency in which it is denominated;
its certificate rate or the method for determining its
certificate rate;
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the payment date or dates and the date or dates from which
interest shall accrue;
the method for allocating collections to certificateholders;
the issuer and terms of any form of enhancement with respect
thereto,
the terms on which the investor certificates of that series
may be exchanged for investor certificates of a series [other
than your series], repurchased by the depositor or remarketed
to other investors;
the series termination date;
the designation of any accounts established in connection with
any series and the terms governing the operation of the
accounts;
the monthly servicing fee and the investors' servicing fee;
the number of classes of investor certificates of the series
and, if more than one class, the rights and priorities of each
class;
the extent to which the investor certificates of the series
will be issuable in temporary or permanent global form;
whether the investor certificates of this series may be issued
in bearer form and any limitations imposed thereon;
the priority of this series with respect to any other series;
whether this series will be part of a group; and
any other terms permitted by the related supplement.
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, 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 the
depositor may specify the terms of a new series so 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
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amortization period or accumulation periods while other series are not. Thus,
some 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.
A new series may be issued only upon the satisfaction of specified
conditions. The depositor may cause the issuance of a new series by notifying
the trustee at least five business days in advance of the applicable issuance
date. The notice shall state the designation of any series and with respect to
that series:
(1) its initial principal amount,
(2) its currency and certificate rate,
(3) the issuer of any enhancement with respect to series, and
(4) the related series issuance date.
The Pooling and Servicing Agreement further provides that the trust
will issue any series only upon delivery to it of the following:
(1) a supplement in form satisfactory to the trustee signed by the
depositor and the servicer and specifying the principal terms
of that series;
(2) any related enhancement agreement executed by each of the
parties thereto other than the trustee; and
(3) an opinion of counsel to the effect that, for federal income
and Vermont state income tax purposes.
(x) the issuance will not adversely affect the
characterization of the investor certificates of any
outstanding series or class as debt of the depositor,
(y) the issuance will not cause or constitute a taxable
event with respect to any certificateholder or the
trust, and
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(z) the investor certificates of that new series will be
characterized as debt of the depositor.
The issuance of a new series is also subject to the conditions that:
(1) 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 the
issuance will not cause an Early Amortization Event to occur,
(2) after giving effect to the issuance, the depositor 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 trust, in each case as of the series issuance date and
after giving effect to the issuance, and
(3) 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 the depositor, BCI or the trustee that the issuance
will result in a reduction or withdrawal of the ratings of any
outstanding series or class of investor certificates.
Upon satisfaction of all these conditions, the trust will issue the new
series.
Supplemental Certificate
The Pooling and Servicing Agreement provides that the BCRC Certificate
shall, at all times, be beneficially owned by the depositor. Upon satisfaction
of the conditions described in this paragraph, however, the depositor may
surrender the BCRC Certificate to the trustee in exchange for a newly issued
BCRC Certificate and a Supplemental Certificate. The Supplemental Certificate
is not required to be beneficially owned by the depositor and may be delivered
to or at the direction of the depositor to any entity. It is a condition to
delivery of the Supplemental Certificate that, following delivery of the
Supplemental Certificate to another entity, the depositor shall, nevertheless,
have an interest in the trust, 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 trust. Additional conditions to the delivery of a
Supplemental Certificate are that the depositor shall have given the Rating
Agencies 10 days' prior notice and the Rating Agency Condition shall have been
satisfied with respect to the exchange and that an opinion of counsel shall be
delivered to the trustee to the effect that, for federal income and Vermont
state income tax purposes, the issuance of a series will not adversely affect
the characterization of the investor certificates of any outstanding series or
class as debt of the depositor and that the issuance will not cause or
constitute a taxable event with respect to any certificateholder and the trust.
In addition, if the supplement by which the
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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 the preceding paragraph.
If a Supplemental Certificate is issued, all references in this
prospectus 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 the depositor as holder of the BCRC
Certificate shall include the depositor 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
depositor sold and assigned to the trust all of the depositor's right, title and
interest in and to the Receivables under the Eligible Accounts purchased from
BCI and the related Collateral Security as of January 1, 1994, all Receivables
created in those initial accounts after January 1, 1994 and the depositor's
interest in the related Collateral Security and in 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 issuance of the Series 1994-1 Certificates, the depositor
has six times added Additional Accounts to the trust as shown in Annex II
hereto. Annex II is hereby incorporated by reference into this prospectus.
In connection with the sale of the Receivables then existing or
subsequently arising under the Eligible Accounts sold or contributed to the
depositor by BCI and the transfer of these Receivables by the depositor to the
trust, BCI has indicated in its computer records that these Receivables and the
related Collateral Security have been transferred to the depositor and that the
depositor has transferred its interest therein to the trust. In addition, BCI
provided to the depositor, and the depositor 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 January 1, 1994 and as of the Additional Cut-Off Dates, as
applicable. BCI has retained and will not deliver to the depositor or to the
trustee any other records or agreements relating to these Receivables. Except as
set forth above, the records and agreements relating to the Receivables in these
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 these Receivables will not be stamped or marked to reflect the transfer of
these Receivables to the trust. The depositor has filed one or more financing
statements in accordance with Vermont state law to perfect the trust's interest
in these 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 "Material
Legal Aspects of the Receivables."
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As described below under "Addition of Accounts," the depositor has the
right--subject to 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 subsequently created in the
Additional Accounts and to convey to the trust the Receivables then existing or
subsequently arising in the accounts. Each Additional Account must be an
Eligible Account. In respect of any conveyance of Receivables in Additional
Accounts, the depositor will follow the procedures set forth in the preceding
paragraph, except that the computer file or microfiche or written list will show
information for these Additional Accounts as of the cutoff date for the
addition.
Representations and Warranties
The depositor may be required to add Receivables to the trust or to
remove or repurchase Receivables in designated Accounts from the trust. In
addition, the depositor may, if the conditions precedent are met, add or remove
Receivables in 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" in this prospectus
summarize the circumstances under which these actions must or may be taken and
the respective repurchase obligations of the depositor and BCI.
The depositor has made representations and warranties to the trustee
and will on the date of the issuance of the Certificates make the following
representations and warranties relating to the Accounts, the Receivables and the
Collateral Security:
as of January 1, 1994, the date of the issuance of
the Certificates 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, and on each Transfer Date, each
Additional Account is an Eligible Account,
each Receivable and all Collateral Security conveyed
to the trust on January 1, 1994 or, in the case of
Additional Accounts, on the date they are included as
Accounts, 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
with respect to each Receivable and all Collateral
Security transferred to the trust on January 1, 1994
or, in the case of Additional Accounts, on the date
they are included as Accounts, and on each Transfer
Date, all appropriate consents and governmental
authorizations required to be obtained by the
depositor in connection with the conveyance have been
duly obtained.
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If the depositor breaches any representation and warranty described
above and this breach remains uncured for 30 days or a longer period as may be
agreed to by the trustee, after the earlier to occur of the discovery of this
breach or receipt of written notice of this breach by the depositor, and this
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, that 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 the depositor on the terms and conditions set
forth in the second succeeding paragraphs below, and in the case of an Account,
that Account shall no longer be designated for inclusion in the trust.
Each of these Receivables shall be retransferred from the trust to the
depositor on or before the end of the Collection Period in which the retransfer
obligation arises, with a corresponding reduction in the Pool Balance. Unless a
Liquidation Event has occurred, in the event that this 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 this retransfer to the depositor is to occur, the depositor will
be obligated to make a deposit into the Collection Account in immediately
available funds in an amount equal to the Transfer Deposit Amount. If the
Transfer Deposit Amount is not deposited, the related Receivables will not be
reassigned to the depositor and will remain part of the trust. The reassignment
of any Receivable to the depositor 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 available to
the Certificateholders or the trustee on behalf of the Certificateholders.
In the Pooling and Servicing Agreement, the depositor also makes
representations and warranties to the trustee to the effect, among other things,
that as of January 1, 1994 and each series issuance date including the date of
the issuance of the Certificates:
(1) 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 the depositor, and
(2) the Pooling and Servicing Agreement constitutes a valid sale,
transfer and assignment to the trust of all right, title and
interest of the depositor in the Receivables and the
Collateral Security, whether then existing or subsequently
created, and the proceeds thereof, under the UCC as then in
effect in the State of Vermont, which is effective on the date
of the issuance of the Certificates or as of the date Accounts
are added to the trust, if applicable.
In the event that:
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any of the representations and warranties described
in paragraph (1) above has been breached,
the representation and warranty with respect to the
Pooling and Servicing Agreement in paragraph (2)
above 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
other specific representations and warranties set
forth in the Pooling and Servicing Agreement are
breached,
and, the 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 the
depositor and the servicer, and to the trustee and the issuer or provider of any
enhancement 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 the notice, or within any longer period specified in the
notice.
This repurchase will not be required to be made, however, if at the end
of the applicable period, either each breached representation and warranty has
been satisfied in all material respects or, in the case of a breach described in
the second item above, 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 has been cured.
The portion of the price for the repurchase in respect of the
Certificates will be equal to the sum of the aggregate principal balance of the
Certificates on the distribution date on which the purchase is scheduled to be
made and the accrued and unpaid interest on the unpaid principal balance of the
Certificates at the Class A Certificate Rate or Class B Certificate Rate, as
applicable, 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 the depositor with the trustee of the
repurchase price for all outstanding series or the Variable Funding Certificate
or both, in immediately available funds, will be considered a payment in full of
that series or the Variable Funding Certificate or both. If notice is given as
provided above, the obligation of the depositor to make this deposit will
constitute the sole remedy respecting a breach of the representations and
warranties available to the investor certificateholders or the
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holder of the Variable Funding Certificate or the trustee on behalf of the
investor certificateholders.
Eligible Accounts and Eligible Receivables
An Eligible Account is:
(1) an 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 under an inventory security
agreement in the ordinary course of business, and
(2) an individual line of credit or financing agreement extended
by BCI or an affiliate of BCI or by a third party 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 that obligor, which, in
each case, as of the date of determination thereof relates to
an obligor that is an Eligible Obligor and 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,
this type of Account or any Receivable therein to any person
without affecting the 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 these 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 trust 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 Obligor is:
in the case of Domestic Inventory Receivables, a
dealer that is located in the United States of
America including its territories and possessions;
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
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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 a Receivable:
(1) 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,
(2) which arose under an Account that at the time the Receivable was
transferred to the trust was an Eligible Account,
(3) which is owned by BCI at the time of sale or contribution by BCI to
the depositor,
(4) which represents the obligation of an obligor to repay an advance
made to or on behalf of that obligor, or credit extended for that 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,
(5) which in the case of:
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 , at the time of transfer to the
trust, is secured by a first priority perfected
security interest in the Eligible Product relating
thereto and,
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,
(6) which is not unenforceable as a result of any violation of
requirements of law applicable thereto and the related inventory security
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,
(7) with respect to which all consents and governmental authorizations
required to be obtained by BCI or an affiliate of BCI, or the depositor in
connection with the creation of the Receivable or the transfer thereof to the
depositor 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
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the case of Domestic Inventory Receivables or the related loan agreement in the
case of Asset-Based Receivables by which the Receivable was created, have been
duly obtained, effected or given and are in full force and effect,
(8) as to which at all times following the transfer of the 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 under the Pooling and Servicing Agreement and other than
tax and other statutory liens, including liens in favor of the Pension Benefit
Guaranty Corporation, which may arise after this transfer and which relate to
affiliates of the depositor,
(9) which has 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 some exceptions, any proceeds thereof,
(10) which will at all times be the legal and assignable payment
obligation of the obligor relating thereto, enforceable against that obligor in
accordance with its terms, as modified or revised from time to time with the
consent of the servicer, except as enforceability may be limited by the
bankruptcy code or other applicable insolvency laws,
(11) which at the time of transfer to the trust is enforceable against
the obligor to the extent of the full principal amount of the Receivable, except
as enforceability may be limited by insolvency laws,
(12) as to which, at the time of transfer of the Receivable to the
trust, BCI or an affiliate of BCI and the depositor have satisfied all their
respective obligations under the Pooling and Servicing Agreement with respect to
the Receivable required to be satisfied at that time,
(13) as to which, at the time of transfer of the Receivable to the
trust, neither BCI or any affiliate of BCI nor the depositor 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
(14) 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.
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 that amendment is
satisfied.
It is not required or anticipated that the depositor 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
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warranties of BCI or for any other purpose. In addition, it is not anticipated
or required that the depositor 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 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 in this section, the depositor has
the right to designate from time to time additional Eligible Accounts to be
included in the trust as Accounts. In addition, unless a Liquidation Event has
occurred, the depositor is required to designate and to add to the trust the
Receivables of additional Eligible Accounts if, as of the date for which the
following calculations are made, either:
(1) the Pool Balance is less than the Required Pool Balance or
(2) the aggregate interest in the trust represented by the BCRC
Certificate and the Variable Funding Certificate held by the depositor is less
than 2% of the aggregate amount of Receivables included in the trust.
In the case of either (1) or (2) immediately above, unless a
Liquidation Event has occurred with respect to BCI or the depositor, the
depositor under the Receivables Purchase Agreement will be required to purchase
or acquire from BCI, but BCI will have no obligation to sell to the depositor,
within 10 business days after the event described in (1) or (2) has occurred,
the Receivables arising in 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 the depositor to designate Additional
Accounts to the trust 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 trust, then Accounts giving rise to either Domestic
Inventory Receivables or Asset-Based Receivables. However, at the option of the
depositor and BCI and subject to specified conditions, including satisfaction of
the Rating Agency Condition prior to the first addition of Asset-Based
Receivables, Asset-Based Receivables may be added in satisfaction of this
requirement even if the only Accounts then in the trust are Accounts containing
Domestic Inventory Receivables.
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Any designation of Additional Accounts referred to in the preceding
paragraph is subject to the following conditions, among others:
(1) each Additional Account must be an Eligible Account and with respect to
Additional Accounts designated at the option of the depositor, the Rating Agency
Condition must be satisfied; provided, that the Rating Agency Condition need not
be satisfied if the conditions described in the second succeeding paragraph
following this list of conditions are satisfied;
(2) the addition of the Receivables arising in the Additional Accounts
shall not, in the reasonable belief of the depositor, cause an Early
Amortization Event to occur;
(3) the depositor shall not select the Additional Accounts in a manner that
it believes is adverse to the interests of the certificateholders or any
enhancement provider; and
(4) unless the Accounts are being added in accordance with the conditions
described in the second succeeding paragraph, the depositor shall deliver legal
opinions to the trustee and any enhancement providers indicating that the
trustee, on behalf of the trust, will have a perfected security interest in the
documents as required by the Pooling and Servicing Agreement.
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 trust, satisfaction of the Rating Agency
Condition with respect to the inclusion of Asset-Based Receivables -- have been
met, the Additional Accounts may not include Asset-Based Receivables. However,
since Additional Accounts, as well as Receivables in general arising under
Accounts subsequent to __________ 1, 1999 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 date of the issuance of the Certificates, they may not be
of the same credit quality as the Accounts and Receivables as of __________ 1,
1999.
The requirement that the Rating Agency Condition be satisfied and that
legal opinions be delivered will not be necessary if the following conditions
are met:
(1) the Additional 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,
(2) during the calendar quarter in which the addition occurs, the number of
new Accounts which have been added, after taking the proposed addition into
account, will not exceed 5% of the number of all Accounts at the end of the
preceding calendar quarter and the
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aggregate dollar amount of principal receivables in these new Accounts added
under this paragraph during this calendar quarter shall not exceed 5% of the
Pool Balance at the end of the preceding calendar quarter, and
(3) during the 12 consecutive calendar months ending with the calendar
month in which the addition is made and including the addition, the number of
these new Accounts does not exceed 20% of the number of all Accounts at the
beginning of this 12-month period and the aggregate dollar amount of principal
receivables in these new Accounts added under this paragraph during this
12-month period shall not exceed 20% of the Pool Balance at the beginning of
this 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 (2) and (3)
above, only those Accounts which have been added in accordance with the
conditions described in the paragraph above 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 in accordance with the
conditions described in the paragraph above, a legal opinion indicating that the
trustee, on behalf of the trust, will have a perfected security interest in
these Accounts is to be delivered to the trustee every six months to the extent
that the addition of these Accounts have not been covered by legal opinions
previously delivered to the trustee.
Removal of Accounts and Assignment of Receivables
The depositor shall have the right at any time to designate specific
accounts from which it will stop transferring newly originated Receivables to
the trust. If the depositor specifies accounts from which Receivables will no
longer be transferred to the trust, these accounts will constitute Removed
Accounts. To cease transferring any newly originated Receivables in any Removed
Account, the depositor or the servicer on its behalf shall, among other things:
(1) at least five business days prior to the date on which the transfer of
these Receivables will cease give notice to the trustee, any enhancement
provider and each Rating Agency;
(2) on or before the fifth business day after the date on which the
transfer of these Receivables will cease, the depositor 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 that Removed Account and the aggregate amount of Receivables
therein as of the day immediately preceding the date or which the transfer of
these Receivables will cease;
(3) represent and warrant that the removal of the relevant Removed Accounts
will not, in the reasonable belief of the depositor, cause an Early Amortization
Event to occur or cause the Pool Balance to be less than the Required Pool
Balance;
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(4) represent and warrant that no selection procedures believed by the
depositor to be adverse to the holders of certificates of any series were
utilized in selecting the Removed Accounts;
(5) represent and warrant that the removal of the relevant Removed Accounts
will not result in a reduction or withdrawal of the ratings of the Certificates
or any other outstanding series or class of investor certificates by any Rating
Agency; and
(6) on or before the related date or which the transfer of these
Receivables will cease, deliver to the trustee and any enhancement provider an
officers' certificate confirming the items set forth in clauses (3), (4) and (5)
above.
Under specified conditions, the Pooling and Servicing Agreement may be
amended without the consent of the Certificateholders or any Rating Agency to
permit the depositor to also remove existing Receivables in Removed Accounts,
including all amounts then held or subsequently received in respect of these
Receivables. See "Amendments."
On the fifth business day after any date on which an Account becomes an
Ineligible Account, the depositor will commence the removal of the Receivables
of this Ineligible Account from the trust by:
(1) furnishing to the trustee, any enhancement provider and the Rating
Agencies a notice specifying the date on which the removal of these Receivables
will begin and the Ineligible Accounts to be removed;
(2) on or before the fifth business day after the date on which the removal
of these Receivables will begins, 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 date on
which the removal of these Receivables began; and
(3) from and after the date on which the removal of these Receivables will
begin, ceasing to transfer to the trust any Receivables arising in the
Ineligible Accounts.
With respect to the removal of Accounts under either of the two immediately
preceding paragraphs, whether this removal occurs at the option of the depositor
prior to the time that the depositor is permitted to remove existing Receivables
in Removed Accounts or upon a required removal of an Ineligible Account:
(1) from and after the applicable date on which the transfer of the
relevant Receivables ceases or the removal of the relevant Receivables begins,
as applicable, all principal collections in respect of each Removed Account or
Ineligible Account will be allocated first to
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the oldest outstanding principal balance of that Account, until the
Determination Date on which the outstanding principal balance of Receivables in
the Account is reduced to zero; and
(2) on each business day from and after the date on which the transfer of
the relevant Receivables ceases or the removal of the relevant Receivables
begins, as applicable until the Determination Date on which the outstanding
principal balance of Receivables in the relevant account is reduced to zero, the
depositor will allocate
to the trust, to be further allocated in accordance
with the Pooling and Servicing Agreement, Non-
Principal Collections in respect of these Accounts
based on the ratio of the amount of principal
receivables in these Accounts on that business day that
were previously sold to the trust divided by the total
amount of principal receivables in these Accounts on
that business day, and
to the depositor the remainder of the Non-Principal
Collections in respect of these Accounts on that
business day.
Upon satisfaction of the above conditions on the Determination Date on
which the outstanding principal balance of Receivables in the relevant account
is reduced to zero, the Removed Accounts or Ineligible Accounts shall be deemed
to have been removed from the trust and the depositor 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 remaining and subsequently arising in the Removed Accounts or
Ineligible Accounts, all amounts received or to be received with respect thereto
and all proceeds thereof.
The depositor may at any time remove specific Receivables from the trust,
including all amounts then held or subsequently received in respect of these
Receivables, without removing any other Receivables in the related Account then
existing or subsequently arising, and shall have the right to remove the related
Collateral Security and other rights associated with these Receivables, provided
the Receivables are removed from the trust in connection with an assignment of
these Receivables to a third party in return for payment for these Receivables.
As a condition to the assignment and removal of these Receivables, the payment
shall be in an amount at least equal to the principal amount of the Receivables
to be removed plus accrued interest to the removal date. All of these payments
shall be included as collections. The depositor has agreed under the Pooling and
Servicing Agreement that this type of removal will take place only if, in the
reasonable belief of the depositor, no Early Amortization Event will occur as a
result of the removal.
[The depositor also has the right to cause the trustee to remove from the
trust and reassign to the depositor Domestic Inventory Receivables originated
and transferred to the trust during the four month period commencing 16 months
prior to the relevant Origination Period that continue to be unpaid in full 450
or more days following the origination thereof, provided that the
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aggregate amount of these 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
this four month period commencing 16 months prior to the relevant Origination
Period.] The depositor shall effect this removal and reassignment by depositing
in the Collection Account for application as collections on the Receivables an
amount equal to the principal amount of the Receivables to be removed plus
accrued interest to the date of the reassignment. The trust will be under no
obligation to hold any of these Receivables for the purpose of allowing the
depositor to cause a reassignment of these 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, the depositor 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 that interest may also be removed.
The requirements for removing an undivided interest include the requirement that
the depositor or the servicer on the depositor's behalf, represent and warrant
that the removal will not, in the reasonable belief of the depositor, 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
The following sections summarize the structure for allocating collections
made on the Receivables and other amounts among the 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, the Collection Account.
Funds in the Collection Account generally will be invested in Eligible
Investments.
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
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The servicer has established and is required to maintain, or, cause to be
established and maintained for the life of the Certificates, an Excess Funding
Account which shall be an Eligible Deposit Account for the benefit of the
certificateholders in the name of the trustee. The Excess Funding Account is
intended to preserve for the benefit of the certificateholders principal
collections otherwise payable in respect of other series or the BCRC Certificate
during the Revolving Period and the Controlled Accumulation Period.
On each Business Day during the Revolving 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 that preceding Business Day, the servicer will
cause principal collections allocable to the Certificates to be deposited by the
servicer in the Excess Funding Account in an amount equal to the Excess Funded
Amount calculated as of the end of the preceding Business Day, minus the amount
then held in the Excess Funding Account.
On each Business Day during 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 that preceding Business Day, the
servicer will cause principal collections allocable to the Certificates, which
remain after making required deposits, to be deposited by the servicer in the
Excess Funding Account in an amount equal to the Excess Funding Amount
calculated as of the end of the preceding Business Day, minus the amount 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:
(1) the excess, if any, of the Required Pool Balance over the Pool Balance,
each as of the end of the preceding day multiplied by
(2) a fraction the numerator of which is the sum of the Required Investor
Percentage of the Adjusted Invested Amount and the Available Subordinated Amount
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, namely, the Required Pool Balance over the Pool Balance, 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
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amounts in the Excess Funding Account since the preceding distribution date will
be withdrawn from the Excess Funding Account and applied as described in the
immediately preceding paragraph.
Allocation Percentages
This section sets forth the procedure for calculating the Certificates'
allocable share of specified distributions and other payments made with respect
to the Receivables. Amounts not allocated to the Certificates 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:
(1) Non-Principal Collections and the Defaulted Amount will be allocated to
the Certificates based on the Floating Allocation Percentage;
(2) during the Revolving Period, principal collections will be allocated to
the Certificates based on the Floating Allocation Percentage;
(3) 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
(4) Miscellaneous Payments will be allocated to the Certificates on the
basis of the Series 1999-1 Investor Allocation Percentage.
When allocating principal collections, if the sum of:
(1) the sum of the floating allocation percentages, including the Floating
Allocation Percentage, if applicable, for each series in its revolving period,
(2) 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
(3) the Variable Funding Percentage
exceeds 100%, then principal collections for the Collection Period will be
allocated among the series and the Variable Funding Certificate pro rata on the
basis of these allocation percentages
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after the pro rata reduction of these percentages so that the sum thereof
equals 100% for this period.
When allocating Non-Principal Collections, if the sum of:
(1) the sum of the floating allocation percentages, including the Floating
Allocation Percentage, for each series, and
(2) the Variable Funding Percentage
exceeds 100%, then Non-Principal Collections for the Collection Period will be
allocated among the series and the Variable Funding Certificate [pro rata] on
the basis of these allocation percentages after the pro rata reduction of these
percentages so that the sum thereof equals 100% for that period.
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 y
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." The servicer will next determine
the amount of Available Investor Principal Collections remaining after these
required payments are made and the amount of any similar excess for any other
series. 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 other amounts
allocated to that series.
Excess Principal Collections will generally not be used to cover investor
charge-offs for any series. If for any Collection Period a principal shortfall
occurs for one or more series of certificates, Excess Principal Collections from
other series may be available to cover some or all of the shortfall. The
determination of what constitutes a principal shortfall for a series is made on
a series by series basis. If for any distribution date the aggregate amount of
principal shortfalls for all series exceeds Excess Principal Collections, then
Excess Principal Collections
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will be allocated pro rata among the applicable series entitled to receive
monthly principal based on the relative amounts of these 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
that 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 that 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 in the Collection
Account until the Pool Balance exceeds the Required Pool Balance, at which time
this 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 this amount
will be treated as a Miscellaneous Payment.
Deposits in Collection Account
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 these collections, net of the Variable Funding
Percentage of these collections and the Excess Retained Percentage of these
collections, into the Collection Account.
Notwithstanding the foregoing, for so long as
(1) BCI remains the servicer under the Pooling and Servicing Agreement,
(2) no Servicer Default has occurred and is continuing, and
(3) 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,
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
otherwise obtains confirmation that the change will not cause a
reduction or withdrawal of outstanding credit ratings on any
certificates,
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then, subject to any limitations in the confirmations referred to below in this
paragraph, BCI need not deposit collections into the Collection Account on a
daily basis but may use for its own benefit all these collections until the
business day immediately preceding the related distribution date, at which time
BCI will make these deposits in a single deposit into the Collection Account in
an amount equal to the net amount of these deposits and withdrawals which would
have been made had the conditions described in this paragraph not applied. Prior
to ceasing daily deposits as described above, BCI must deliver 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 according to the terms of any series supplement to the
Pooling and Servicing Agreement or the terms of any enhancement agreement. If,
at any time prior to a distribution date, the amount of collections deposited in
the Collection Account exceeds the amount required to be deposited for that
distribution date, the servicer will be permitted to withdraw the 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, to the holder of the Variable Funding
Certificate, an amount equal to the Variable Funding Percentage of these
collections and, to the holder of BCRC Certificate, the Excess Retained
Percentage of these collections.
Daily Allocations
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 the Floating Allocation Percentage for that date
multiplied by the aggregate amount of Non-Principal Collections on that date,
and
(2) the Series 1999-1 Available Retained Collections for that date,
and of that allocation, the servicer will deposit and retain in the Collection
Account an amount equal to the lesser of
(1) the Daily Allocation on that date and
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(2) the difference between
the sum of the amounts required to be distributed on the related
distribution date under clauses (1) through (8) under
"Distributions from the Collection Account; Reserve
Fund--Non-Principal Collections" below, provided that if BCI is
the servicer, these amounts shall not include the Monthly
Servicing Fee, and
the sum of the Daily Allocations previously deposited in the
Collection Account for the current Collection Period,
and the remainder of this Daily Allocation will be retained by the servicer for
application as described in the following two paragraphs.
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 under clauses (1)
through (8) under "Distributions from the Collection Account; Reserve
Fund--Non-Principal Collections" below, provided that if BCI is the servicer,
BCI may make this 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.
Limited Subordination of Retained Interest
A portion of the Retained Interest 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 Deficiency Amount which will be the amount, if any, by
which
the sum of
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(1) Monthly Interest for the distribution date,
(2) Monthly Interest accrued but not paid for prior distribution dates
plus interest thereon,
(3) the Net Servicing Fee for the distribution date,
(4) the Investor Default Amount for the distribution date, and
(5) the Series 1999-1 Investor Allocation Percentage of any Adjustment
Payment for the distribution date that has not been deposited in
the Collection Account as required under the Pooling and Servicing
Agreement,
exceeds
the sum of
(1) Investor Non-Principal Collections and Investment Proceeds for the
distribution date and
(2) the amount of funds in the Reserve Fund on the distribution date
available to fund the amount by which the amount in (1) through
(5) above exceeds the amount in (1) immediately above.
The lesser of the Deficiency Amount and the Available Subordinated Amount is the
"Required Subordination Draw Amount."
Required Subordinated Amount. The "Required Subordinated Amount" means, as of
any date of determination, the sum of
(1) the Invested Amount multiplied by the percentage equivalent of a
fraction, the numerator of which is 5.5% and the denominator of
which is the excess of 100% over 5.5% and
(2) the Incremental Subordinated Amount for the immediately preceding
distribution date or, if the date of determination is a
distribution date, for that 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 3.75% of the initial principal amount of the
Certificates plus the Incremental Subordinated Amount for
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the immediately preceding distribution date or, if the date of
determination is a distribution date, for that 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 after this
commencement 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 the 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:
the lesser of:
(1) the Available Subordinated Amount for the preceding distribution
date, minus, with some limitations, the Required Subordination
Draw Amount for the preceding distribution date or, if the date of
determination is a distribution date, that 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 portion of the Investor Default Amount on the preceding
distribution date or, if the date of determination is a
distribution date, that 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 date of the
issuance of the Certificates, 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 date of the issuance of the Certificates, 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 the date of
determination is a distribution date, the preceding distribution
date, plus the Incremental Subordinated Amount for the immediately
preceding distribution date, or if the date of determination is a
distribution date, that distribution date plus the percentage
equivalent of a fraction, the numerator of which is 5.5% and the
denominator of which is the excess of 100% over 5.5%, multiplied
by the aggregate amount of any increases in
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the Invested Amount resulting from any withdrawals from the Excess
Funding Account since the preceding distribution date; and
(2) the Required Subordinated Amount for that date of determination;
and
the amount of any optional increase in the Available Subordinated
Amount exercised by the depositor as described below in the final
paragraph of this section "Limited Subordination of the Retained
Interest--Available Subordinated Amount."
The Available Subordinated Amount for any date of determination during the
period from the date of the issuance of the Certificates through the first
distribution date is equal to the Required Subordinated Amount as of that date
of determination, which will equal at least $[18,643,730] on the date of the
issuance of the Certificates.
If the Available Subordinated Amount for any distribution date is less than
the Required Subordinated Amount for that 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 these
increases may not exceed an amount equal to 1% of the initial principal amount
of the Certificates -- at the time this Early Amortization Event would otherwise
occur, thus preventing or delaying the occurrence of this Early Amortization
Event.
Distributions from the Collection Account; Reserve Fund; Principal Account
Non-Principal Collections. On each distribution date, the trustee will apply
Investor Non-Principal Collections and Investment Proceeds for that distribution
date to make the following distributions in the following order of priority:
(1) an amount equal to Class A Monthly Interest for that distribution date,
plus the amount of any Class A Monthly Interest previously due but not
distributed on a prior distribution date, plus, 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;
(2) an amount equal to Class B Monthly Interest for that distribution date,
plus the amount of any Class B Monthly Interest previously due but not
distributed on a prior distribution date, plus, 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;
(3) an amount equal to the Net Servicing Fee for that distribution date
shall be distributed to the servicer, unless this amount has been deducted from
amounts that would otherwise be deposited to the Collection Account as described
above under "Deposits in
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Collection Account" or waived as described under "Servicing Compensation and
Payment of Expenses" below;
(4) an amount shall be deposited in the Reserve Fund equal to the amount,
if any, by which the Reserve Fund Required Amount for that distribution date
exceeds the amount on deposit in the Reserve Fund after giving effect to any
withdrawal therefrom on that distribution date;
(5) an amount equal to the Investor Default Amount, if any, for that
distribution date shall be treated as a portion of Available Investor Principal
Collections for that distribution date and shall be allocated by the trustee in
the manner described under "Principal Collections" below;
(6) an amount equal to the remainder of the Monthly Servicing Fee for that,
distribution date, if any, due but not paid to the servicer shall be paid to the
servicer, unless this amount has been deducted from amounts that would otherwise
be deposited to the Collection Account as described above under "Deposits in
Collection Account" or waived as described under "Servicing Compensation and
Payment of Expenses" below;
(7) any Class A Carry-Over Amount for that 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;
(8) any Class B Carry-Over Amount for that 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 holders of the Class B
Certificates; and
(9) the balance, if any, shall constitute Excess Servicing and shall be
allocated by the trustee in the manner described under "Excess Servicing" below.
If the Investor Non-Principal Collections and Investment Proceeds are
not sufficient to make the distributions required by clauses (1), (2), (3) and
(5), the trustee shall withdraw funds from the Reserve Fund and apply these
funds to complete, to the extent available, the distributions in accordance with
clauses (1), (2), (3) and (5) in the numerical order thereof.
If there is a Deficiency Amount for that 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 that
distribution date, but only up to the Required Subordination Draw Amount, to
make the distributions required by clauses (1), (2), (3) and (5) above that have
not been made through the application of funds from the Reserve Fund as
described in the preceding paragraph. Any of the Series 1999-1 Available
Retained Collections remaining after the application thereof in accordance with
the preceding sentence shall be treated as a portion of the Available Investor
Principal Collections, but only up to the amount of unpaid Adjustment
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Payments allocated to the Certificates. The holder of the BCRC Certificate may
elect 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.
Reserve Fund. The Reserve Fund, which shall be an Eligible Deposit Account
will be established and maintained in the name of the trustee for the benefit of
the Certificateholders. The depositor will make an initial deposit into the
Reserve Fund on the date of the issuance of the Certificates in an amount
no less than $[1,601,695]. If, after giving effect to the allocations,
distributions and deposits in the Reserve Fund described in this prospectus
under the caption "Non-Principal Collections," the amount in the Reserve Fund
is less than the Reserve Fund Required Amount for that 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. 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, 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 that 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 this
Excess Reserve Fund Required Amount.
Excess Servicing. On each distribution date, the trustee will allocate Excess
Servicing with respect to the Collection Period immediately preceding that
distribution date, in the following order of priority:
(1) an amount equal to the aggregate amount of Investor Charge-Offs which
have not been previously reimbursed, after giving effect to the allocation on
that distribution date of the Series 1999-1 Investor Allocation Percentage of
Miscellaneous Payments with respect to that distribution date, will be included
in Available Investor Principal Collections for that distribution date;
(2) 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
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(3) 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. The Principal Account, which shall be an Eligible Deposit
Account will be established and maintained in the name of the trustee for the
benefit of the Series 1999-1 Certificateholders. 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.
Principal Collections. The trustee will apply Available Investor Principal
Collections as follows:
(1) 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 that 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";
(2) for each distribution date with respect to the Controlled Accumulation
Period:
if the distribution date is not the Scheduled Payment Date;
an amount equal to the Controlled Deposit Amount will be
deposited into the Principal Account; and
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
the balance, if any, will be allocated to Excess Principal
Collections; and
if the distribution date is the Scheduled Payment Date,
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
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the balance, if any, will be allocated to Excess Principal
Collections; and
(3) for each distribution date with respect to any Initial Amortization
Period or Early Amortization Period:
an amount equal to Monthly Principal for that 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
the balance, if any, will be allocated to Excess Principal
Collections.
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.
Available Investor Principal Collections for any distribution date means
the sum of
(1) the product of 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 multiplied by principal
collections for the related Collection Period,
(2) 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,
(3) the Series 1999-1 Investor Allocation Percentage of Miscellaneous
Payments for that distribution date,
(4) Excess Principal Collections, if any, from other series allocated to
the Certificates,
(5) 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,
(6) 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
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(7) 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 these floating allocation percentages and
principal allocation percentages.
Discount Option
The Pooling and Servicing Agreement provides that the depositor 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 the designation
that otherwise would be treated as principal collections to be treated as
Non-Principal Collections. The depositor must provide 10 days' prior written
notice to the servicer, the trustee and each Rating Agency of any of these
designations, and these designations will become effective on the date specified
therein only if an officer's certificate is delivered to the trustee to the
effect that in the reasonable belief of the depositor the relevant designation
would not result in an Early Amortization Event or have a materially adverse
effect on the certificateholders and if the Rating Agency Condition shall have
been satisfied.
Defaulted Receivables and Recoveries
Defaulted Receivables on any distribution date are:
(1) [prior to payment in full of the Series 1997-1 certificates,] all
Receivables originally secured by a security interest in a related
Eligible Product which have not been paid in full for more than 60 days
after the sale of the related Eligible Product, [and subsequent to the
payment in full of the Series 1997-1 Certificates, all Receivables
originally secured by a security interest in a related Eligible Product
which have not been paid in full for more than 90 days after the sale
of the related Eligible Product];
(2) [prior to payment in full of the Series 1997-1 certificates,] all
Receivables in an Account in which interest in the amount of $150 or
more has been delinquent for 90 days or more, and
(3) all Receivables which, although they were Eligible Receivables when
transferred to the trust, arose in an Account which has become an
Ineligible Account since
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this transfer and which were not Eligible Receivables for any six
consecutive distribution dates after this 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 not less
than zero, equal to the aggregate principal amount of Receivables that became
Defaulted Receivables during the preceding Collection Period less the full
amount of any Defaulted Receivables subject to retransfer from the trust to the
depositor or to purchase by the servicer for that Collection Period . If,
however, specified events of bankruptcy, insolvency, or receivership have
occurred with respect to either of the depositor or the servicer or if a
Liquidation Event has occurred, the Defaulted Amount will not be reduced for
those Defaulted Receivables retransferred from the trust or purchased by the
servicer. 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 the Defaulted Amount for that
Collection Period multiplied by the Floating Allocation Percentage for that
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.
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 that Receivable was
created in respect of a product which was refused or returned by an Obligor, the
amount of this 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 this deficiency up to the amount of this
adjustment into the Collection Account in immediately available funds on the day
on which this adjustment occurs.
Investor Charge-Offs
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 this Deficiency Amount over any
remaining Available Subordinated Amount on the related Determination Date, but
not by more than the Investor Default Amount for that distribution date. 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 subsequently be increased on any
distribution date, but not by an amount in excess of the aggregate Investor
Charge-Offs, by the sum of the Series 1999-1 Investor Allocation Percentage of
Miscellaneous Payments for that distribution date plus the amount of Excess
Servicing allocated and available for that purpose as described above.
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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, the depositor will have the option, subject to
specified 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 that 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 this repurchase and any Class A
Carry-Over Amount or Class B Carry-Over Amount for that 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 the depositor exercises this option. Following
any deposit of this type, 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 the depositor fails for any
reason to deposit this 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 as
Excess Principal Collection or to the BCRC Certificate but instead will be
allocated to the Certificates monthly on each distribution date, except as
described below in this section.
An Early Amortization Event refers to any of the following events:
1. a failure by the depositor to convey Receivables in Additional
Accounts to the trust within five business days after the day on which it is
required to convey these Receivables under the Pooling and Servicing Agreement;
2. failure on the part of the depositor, the servicer or BCI, as
applicable:
(a) 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 this payment or deposit is required to be made, which
failure is not cured within five business days after notice
from the trustee of this failure;
(b) with respect to any series, to deliver a distribution date
Statement within ten business days after notice from the
trustee of this failure;
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(c) 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 other statutory liens, including liens in
favor of the Pension Benefit Guaranty Corporation, and some
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 this 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 this period in
accordance with the provisions of the Pooling and Servicing
Agreement; or
(d) 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
this failure, requiring the same to be remedied, shall have
been given to the depositor by the trustee or any enhancement
provider;
3. any representation or warranty made by the depositor in the Pooling
and Servicing Agreement or any information required to be given by the depositor
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 any
longer period as may be specified in the notice, of this failure, requiring the
same to be remedied, shall have been given to the depositor 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 the
depositor 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 the depositor 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 the depositor has repurchased the related Receivables or all of
these Receivables, if applicable, during this period in accordance with the
provisions of the Pooling and Servicing Agreement;
4. the occurrence of specified 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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5. the depositor or the trust becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
6. 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 that distribution date;
7. 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 that distribution date;
8. any Servicer Default occurs;
9. any Class A Carry-Over Amount or Class B Carry-Over Amount, as
applicable, is outstanding on six consecutive distribution dates;
10. the ratio, expressed as a percentage, of the average for each month
of the net losses on the Receivables in the trust, that is, 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 the average of the month-end
Pool Balances for that three-month period, exceeds 5% on an annualized basis;
provided, that this clause (10) may be revised or waived without the consent of
the Certificateholders if the Rating Agency Condition is satisfied;
11. the average percentage obtained by dividing the aggregate principal
collections for a Collection Period by the average daily Pool Balance for that
Collection Period:
(a) with respect to the three Collection Periods included in the
period from January through March of any calendar year is less
than 12% and
(b) with respect to any other three consecutive Collection Periods
is less than 14%,
provided, that this clause (11) may be revised or waived without the consent of
the Certificateholders if the Rating Agency Condition is satisfied;
12. the failure to pay the outstanding principal amount of the Class A
Certificates on the _______ distribution date or the failure to pay the
outstanding principal amount of the Class B Certificates on the _______
distribution date;
13. a Liquidation Event occurs; or
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14. 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 that distribution date.
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 this 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 the
depositor to convey Receivables in Additional Accounts to the trust as described
in clause (1) above during the Revolving Period and no other Early Amortization
Event has occurred, the Early Amortization Period resulting from this 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 (1) above. An Early Amortization Event
would no longer be deemed to exist as described in clause (1) 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 of 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 the depositor violates its
covenant set forth in clause 2(c) above, and this violation becomes an "Early
Amortization Event" as described in clause 2(c) above, on the day of the
Liquidation Event or Early Amortization Event occurring because of this
violation, as applicable, the depositor will immediately cease to transfer
Receivables to the trust and promptly give notice to the trustee of this
Liquidation Event or Early Amortization Event occurring because of this
violation, as applicable. Furthermore, under the terms of the Pooling and
Servicing Agreement, within 15 days following an insolvency event with respect
to the depositor or an Early Amortization Event as described in the preceding
sentence as a result of the occurrence of a violation set forth in 2(c) above,
the trustee will publish a notice of the insolvency event or Early Amortization
Event occurring because of this 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 other outstanding
series, or, with respect to any series with two or more classes, the
certificates of each of these classes, 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.
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In the event of any sale, liquidation or disposition of this type, 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 these 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 2(c)
above, the trustee will not sell the Receivables upon an Early Amortization
Event occurring because of this 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 the day following the
distribution date on which the aggregate of the invested amounts for all series
is zero and _________. 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 this sale will be paid pro rata to Certificateholders as of
the Series 1999-1 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 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 the servicer will indemnify
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
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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
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 case of this type, the trust, the trustee, and its
officers, directors, employees and agents will not be so indemnified if these
acts or omissions constitute, or the actual or threatened action, proceeding or
claim arises out of, or the 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 the depositor 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 these certificateholders or other beneficiaries with
respect to this 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
indemnification of this type 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.
The Pooling and Servicing Agreement provides that, except as described
above in this section and with other specified exceptions, neither the servicer
nor the depositor 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, in accordance with the Pooling and Servicing Agreement or
otherwise. However, neither the servicer nor the depositor will be protected
against any liability which would otherwise be imposed by reason of their
willful misfeasance, bad faith or gross negligence.
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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 legal
action which it may deem necessary or desirable for the benefit of the trust.
Collection and Other Servicing Procedures
Under 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 these 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 some 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 these duties to third parties in
accordance with the terms of the Pooling and Servicing Agreement, provided that
no delegation of this sort will relieve BCI of its responsibilities as servicer
with respect to these 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 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 the depositor
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
In the Pooling and Servicing Agreement the servicer covenants that:
(1) 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;
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(2) it will do nothing to impair the rights of the beneficiaries of the
trust in the Receivables or in the Certificates; and
(3) 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 this noncompliance has not been
cured within 30 days after this notice, or any 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 that Receivable or all Receivables in that Account, as applicable. This
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 that Receivable or Receivables plus accrued and unpaid interest
thereon. The amount of this deposit shall be deemed a Transfer Deposit Amount.
The purchase by the servicer constitutes the sole remedy available to
certificateholders if the relevant covenant or warranty of the servicer is not
satisfied and the 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
servicing fee payable in arrears on each distribution date on or prior to the
earlier to occur of __________ or the day after the distribution date on which
the aggregate of the invested amounts for all series is zero. The servicing fee
equals the aggregate of the monthly servicing fees specified in the supplements
to the Pooling and Servicing Agreement executed in connection with each series.
The Net Servicing Fee for this series 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 be equal to one-twelfth of
the product of 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% multiplied by the Invested Amount as of the last day of the second
preceding 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
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servicer solely to the extent amounts are available for distribution therefor in
accordance with the terms of the Series 1999-1 Supplement among BCI, the
depositor and the trustee.
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
that distribution date shall be deemed to be zero.
The servicer will pay from its servicing compensation specified
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.
Matters Regarding the Servicer
The servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that these duties are
no longer permissible under applicable law. No resignation under these
circumstances 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, under the Pooling and Servicing
Agreement and in and to the Receivables and the proceeds thereof and appoint a
new servicer. 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 the 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
transfer of the servicer rights and obligations to a new servicer, the trustee
will review any bids obtained from potential servicers meeting the 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 of these 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.
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A Servicer Default refers to any of the following events:
(1) failure by the servicer to make any payment, transfer or deposit
into the trust, or into any account created for a series of certificates, 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 this failure;
(2) failure on the part of the servicer duly to observe or perform 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 the depositor or the servicer
shall have repurchased the related Receivables or, if applicable, all the
Receivables during this period in accordance with the terms and provisions of
the Pooling and Servicing Agreement or 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;
(3) any representation, warranty or certification made by the servicer
in the Pooling and Servicing Agreement or in any certificate delivered under 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 the depositor
shall have repurchased the related Receivables or, if applicable, all the
Receivables during this period in accordance with the provisions of the Pooling
and Servicing Agreement; or
(4) the occurrence of an event of bankruptcy, insolvency or
receivership with respect to the servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (1) 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 this delay or failure referred to under clauses (2) or (3)
for a period of up to 60 business days, shall not constitute a Servicer Default
if this delay or failure or continuance was caused by an act of God or other
similar occurrence. Upon the occurrence of any event of this nature, 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 the depositor prompt notice of this failure or delay by it,
together with a description
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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 occurring after the commencement of the
Controlled Accumulation Period, an Initial Amortization Period or an Early
Amortization Period, the trustee will forward or cause to be forwarded to each
Certificateholder of record -- which is expected to be only Cede & Co., as
nominee for The Depository Trust Company, unless definitive certificates are
issued -- a 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:
(1) the aggregate amount of principal paid or distributed on the
Certificates and the aggregate amount of interest paid or distributed on the
Certificates on that distribution date;
(2) the average for the Deposit Dates in the relevant Collection Period
of Floating Allocation Percentage and the Principal Allocation Percentage;
(3) the Investor Default Amount for that distribution date;
(4) the Required Subordination Draw Amount, if any, for that
distribution date;
(5) the amount of the Investor Charge-Offs and the amounts of
reimbursements thereof for the preceding Collection Period;
(6) the amount of Class A Carry-Over Amount, if any, and the amount of
Class B Carry-Over Amount, if any, being paid and the amount remaining unpaid;
(7) the Pool Balance;
(8) the outstanding principal amount of Class A Certificates and Class
B Certificates after giving effect to distributions on that date;
(9) the applicable Class A Certificate Rate and Class B Certificate
Rate;
(10) the amount of the Monthly Servicing Fee for the preceding
Collection Period;
(11) a fraction expressed as a package calculated to eleven decimal
places, the numerator of which shall be the Invested Amount and the denominator
of which shall be the Adjusted Invested Amount as of that distribution date,
determined after taking into account any reduction in the Invested Amount which
will occur on that distribution date;
(12) the Available Subordinated Amount for that distribution date;
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(13) the Reserve Fund balance for that distribution date;
(14) the Excess Funding Account balance;
(15) the Collection Account balance with respect to that distribution
date;
(16) the Principal Account balance and
(17) whether an Early Amortization Event has occurred or whether BCI
has elected to not extend the Initial Principal Payment Date.
On or before January 31 of each calendar year, beginning with January
31, 2000, 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 only Cede & Co., as nominee for The Depository
Trust Company, 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 that calendar year, together
with information required to be provided by an issuer of indebtedness under the
Internal Revenue Code of 1986 for that preceding calendar year or the applicable
portion thereof during which this person was a Certificateholder, together with
any 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 & Co., as nominee for The Depository Trust
Company, Certificate Owners will receive tax and other information from
Participants and Indirect Participants rather than from the trustee. See
"Material 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 the depositor, to furnish a report relating to specified 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 of these obligations, specifying the
nature and status of the default.
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Copies of all statements, certificates and reports furnished to the
trustee may be obtained by any Certificateholder, which is expected to be Cede &
Co., as nominee for The Depository Trust Company, 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 the
depositor, the servicer, the trustee and BCI if BCI is not then the servicer,
without additional consent, so long as this 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 the depositor,
the servicer, the trustee and BCI if BCI is not then the servicer to conform the
provisions regarding removal of Accounts with those in effect prior to Amendment
No. 1 to the Pooling and Servicing Agreement to allow for the removal of
existing Receivables in Removed Accounts, including all amounts then held or
subsequently received in respect of these Receivables, if, at the time of this
amendment, these provisions will be consistent with sale treatment of the
Receivables by the depositor 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 the
depositor, 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 the 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 amendment of this sort, however, may:
(1) 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,
(2) change the definition or the manner of calculating interest on any
certificate,
(3) reduce the amount available under any enhancement,
(4) adversely affect the rating of any series or class by any Rating
Agency which rated that series or class or
(5) reduce the percentage of the unpaid principal balance of
certificates the holders of which are required to consent to any amendment,
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without, in the case of (1), (2), (3) or (5) the consent of each affected
certificateholder or the Variable Funding Certificate, as applicable and, in the
case of (4), the consent of the holders of certificates of the relevant series
or class evidencing not less than 66 2/3% of the aggregate unpaid principal
amount of the certificates of that 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 the 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 these 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 & Co., as nominee of
The Depository Trust Company, and that Certificate Owners will not be recognized
by the trustee as Certificateholders for this purpose. See "Book-Entry
Registration" and "Definitive Certificates" above.
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 the depositor 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 the depositor, 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 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 these
appointments, all rights, powers, duties and obligations shall be conferred or
imposed upon the trustee and the separate trustee or co-trustee jointly, or, in
any jurisdiction in which the trustee shall be incompetent or unqualified to
perform specified acts, singly upon the separate trustee or co-trustee, who
shall exercise and perform these rights, powers, duties and obligations solely
at the direction of the trustee.
The trustee may resign at any time, in which event the depositor 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 trustee under the
Pooling and Servicing Agreement or if the trustee
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becomes insolvent. In these 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 the depositor from BCI in accordance with the
Receivables Purchase Agreement, dated as of January 1, 1994, between BCI, as
seller, and the depositor, as purchaser, and as amended by Amendment Number 1
dated as of January 1, 1997 and as otherwise supplemented or amended from time
to time, filed as an exhibit to the registration statement of which this
prospectus is a part. The Receivables Purchase Agreement provides that it is
governed by New York law. The following discussion represents a summary of
relevant terms of the Receivables Purchase Agreement relating to the sale or
contribution of the Receivables to the depositor and does not purport to provide
a complete description. For further information, owners and prospective owners
of Certificates are advised to examine the Receivables Purchase Agreement, a
copy of which, without specified exhibits or schedules, will be made available
by the trustee upon written request.
Sale and Transfer of Receivables
Under the Receivables Purchase Agreement, BCI has sold and transferred
to the depositor 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 January 1, 1994 and from time to
time has sold and transferred and will sell or contribute and transfer to the
depositor Domestic Inventory Receivables created after January 1, 1994 including
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 the depositor in exchange for the net
cash proceeds received by the depositor 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 the
depositor in the Reserve Fund and a promissory note issued by the depositor 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
these Receivables plus accrued and unpaid interest thereon on the date of
transfer, less, if applicable, the amount of principal and interest allocable
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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 the Receivables, less, if applicable, the amount of principal and
interest allocable to any Participation Interest. With respect to Receivables
which are sold to the depositor, the principal amount of the Note will be
increased from time to time in connection with the sale of additional
Receivables by BCI to the depositor for inclusion in the trust in accordance
with the Receivables Purchase Agreement to the extent the purchase price for
these Receivables is not paid in cash by the depositor.
As security for the Note, the depositor has pledged to BCI the Variable
Funding Certificate held by the depositor. Principal and interest payable on the
Note may be paid by the depositor from time to time out of monies available to
the depositor from any source, including through the depositor'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 the
depositor 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 the excess, if any, of the Pool
Balance over the Required Pool Balance plus the Retained Interest exceeds 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 the depositor, BCI may transfer the Receivables to the
depositor as a capital contribution. When Receivables are transferred by
contribution, the depositor will not be required to pay cash to BCI or to
increase the amount of the Note as consideration for these Receivables.
In connection with the sale or contribution of the Receivables to the
depositor, BCI will indicate in its computer files that the Receivables have
been transferred to the depositor, and that the depositor has transferred its
interest therein to the trust. In addition, BCI will provide to the depositor
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 January 1, 1994 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 this 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 Thus Causing Losses on Your Certificates" and
"Material Legal Aspects of the Receivables--Transfer of Receivables and
Certificates."
Representations and Warranties
BCI makes representations and warranties to the depositor to the effect
that, among other things, as of the date of the issuance of the Certificates 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.
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BCI also makes representations and warranties to the depositor relating
to the Receivables to the effect that, among other things, as of January 1,
1994, the date of the issuance of the Certificates 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 as of the date they are
considered Accounts, each of these Additional Accounts 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 the depositor accept retransfer
of Receivables from the trust under the Pooling and Servicing Agreement, then
BCI shall, unless a Liquidation Event has occurred, repurchase these Receivables
from the depositor. The purchase price for these 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 this retransfer.
BCI also makes representations and warranties to the depositor to the
effect, among other things, that as of January 1, 1994, the date of the issuance
of the Certificates and each series issuance date the Receivables Purchase
Agreement constitutes a legal, valid and binding obligation of BCI and the
Receivables Purchase Agreement constitutes a valid sale to the depositor of all
right, title and interest of BCI in and to the Receivables, whether then
existing or subsequently created in the Accounts, the Collateral Security and,
with some exceptions, the proceeds thereof which is 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 the depositor under the Pooling and Servicing Agreement to
repurchase an interest in Receivables from the trust, BCI will be obligated to
repurchase this interest retransferred to the depositor for the amount which the
depositor was required to pay to the trust in connection with this retransfer.
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, except for specified tax and governmental and
other statutory liens, in the Receivables being transferred to the depositor to
any other person; provided that, the depositor may remove Receivables from the
trust for the purpose of assigning or selling these 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 the depositor for any
loss, liability or expense incurred by the depositor in connection with a breach
by BCI of some of its representations, warranties or covenants contained in the
Receivables Purchase Agreement.
In addition, BCI has expressly acknowledged and consented to the
depositor's assignment of its rights relating to the Receivables under the
Pooling and Servicing Agreement to the trustee.
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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 this proceeding either is
voluntary or is involuntary and, in the case of an involuntary proceeding, this
involuntary proceeding is not dismissed within 60 days of its institution, BCI
will immediately cease to sell or transfer Receivables to the depositor and will
promptly give notice of this event to the depositor 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 the depositor, BCI represents and warrants that the transfer constitutes
a valid transfer and assignment to the depositor 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 the depositor a valid, subsisting and
enforceable first priority perfected ownership interest in the Receivables
transferred to the depositor. BCI also represents and warrants with respect to
any Receivables subsequently created in the Accounts or Additional Accounts
transferred to the depositor that there exists in favor of the depositor a
valid, subsisting and enforceable first priority perfected ownership interest in
all of these Receivables subsequently created in these Accounts or Additional
Accounts on and after their creation. For a discussion of the depositor's rights
arising from these representations and warranties not being satisfied, see
"Description of the Certificates--Representations and Warranties."
Each of BCI and the depositor 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, in the case of
Receivables that are deemed to be accounts, file an appropriate financing
statement or statements and, 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 the depositor to
perfect the interests of the depositor and the trust, respectively, in the
Receivables. Continuation statements will be filed as required to continue the
perfection of these interests. The Receivables will not be stamped to indicate
the interest of the depositor 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 the depositor represents and warrants in the Pooling and
Servicing Agreement, that except for specified liens permitted by the Pooling
and Servicing Agreement each these 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
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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
some circumstances, still be secured by the proceeds of these 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 limited circumstances under the UCC and applicable federal
law in which prior or subsequent transferees of Receivables could have an
interest in these 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 in the ordinary course of that
purchaser's business may, under some circumstances, for instance, 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 the depositor and the trust therein, as described in
the second preceding paragraph above, could support a claim by a subsequent
purchaser of the Receivables that this purchaser acted without notice of any
claim by the depositor or the trust with respect to the Receivables. A tax or
other government lien or non-consensual lien on property of BCI or the depositor
arising prior to the time a Receivable is conveyed to the trust may also have
priority over the interest of the trust in that Receivable.
Under the Receivables Purchase Agreement, in connection with any
Receivables sold or contributed and assigned by BCI to the depositor, BCI
warrants to the depositor 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, the
depositor 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 the depositor 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 the depositor and the
trust and except
for tax and other statutory liens including liens in favor of the
Pension Benefit Guaranty Corporation and
that the depositor 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."
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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 these collections. In the event of this type of
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.
The depositor has represented and warranted to the trustee that the
transfer of the Receivables on January 1, 1994 constitutes, and the transfer of
the depositor'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 the depositor in and to the
Receivables, including any additional Receivables subsequently created in the
Accounts, and in any Additional Accounts, except for specified tax and
governmental liens and claims, all monies due or to become due thereon and, with
some exceptions, the proceeds thereof which is effective as to each Receivable
upon the transfer thereof to the trust.
Tax and other statutory liabilities, like 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 of these
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 these 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.
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 the depositor, 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 some
circumstances, could be substantial, in the amount of payments to
Certificateholders could result.
Matters Related to Unfunded Receivables
Receivables are created on the books of BCI and sold to the depositor
and assigned to the trust as early as the day products are shipped by the
manufacturer, importer or distributor to the dealer; however, BCI usually does
not pay the manufacturer, importer or distributor for the product for a period
of time after this shipment. If BCI were to become insolvent or for any other
reason did not or was not able to pay the manufacturer for a product, it may not
be possible to collect the unfunded receivables from the dealer. In addition,
the manufacturer, importer or distributor might be able to delay or prevent the
trust from receiving payments otherwise owing to the trust with respect to these
receivables. See "The Floorplan and Asset-Based Financing Business--Creation of
the Receivables."
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Material Matters Relating to Bankruptcy
In connection with any Receivables sold or contributed and assigned by
BCI to the depositor under the Receivables Purchase Agreement, BCI warrants to
the depositor in the Receivables Purchase Agreement that the sale of these
Receivables by it to the depositor is a valid sale of these Receivables. In
addition, BCI and the depositor have agreed to treat the transfer of Receivables
by BCI to the depositor under the Receivables Purchase Agreement as a sale of
the Receivables to the depositor, and BCI has or will take all actions that are
required under Vermont law to perfect the depositor'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 the depositor under the Receivables Purchase Agreement should be
recharacterized as a pledge of these Receivables to secure a borrowing by BCI,
then delays in payments of collections of Receivables to the depositor could
occur or, should the court rule in favor of that trustee, debtor in possession
or creditor, reductions, which, in some circumstances, could be substantial, in
the amount of these payments could result.
In addition, if BCI were to become a debtor in a bankruptcy case and a
creditor or bankruptcy trustee of this debtor or this debtor itself were to
request a court to order that BCI should be substantively consolidated with the
depositor, delays in payments on the Receivables and, accordingly, the
Certificates could result. Should the bankruptcy court rule in favor of that
creditor, bankruptcy trustee or this debtor, reductions, which, in some
circumstances could be substantial, in the amount of these payments could
result.
The depositor represents and warrants to the trustee in connection with
the transfer of any Receivables to the trust that the transfer of these
Receivables to the trust and of the depositor's right to additional Receivables
will constitute a valid transfer and assignment to the trust of all right,
title and interest of the depositor in and to the Receivables, including any
additional Receivables subsequently created, except for specified tax and
government liens and claims, all monies due or to become due thereon and,
with some exceptions, the proceeds thereof which is effective as to each
Receivable upon the transfer thereof to the trust.
The depositor's certificate of incorporation provides that the
depositor is required to have two independent directors and that it shall not
file a voluntary application for relief under the United States bankruptcy code
without the affirmative vote of its two independent directors. Under the Pooling
and Servicing Agreement, BCI, the servicer and any enhancement provider covenant
that they will not at any time institute against the depositor any bankruptcy,
reorganization or other proceedings under any federal or state bankruptcy or
similar law. In addition, other steps have been taken to avoid the depositor's
becoming a debtor in a bankruptcy case. Notwithstanding these steps, if the
depositor were to become a debtor in a bankruptcy case, and a bankruptcy trustee
for the depositor or the depositor as debtor in possession or a creditor of the
depositor were to take the position that the transfer of the Receivables from
the depositor 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 that trustee, debtor in possession or creditor,
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<PAGE>
reductions, which, in some circumstances, could be substantial, in the amount of
these payments could result.
The depositor does not intend to file, and BCI has agreed that it will
not cause the depositor to file, a voluntary or involuntary petition for relief
under the United States bankruptcy code or any similar applicable state law with
respect to the depositor so long as the depositor 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 the depositor to file this type of petition and permit
BCI as creditor of the depositor, on account of the Note issued by the depositor
to BCI as partial consideration for the transfer of the Receivables to the
depositor and on account of the related pledge of the Variable Funding
Certificate as security for the Note, to commence an involuntary petition
against the depositor.
If BCI or the depositor were to become a debtor in a bankruptcy case
causing an Early Amortization Event to occur, then, according to the Pooling and
Servicing Agreement and the Receivables Purchase Agreement, new Receivables
would no longer be transferred to the depositor by BCI and, according to the
Pooling and Servicing Agreement, only collections on Receivables theretofore
sold to the depositor 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 these circumstances, the servicer is obligated
to allocate all principal collections on Receivables to the oldest principal
balance first. If this allocation method were to be altered by the bankruptcy
court, the rate of payment on the Certificates might be adversely affected.
The occurrence of specified 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 this 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 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. Both types of changes could adversely affect
the tax consequences described in this section. The discussion does not address
all of the tax consequences that may be relevant to a particular
Certificateholder in light of its own circumstances. Further, the following
specific categories of Certificateholders may be subject to special tax rules
and limitations which are not discussed in this section: dealers or trades in
securities, financial institutional, life-insurance companies, tax-exempt
entities, United States holders that have a principal place of business outside
the United States, United States holders whose functional currency is not the
United States dollar, United States holders who hold the Certificates as part of
a straddle, hedge, conversion, synthetic security or constructive sale
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transaction or specified United States alien holders. It is suggested that
prospective purchasers 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
This section sets forth the federal income tax opinions of Morgan,
Lewis & Bockius LLP, special U.S. tax counsel to the depositor 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, is of the opinion that, for federal
income tax purposes, the Certificates will be characterized as indebtedness of
the depositor secured by the Receivables, and the trust will be treated as a
mere security device and will not be subject to tax. The 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 the depositor and some or all
classes of Certificateholders, or a publicly traded partnership taxable as a
corporation in which the depositor owns common stock and some or all classes of
Certificateholders own preferred stock.
Because the depositor 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 will be adequately secured by the
Receivables, and other collateral to be held by the trust, Morgan, Lewis &
Bockius LLP is of the opinion that the IRS would not prevail in any attempt to
characterize the Certificates as other than indebtedness. Accordingly, the
transaction will not be treated as a sale of receivables for United States
federal income tax prepaid, although it will be treated as a sale of the
Receivables for financial accounting 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. This partnership would not be subject to federal income tax if the
trust were treated as a partnership, other than a publicly traded partnership
taxable as a corporation. 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 the
depositor and the Certificateholders treated as partners, in accordance with
their respective ownership of the interests of the 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 the depositor. In addition, if the trust were treated as a
partnership, income derived from the partnership by a Certificateholder that is
a pension fund or other tax-exempt entity treated as a partner may be treated as
unrelated business taxable income.
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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
publicly traded partnership 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. This 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, may
be 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 the
depositor secured by the Receivables. The depositor and the Certificateholders
have agreed to treat the Certificates as indebtedness for federal income tax
purposes and neither the trustee nor the depositor will comply with the
reporting requirements applicable to corporations, publicly traded partnerships
or partnerships.
Taxation of Interest Income to Certificateholders
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, other than payments of discount, will be a return of capital to the
extent of the Certificateholder's basis in the Certificate allocable to those
payments.
Original Issue Discount.
It is not anticipated that the Certificates will be issued with
original issue discount. 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 having original issue
discount. A holder of a Certificate having original issue discount must include
original issue discount 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 original issue discount 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 which a substantial
amount of the Certificates of that class are first sold to the
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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 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. As indicated
above, the IRS may take the position that some of the interest on a certificate
is "qualified stated interest."
A Certificateholder must include in gross income for any taxable year
the sum of the "daily portions" of the original issue discount that accrue 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
original issue discount that accrues on each Certificate during each "accrual
period," which in general is the period corresponding to the period between
distribution dates. The original issue discount accruing during any accrual
period is divided by the number of days in the period to determine the daily
portion of original issue discount for each day in the period. The amount of
original issue discount 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 original issue discount
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 Internal Revenue Code of 1986. 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 Internal
Revenue Code of 1986.
Sale or Exchange of Certificates
Upon a sale of a Certificate, a Certificateholder 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 original
issue discount 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. 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.
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Foreign Investors
A Certificateholder that is 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, the depositor. 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 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 signed by the non-U.S. Certificateholder under penalties of perjury,
that certifies that the non-U.S. Certificateholder is not a U.S. Person and that
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 last U.S. Person in the chain of
payment prior to payment to a non-U.S. Certificateholder 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 other financial institutions,
the organization or institution may provide a signed statement to the last U.S.
Person in the chain of payment prior to payment to a non-U.S. Certificateholder.
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.
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, in the case of a Certificateholder that is an
individual, the non-U.S. Certificateholder is not present in the United States
for 183 days or more during the taxable year in which the retirement or
disposition occurs or satisfies a "substantial presence" test for that
particular year, and, in the case of gain representing accrued interest, the
conditions described in the preceding paragraph for exemption from withholding
are satisfied. Specific 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 the depositor.
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
would be subject to U.S. federal income tax, including the branch profits tax,
on its net income from the partnership. Further, specific 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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Information Reporting and Backup Withholding
Interest, including original issue discount, 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
other exempt recipients, which may be required to establish their exempt status.
Backup withholding 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 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.
It is recommended that all investors consult their own tax advisers regarding
the Federal, State, Local or Foreign Income or Estate Tax Consequences of the
Purchase, Ownership and Disposition of the Certificates.
ERISA Considerations
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, or by or for the account of any entity whose underlying
assets include any assets subject to laws by reason of investment in that
entity. By accepting and holding any Certificate, the holder of the Certificate
will be deemed to have represented and warranted that it is not an entity
described above, and that its acquisition and holding of the Certificate is in
compliance with the foregoing restrictions.
Underwriting
Subject to the terms and conditions of the Underwriting Agreement among
the depositor, BCI and the underwriters named below relating to the
Certificates, 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.
<TABLE>
<CAPTION>
Principal Amount Principal Amount
of Class A of Class B
Underwriter Certificates Certificates
- ---------------------------------------------------- ----------------------------- ---------------------------
<S> <C> <C>
J.P. Morgan Securities Inc.........................
[Underwriter].......................................
----------------------------- ---------------------------
</TABLE>
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<TABLE>
<CAPTION>
Principal Amount Principal Amount
of Class A of Class B
Underwriter Certificates Certificates
- ---------------------------------------------------- ----------------------------- ---------------------------
<S> <C> <C>
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 specified dealers at these 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 these 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, these
concessions and this 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 the secondary 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
specified selling group members to bid for and purchase the Certificates. As an
exception to these rules, the underwriters are permitted to engage in specified
transactions that stabilize the price of the Certificates. These 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 these purchases.
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 in this section may have on the prices of the
Certificates. In addition, neither the depositor nor any of the
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underwriters makes any representation that the underwriters will engage in these
transactions or that these 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, specified liabilities,
including liabilities under the Securities Act of 1933, as amended.
Legal Matters
Specified 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. Specified
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 by 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. These reports 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."
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These reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles.
The trust will file with the Securities and Exchange Commission those
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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ANNEX I
PRIOR SERIES
The Certificates will be the fifth series to be issued by the trust. The
table below summarizes some 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............................................................ December 1999
Class A Certificate Rate......................................................................Commercial Paper Rate
Series 1996-1 Termination Date.....................................................................November 3, 2000
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 (a) One month LIBOR plus 0.12% and (b) Net Receivables Rate
Class B Interest Rate.........................Lesser of (a) one month LIBOR plus 0.33% and (b) 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
Series Servicing Fee Rate........................................................................................2%
Initial Available Subordinated Amount....................................................................$2,000,000
</TABLE>
1
<PAGE>
ANNEX II
Receivables in Additional Accounts Conveyed to the trust by the depositor
<TABLE>
<CAPTION>
Principal Amount
Date Receivables of Receivables in
Assignment Transferred Relevant Number Additional
Number to Trust Cut-Off Date of Accounts Accounts
-------- -------- ------------ ----------- --------
<S> <C> <C> <C> <C>
1 Sept. 30, 1994 Sept. 26, 1994 277 $ 28,569,849
2 Jan. 30, 1996 Jan. 18, 1996 610 $ 86,817,128
3 Oct. 31, 1997 Oct. 22, 1997 51 $ 30,132,722
4 Feb. 26, 1998 Jan. 1, 1998 832 $ 98,371,236
5 Oct. 16, 1998 Aug. 28, 1998 457 $ 92,037,386
6 Mar. 19, 1999 Mar. 2, 1999 311 $126,143,143
</TABLE>
2
<PAGE>
ANNEX III
Global Clearance, Settlement and Tax Documentation Procedures
Except in limited circumstances, the globally offered Certificates will
be available only in book-entry form. Investors in the globally offered
Certificates may hold them through any of The Depository Trust Company,
Cedelbank or Euroclear. The globally offered Certificates 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 globally offered
Certificates 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 globally offered
Certificates through The Depository Trust Company 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 The
Depository Trust Company Participants holding Certificates will be effected on a
delivery-against- payment basis through the respective Depositaries of Cedelbank
and Euroclear, in the capacity of Depositaries and as The Depository Trust
Company Participants.
Non-U.S. holders of globally offered Certificates will be subject to
U.S. withholding taxes unless these holders meet specific requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All globally offered Certificates will be held in book-entry form by The
Depository Trust Company in the name of Cede & Co. as nominee of The Depository
Trust Company. Investors' interests in the globally offered Certificates will be
represented through financial institutions acting on their behalf as direct and
indirect Participants in The Depository Trust Company. As a result, Cedelbank
and Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold these positions in accounts as
The Depository Trust Company Participants.
Investors electing to hold their globally offered Certificates through
The Depository Trust Company 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.
3
<PAGE>
Investors electing to hold their globally offered Certificates 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. Globally offered Certificates
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 The Depository Trust Company Participants. Secondary
market trading between The Depository Trust Company 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 The Depository Trust Company seller and Cedelbank or
Euroclear purchaser. When globally offered Certificates are to be transferred
from the account of The Depository Trust Company 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 globally offered Certificates against payment. Payment will include
interest accrued on the globally offered Certificates 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 Depository Trust Company Participant's account
against delivery of the globally offered Certificates. After settlement has been
completed, the globally offered Certificates 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 globally offered Certificates
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
4
<PAGE>
Euroclear. Under this approach, they may take on credit exposure to Cedelbank or
Euroclear until the globally offered Certificates are credited to their accounts
one day later.
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 globally offered Certificates would incur overdraft
charges for one day, assuming they cleared the overdraft when the globally
offered Certificates were credited to their accounts. However, interest on the
globally offered Certificates would accrue from the value date. Therefore, in
many cases the investment income on the globally offered Certificates earned
during that one-day period may substantially reduce or offset the amount of
these 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, The
Depository Trust Company Participants can employ their usual procedures for
sending globally offered Certificates to the respective Depositary for the
benefit of Cedelbank Participants or Euroclear Participants. The sale proceeds
will be available to The Depository Trust Company seller on the settlement date.
Thus, to The Depository Trust Company Participant a cross-market transaction
will settle no differently than a trade between two The Depository Trust Company
Participants.
Trading between Cedelbank or Euroclear seller and The Depository Trust
Company purchaser. Due to time zone differences in their favor, Cedelbank
Participants and Euroclear Participants may employ their customary procedures
for transactions in which globally offered Certificates are to be transferred by
the respective clearing system, through the respective Depositary, to The
Depository Trust Company 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 globally offered Certificates to The Depository Trust Company Participant's
account against payment. Payment will include interest accrued on the globally
offered Certificates 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.
5
<PAGE>
Finally, day traders that use Cedelbank or Euroclear and that purchase
globally offered Certificates from The Depository Trust Company 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:
(1) 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;
(2) borrowing the globally offered Certificates in the U.S. from The
Depository Trust Company Participant no later than one day prior to settlement,
which would give the globally offered Certificates sufficient time to be
reflected in their Cedelbank or Euroclear account in order to settle the sale
side of the trade; or
(3) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from The Depository Trust Company
Participant is at least one day prior to the value date for the sale to the
Cedelbank Participant or Euroclear Participant.
Material U.S. Federal Income Tax Documentation Requirements
A beneficial owner of globally offered Certificates holding securities
through Cedelbank or Euroclear (or through The Depository Trust Company 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
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 that beneficial owner and the U.S. entity required to
withhold tax complies with applicable certification requirements and that
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 globally
offered Certificates 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 this 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).
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<PAGE>
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.
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
a citizen or resident of the United States,
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
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 globally offered
Certificates. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the globally
offered Certificates.
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.
7
<PAGE>
GLOSSARY
"ACCOUNTS" means the accounts designated to the trust and identified in
the computer file or microfish or written list delivered to the Trustee on the
date of issuance of the first series of certificates under the Pooling and
Servicing Agreement plus all Additional Accounts less any accounts which have
been renewed from the trust.
"ACCUMULATION PERIOD COMMENCEMENT DATE" shall mean _______, 200_, if
the Accumulation Period Length is six months; _______, 200_, if the Accumulation
Period Length is five months; _______, 200_, if the Accumulation Period Length
is four months; _______, 200_, if the Accumulation Period Length is three
months; _______, 200_, if the Accumulation Period Length is two months; _______,
200_, 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 this determination, any outstanding series enters into an early
amortization period, the Accumulation Period Commencement Date shall be the
earlier of the date that this outstanding series entered into its early
amortization period and the Accumulation Period Commencement Date, as previously
determined.
"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 [six] multiplied by a
fraction, the numerator of which is the Invested Amount as of _____________,
after giving effect to all changes therein on that date, and the denominator of
which is the sum of this Invested Amount and the invested amounts as of
_____________, after giving effect to all changes therein on that 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 any Monthly Period, the amount by
which the Controlled Deposit Amount for all preceding Distribution Dates exceeds
the amount deposited in the Principal Account for the preceding Monthly Period.
"ADDITIONAL ACCOUNTS" shall mean any accounts designated by the
depositor to be included in the trust in addition to those designated at the
time of this first series of certificates.
"ADDITIONAL CUT-OFF DATE" shall mean the date as of which additional
accounts are identified and selected to be included as Additional Accounts.
"ADJUSTED INVESTED AMOUNT" means the initial principal amount of the
Certificates plus the amount of any withdrawals from the Excess Funding Account
in connection with an increase in Receivables in the trust since the date of the
issuance of the certificates minus the amount of any additions to the Excess
Funding Account in connection with a reduction in the Receivables in the trust
since the date of the issuance of the certificates.
<PAGE>
"ADJUSTMENT DATE" shall mean the second day on which dealings in
deposits in United States dollars are transacted in the London interbank market
preceding the first day of the related Interest Period.
"ADJUSTMENT PAYMENT" shall be an amount payable by the depositor for
deposit into the Collection Account 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 that Receivable was created in respect of a product which was refused or
returned by an obligor, the amount of this adjustment will be deducted from the
Pool Balance if the adjustment reduces 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; the amount of the payment will be an amount equal to
the deficiency up to the amount of the adjustment.
"ASSET-BASED RECEIVABLES" shall mean the Receivables resulting from
extensions of credit made by BCI, an affiliate of BCI or another lender and
acquired by BCI or one of its affiliates to dealers to finance working capital
needs and to manufacturers and distributors to finance production, manufacturing
and inventory of consumer, recreational and commercial products.
"AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" for any Distribution Date
means the sum of
(1) the product of 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 multiplied by principal
collections for the related Collection Period,
(2) 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,
(3) the Series 1999-1 Investor Allocation Percentage of Miscellaneous
Payments for that Distribution Date,
(4) Excess Principal Collections, if any, from other series allocated
to the Certificates,
(5) 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,
(6) 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
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<PAGE>
(7) 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 these floating allocation percentages and
principal allocation percentages.
"AVAILABLE RETAINED COLLECTIONS" for any Deposit Date means the sum of
the Available Retained Non-Principal Collections for that date and the Available
Retained Principal Collections for that date; provided, however, that the
Available Retained Collections will be zero for any Collection Period for which
the Available Subordinated Amount is zero for the Distribution Date occurring in
that Collection Period.
"AVAILABLE RETAINED NON-PRINCIPAL COLLECTIONS" for any Deposit Date
means an amount equal to the product of the excess of the Retained Percentage
for the related Deposit Date over the Excess Retained Percentage for this
Deposit Date multiplied by Non-Principal Collections for that date.
"AVAILABLE RETAINED PRINCIPAL COLLECTIONS" for any Deposit Date means
an amount equal to the product of the excess of the Retained Percentage for this
Deposit Date over the Excess Retained Percentage for this Deposit Date and
principal collections for that date.
"AVAILABLE SUBORDINATED AMOUNT" for any date of determination after the
first Distribution Date means an amount equal to the sum of:
the lesser of:
(1) 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 the date of determination is a
Distribution Date, that 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 portion
of the Investor Default Amount on the preceding Distribution
Date or, if the date of determination is a Distribution Date,
that 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
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<PAGE>
and the denominator of which is the Pool Balance as of the
last day of the preceding Collection Period, plus the
aggregate amount of Excess Servicing paid to the holder of the
BCRC Certificate on the previous Distribution Date, minus the
Incremental Subordinated Amount for the second preceding
Distribution Date or if the date of determination is a
Distribution Date, the preceding Distribution Date, plus the
Incremental Subordinated Amount for the immediately preceding
Distribution Date, or if the date of determination is a
Distribution Date, that Distribution Date plus [5.82]% of 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
(2) the Required Subordinated Amount for that date of
determination; and
the amount of any optional increase in the Available
Subordinated Amount exercised by the depositor as described in
the prospectus under "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 date of the issuance of the Certificates through the first
Distribution Date is equal to the Required Subordinated Amount as of that date
of determination, which will equal at least $_________ on the date of the
issuance of the Certificates.
"BCI" shall mean Bombardier Capital Inc., a Massachusetts corporation.
"BCI DOMESTIC INVENTORY PORTFOLIO" shall mean the accounts, whether or
not they would be Eligible Accounts and whether or not they have been added to
the Trust generating Receivables as a result of extensions of credit and
advances made to dealers if consumer, recreational and commercial products which
dealers are located in the United States.
"BCRC CERTIFICATE" means the certificate held by the depositor and
representing the Retained Interest.
"BUSINESS DAY" shall mean any day other than (a) a Saturday or Sunday
or (b) another day on which banking institutions or trust companies in the State
of New York are authorized or obligated by law, executive order or governmental
decree to be closed.
"CERTIFICATE OWNER" shall mean a beneficial owner of a Certificate.
"CERTIFICATE RATE" shall mean the Class A Certificate Rate or the Class
B Certificate Rate, as the context requires.
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<PAGE>
"CERTIFICATEHOLDER" shall mean The Depository Trust Company, acting
upon the instructions of its Participants, with respect to the taking of
actions, and Cede & Co. with respect to the receipt of distributions, notices,
reports and statements.
"CERTIFICATES" shall mean the Class A Certificates and the Class B
Certificates, collectively.
"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 Class A Monthly Interest for that 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 the actual Class A Monthly
Interest for that Distribution Date.
"CLASS A CERTIFICATE RATE" shall mean the per-annum rate at which
interest accrues on the principal balance of the Class A Certificates and shall
be equal to the lesser of LIBOR plus ____% and the Net Receivables Rate.
"CLASS A CERTIFICATES" shall mean the floating rate, Class A
asset-backed certificates, Series 1999-1, issued by the trust.
"CLASS A MONTHLY INTEREST" for any Distribution Date means an amount
equal to the product of
the actual number of days elapsed in the related Interest Period divided
by 360 days and
the product of
(1) the Class A Certificate Rate and
(2) 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 date of the
issuance of the certificates, after giving effect to any
payments of principal on the Class A Certificates on that
preceding Distribution Date.
"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 Class B Monthly Interest for that 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 the actual Class B Monthly
Interest for that Distribution Date;
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<PAGE>
"CLASS B CERTIFICATE RATE" shall mean the per-annum rate at which
interest accrues on the principal balance of the Class B Certificates and shall
be equal to the lesser of LIBOR plus ____% and the Net Receivables Rate.
"CLASS B CERTIFICATES" shall mean the floating rate, Class B
asset-backed certificates, Series 1999-1, issued by the trust.
"CLASS B MONTHLY INTEREST" for any Distribution Date means an amount
equal to the product of
the actual number of days elapsed in the related Interest Period
divided by 360 days and
the product of
(1) the Class B Certificate Rate and
(2) 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 date of the issuance
of the certificates, after giving effect to any payments of
principal on the Class B Certificates on that preceding
Distribution Date.
"COLLATERAL SECURITY" shall mean the security granted by the obligor to
secure payment of the Receivables.
"COLLECTION ACCOUNT" shall mean the Eligible Deposit Account
established and maintained by the Servicer for the benefit of the
Certificateholders in the name of the Trustee and designated as the "Collection
Account.".
"COLLECTION PERIOD" shall mean the preceding calendar month.
"CONTROLLED ACCUMULATION AMOUNT" means for any Distribution Date an
amount sufficient together with a similar amount to be deposited on other
Distribution Dates in the Controlled Accumulation Period 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:
(1) the commencement of the Early Amortization Period or any Initial
Amortization Period,
6
<PAGE>
(2) payment of the full Invested Amount, and
(3) the Series 1999-1 Termination Date.
"CONTROLLED DEPOSIT AMOUNT" means, for any Monthly Period, the sum of
the Controlled Accumulation Amount for that Monthly Period plus the Accumulation
Shortfall for the related Monthly Period.
"DAILY ALLOCATION" shall mean for any Deposit Date:
(1) the product of the Floating Allocation Percentage for that date
multiplied by the aggregate amount of Non-Principal Collections on that date,
plus
(2) the Series 1999-1 Available Retained Collections for that date.
"DEFAULTED AMOUNT" for any Collection Period will be an amount which
shall not be less than zero equal to the aggregate principal amount of principal
Receivables that became Defaulted Receivables during the preceding Collection
Period less the full amount of the Defaulted Receivables which are subject to
retransfer from the trust to the depositor or purchased by the Servicer for that
Collection Period unless certain events of bankruptcy, insolvency, or
receivership have occurred with respect to either of the depositor or the
Servicer or unless a Liquidation Event has occurred, in which event the
Defaulted Amount will not be reduced for those Defaulted Receivables.
"DEFAULTED RECEIVABLES" on any Distribution Date are, without
duplication:
(1) 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,
(2) all Receivables originally secured by a security interest in a
related Eligible Product which have not been paid in full for
more than 60 days after the sale of the related Eligible
Product,
[(3) all Receivables in an Account in which interest in the amount
of $150 or more has been delinquent for 90 days or more, and
(4)] 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
this Account became an Ineligible Account.
7
<PAGE>
Receivables are not Defaulted Receivables merely because they become Ineligible
Receivables.
"DEFICIENCY AMOUNT" shall mean for each Distribution Date
the sum of
(1) Monthly Interest for the Distribution Date,
(2) Monthly Interest accrued but not paid with respect to prior
Distribution Dates and interest thereon,
(3) the Net Servicing Fee for the Distribution Date,
(4) the Investor Default Amount for the Distribution Date, and
(5) the Series 1999-1 Investor Allocation Percentage of any
Adjustment Payment for the Distribution Date that has not been
deposited in the Collection Account as required under the
Pooling and Servicing Agreement, exceeds
the sum of
(1) Investor Non-Principal Collections and Investment Proceeds for
such Distribution Date and
(2) if the amounts of Investor Non-Principal Collections and
Investment Proceeds are not sufficient to cover all amounts
described above in (1) through (5) of this definition, the
amount of funds in the Reserve Fund on such Distribution Date
available to fund the remaining amounts.
"DEPOSIT DATE" shall mean any date on which the Servicer receives
collections.
"DEPOSITARY" shall mean either Citibank, N.A. in its capacity as
depositary for Cedelbank or Morgan Guaranty Trust Company of New York in its
capacity as depositary for the Euroclear System; "DEPOSITARIES" shall mean these
two entities in those capacities, collectively.
"DESIGNATED MANUFACTURER OVERCONCENTRATIONS" on any Distribution Date
means the excess of 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 trust on the last day of the
Collection Period immediately preceding that Distribution Date over [50]% of the
Pool Balance on the last day of that immediately preceding Collection Period
where the "Designated Manufacturer" is collectively Bombardier Inc. and its
subsidiaries; provided, however, that this percentage and the entities included
as Designated Manufacturer may be
8
<PAGE>
adjusted from time to time without the consent of the Certificateholders, if the
Rating Agency Condition is satisfied.
"DETERMINATION DATE" shall mean, with respect to any Distribution Date,
the day that is two business days prior to that Distribution Date.
"DISTRIBUTION DATE" shall mean the 15th day of each month, or if this
day is not a business day, on the next succeeding business day, commencing
[[month] 15, 1999].
"DISTRIBUTION DATE STATEMENT" means the monthly statement prepared by
the Servicer setting forth information with respect to the Certificates.
"DOMESTIC INVENTORY RECEIVABLES" shall mean Receivables arising from
extensions of credit and advances made by BCI, an affiliate of BCI or another
lender and acquired by BCI or one of its affiliates to dealers of consumer,
recreational and commercial products which dealers are located in the United
States.
"EARLY AMORTIZATION PERIOD" shall mean the period beginning as of the
day an Early Amortization Event occurs.
"ELIGIBLE ACCOUNT" shall mean:
(1) 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, in the ordinary course of business, and
(2) 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 that obligor, it which, in
each case, as of the date of determination thereof relates to an obligor that is
an "Eligible Obligor" and 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, an Account
or any Receivable therein to any person without affecting the Account's status
as an Eligible Account.
"ELIGIBLE DEPOSIT ACCOUNT" shall mean either (1) a segregated account
with the corporate trust department of the Trustee or a depository institution
or trust company organized under the laws of the United States of America or any
one of the states thereof, or the District of Columbia (or any domestic branch
of a foreign bank) which at all times has either a long-term unsecured debt
rating of A2 or better by Moody's and of AAA or better by Standard & Poor's or
such other rating that is acceptable to each Rating Agency, as evidenced by a
letter from such Rating
9
<PAGE>
Agency to the Trustee or a certificate of deposit rating of P-1 by Moody's and
A-1+ by Standard & Poor's or such other rating that is acceptable to each Rating
Agency, as evidenced by a letter from such Rating Agency to the Trustee and is a
member of the FDIC or (2) a segregated trust account with the corporate trust
department of the Trustee, 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, being a member of FDIC and having corporate
trust powers and acting as trustee for funds deposited in that account, so long
as any of the securities of that 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 INVESTMENTS" shall mean:
(1) obligations of or fully guaranteed by the United States,
(2) 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 this type of obligation the rating of which is based
on the credit of a person or entity other than that 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,
(3) 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,
(4) demand deposits, time deposits and certificates of deposit which
are fully insured by the FDIC,
(5) bankers' acceptances issued by any depository institution or trust
company described in (2) above,
(6) investments in money market funds which have the highest rating
from, or have otherwise been approved in writing by, any individual Rating
Agency,
(7) 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
10
<PAGE>
(8) other investments acceptable to any individual Rating Agency as
being consistent with the then-current rating of the Certificates.
"ELIGIBLE OBLIGOR" shall mean:
in the case of Domestic Inventory Receivables, a dealer that is
located in the United States of America (including its territories
and possessions),
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
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.
"ELIGIBLE PRODUCTS" shall mean consumer, recreational and commercial
products, including, but not limited to, 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 these products.
"ELIGIBLE RECEIVABLE" shall mean each Receivable:
(1) 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,
(2) which arose under an Account that at the time the Receivable was
transferred to the trust was an Eligible Account,
(3) which is owned by BCI at the time of sale or contribution by BCI to
the depositor,
(4) which represents the obligation of an obligor to repay an advance
made to or on behalf of that obligor, or credit extended for that 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,
(5) which in the case of:
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
11
<PAGE>
sold or 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,
Asset-Based Receivables, 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.
(6) which is not unenforceable as a result of any violation of
requirements of law applicable thereto and the related inventory security
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,
(7) with respect to which all consents and governmental authorizations
required to be obtained by BCI or an affiliate of BCI or the depositor in
connection with the creation of the Receivable or the transfer thereof to the
depositor and the trust or the performance by BCI or an affiliate of BCI of the
inventory security agreement in the case of Domestic Inventory Receivables or
the related loan agreement in the case of Asset-Based Receivables pursuant to
which the Receivable was created, have been duly obtained, effected or given and
are in full force and effect,
(8) as to which at all times following the transfer of the 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 after this transfer and
which relate to affiliates of the depositor,
(9) which has 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,
(10) which will at all times be the legal and assignable payment
obligation of the obligor relating thereto, enforceable against that obligor in
accordance with its terms, as modified or revised from time to time with the
consent of the Servicer, except as enforceability may be limited by the
bankruptcy code or other applicable insolvency laws,
(11) which at the time of transfer to the trust is enforceable against
the obligor to the extent of the full principal amount of the Receivable, except
as such enforceability may be limited by the bankruptcy code or other applicable
insolvency laws,
12
<PAGE>
(12) as to which, at the time of transfer of the Receivable to the
trust, BCI or an affiliate of BCI and the depositor have satisfied all their
respective obligations under the Pooling and Servicing Agreement with respect to
the Receivable required to be satisfied at that time,
(13) as to which, at the time of transfer of the Receivable to the
trust, neither BCI or any affiliate of BCI nor the depositor 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
(14) 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
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.]
"EUROCLEAR OPERATOR" shall mean the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York or any successor entity thereto.
"EUROCLEAR PARTICIPANTS" shall mean participants of the Euroclear
system.
"EXCESS FUNDED AMOUNT" shall be calculated for each Business Day and
shall be an amount equal to the product of:
(1) the excess, if any, of the Required Pool Balance over the Pool
Balance, each as of the end of the preceding day multiplied by
(2) a fraction the numerator of which is the sum of the Required
Investor Percentage of the Adjusted Invested Amount and the Available
Subordinated Amount 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.
"EXCESS FUNDING ACCOUNT" shall be an Eligible Account established and
maintained for the life of the Certificates for the benefit of
Certificateholders in the name of the Trustee and designated as the "Excess
Funding Account."
"EXCESS PRINCIPAL COLLECTIONS" shall mean, for Series 1999-1, the
amount of Available Investor Principal Collections remaining after all payments
required to be made from Available Investor Principal Collections have been paid
and for any other series, the amount of any similar excess for any other series.
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<PAGE>
"EXCESS RESERVE FUND REQUIRED AMOUNT" for any Distribution Date with
respect to an Early Amortization Period, means an amount equal to the greater of
5% of the initial principal amount of the Certificates and the excess of the
Required Pool Balance (after giving effect to any changes thereto on that
Distribution Date) over the Pool Balance (after giving effect to changes thereto
on that Distribution Date); provided that it shall in no event exceed the
Available Subordinated Amount for that Distribution Date.
"EXCESS RETAINED PERCENTAGE" for any date of determination, the
Retained Percentage for that date minus the percentage equivalent of a fraction,
the numerator of which is equal to the sum of the Available Subordinated Amount
and the aggregate available subordinated amounts for all other outstanding
series 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.
"EXCESS SERVICING" for any Distribution Date means the amount available
pursuant to in clause (9) under "Distribution from the Collection Account;
Reserve Fund; Principal Account" in this Prospectus.
"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 close of business on the preceding day by the Pool
Balance as of the close of business on that 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
_________, 1999 -- giving pro forma effect as of the _________, 1999 to the
issuance of the Certificates.
"HOLDERS" shall mean the holders of the definitive certificates, if
any, issued by the Trustee.
"INCREMENTAL SUBORDINATED AMOUNT" on any Distribution Date will equal
the product of 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 date of the
issuance of the Certificates and the Available Subordinated Amount for that
Distribution Date, calculated without subtracting or adding the Incremental
Subordinated Amount for that Distribution Date as described in clause (1) of the
definition of Available Subordinated Amount or clause (2) of the definition of
Required Subordinated Amount, and the denominator of which is the Pool Balance
on such last day multiplied by the [Overconcentration Amount on that
Distribution Date.]
"INDIRECT PARTICIPANTS" shall mean those entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly.
"INDUSTRY OVERCONCENTRATIONS" on any Distribution Date means the excess
of
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<PAGE>
(1) 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,
that is, 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
that Distribution Date over
(2) an amount equal to __% of the Pool Balance on the last day of
that immediately preceding Collection Period; provided,
however, that with respect to each industry specified below,
the percentage in clause (2) of this definition shall be
deemed to equal the percentage set forth opposite that
industry:
<TABLE>
<CAPTION>
Industry Percentage
-------- ----------
<S> <C>
Marine Products....................................... 45%
Manufactured Housing 45%
Recreational Vehicles................................. 15%
Lawn and Garden....................................... 10%
Consumer Electronics and Appliances................... 10%
</TABLE>
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.
"INELIGIBLE ACCOUNT" shall mean any Account which is not an Eligible
Account.
"INELIGIBLE RECEIVABLE" shall mean any Receivable that is not an
Eligible Receivable.
"INITIAL AMORTIZATION PERIOD" shall mean the period during which
principal is distributed to the Certificateholders as a result of BCI's election
not to extend the Initial Principal Payment Date.
"INITIAL PRINCIPAL PAYMENT DATE" shall mean the Distribution Date no
earlier than the _______ Distribution Date and no later than the _______
Distribution Date, on which principal will begin to be paid to the
Certificateholder if BCI elects not to extend the Revolving Period or the
Controlled Accumulation Period, as applicable.
"INTEREST PERIOD" shall mean, with respect to any Distribution Date,
the period from and including the previous Distribution Date -- or, in the case
of the first Distribution Date, from and including the date of the issuance of
the certificates -- to but excluding that Distribution Date.
"INVESTED AMOUNT" means for any date an amount equal to the Adjusted
Invested Amount of the Certificates, minus the amount, without duplication, of
principal payments --
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<PAGE>
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 that date minus the excess, if any, of the aggregate
amount of Investor Charge-Offs for all Distribution Dates preceding that date
over the aggregate amount of any reimbursements of Investor Charge-Offs for all
Distribution Dates preceding that date.
"INVESTMENT PROCEEDS" for any Distribution Date means an amount equal
to the sum of 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 plus 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.
"INVESTOR CHARGE-OFF" shall occur if the Available Subordinated Amount
is reduced to zero, and on any Distribution Date the Deficiency Amount is
greater than zero and shall mean an amount equal to the excess of this
Deficiency Amount over any remaining Available Subordinated Amount on the
related Determination Date, but shall not exceed the Investor Default Amount for
that Distribution Date.
"INVESTOR DEFAULT AMOUNT" shall mean the portion of the Defaulted
Amount allocated to the Certificates.
"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 in the Prospectus under the caption
"Allocation Percentages--Allocation to the Certificates" and "Allocation of
Collections; Deposits in Collection Account; Limited Subordination of the
Retained Interest."
"LIBOR" shall mean, with respect to any Interest Period, an interest
rate based on the offered rates for deposits in United States dollars having a
maturity of one month commencing on the related Adjustment Date which appears on
the Telerate Page 3750 as of 11:00 A.M., London time, on the date of
calculation. If this rate does not appear on Telerate Page 3750, LIBOR with
respect to the relevant Interest Period will be determined at approximately
11:00 A.M., London time, on that 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 Trustee or by a party selected by the
depositor and acceptable to the Trustee, to prime banks in the London interbank
market for a period equal to one month 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 that market at that time. The principal London office of each of
those banks will be requested to provide a quotation of its rate. If at least
two of these 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 these quotations. If
fewer than two quotations
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<PAGE>
are provided, LIBOR with respect to this 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 that Adjustment Date by three
major banks in New York, New York for loans in United States dollars to leading
European banks having a maturity of one month 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 that market at that 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.
"LIQUIDATION EVENT" shall mean events of bankruptcy, insolvency or
receivership relating to BCI or the depositor.
"MANUFACTURER OVERCONCENTRATIONS" on any Distribution Date means the
excess of 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 in the definition of Designated
Manufacturer Overconcentrations, which Eligible Receivables are in the trust on
the last day of the Collection Period immediately preceding that Distribution
Date over [15]% of the Pool Balance on the last day of that immediately
preceding Collection Period; provided, however, that this percentage may be
adjusted from time to time without the consent of the Certificateholders, if the
Rating Agency Condition is satisfied.
"MISCELLANEOUS PAYMENTS" for any Collection Period means the sum of
Adjustment Payments and Transfer Deposit Amounts on deposit in the Collection
Account on the related Distribution Date received with respect to that
Collection Period and any amounts not paid to the holder of the BCRC Certificate
because the Pool Balance does not exceed the Required Pool Balance and which are
available to be treated as Miscellaneous Payments as of the Distribution Date
following that Collection Period as described in the Prospectus under the
caption "Principal Collections for all Series."
"MONTHLY INTEREST" for any Distribution Date means the sum of the Class
A Monthly Interest and the Class B Monthly Interest with respect to that
Distribution Date.
"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 that Distribution Date; provided,
however, that Monthly Principal will not exceed the applicable outstanding
principal balances of the Class A and Class B Certificates, respectively.
MONTHLY SERVICING FEE" will generally be equal to one-twelfth of the
product of 2% or, for any Distribution Date in respect of which the Monthly
Servicing Fee has been waived, 0% multiplied by 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
$_________.
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<PAGE>
["NET RECEIVABLES RATe" shall mean, for any Adjustment Date, the
weighted average of the interest rates borne by the Receivables included in the
trust for the preceding Collection Period less, if BCI is the Servicer, 2%, or,
if BCI is not the Servicer, 3%.]
"NET SERVICING FEE" will generally be equal to one-twelfth of the
product of 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% multiplied by the Invested Amount as of the last day of the second
preceding Collection Period, provided that the Net Servicing Fee for the first
Distribution Date will be equal to $_________.
"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.
"NON-U.S. CERTIFICATEHOLDER" is 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.
"NOTE" shall mean the promissory note issued by the depositor in favor
of BCI in connection with the purchase of Receivables by the depositor from BCI.
"OBLIGOR OVERCONCENTRATIONS" on any Distribution Date means, with
respect to any Account, the excess of the aggregate principal amount of Eligible
Receivables in that Account on the last day of the Collection Period immediately
preceding that Distribution Date over [2]% of the Pool Balance with respect to
any obligor with respect to the six largest Accounts in the trust calculated on
the basis of the amount of Principal Receivables in that Account and [1.5]% of
the Pool Balance with respect to all other obligors, in each case on the last
day of that immediately preceding Collection Period. The percentages set forth
in this description of obligor Overconcentrations and the manner of determining
to which obligors the [2]% rate applies may be adjusted from time to time
without the consent of the Certificateholders if the Rating Agency Condition is
satisfied.
"ORIGINATION PERIOD" shall mean each four-month period commencing June
1, October 1, and February 1 of each year.
"PARTICIPANTS" shall mean the organizations for which The Depository
Trust Company holds securities to facilitate the clearance and settlement of
securities transactions among themselves.
"PARTICIPATION INTEREST" means an undivided interest in any of the
Receivables and Collateral Security not owned by the trust.
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<PAGE>
"POOL BALANCE" shall mean the aggregate principal balances of the
Receivables that are Eligible Receivables.
"POOLING AND SERVICING AGREEMENT" shall mean the Pooling and Servicing
Agreement, dated as of January 1, 1994, as supplemented by the respective
supplements relating to prior series of investor certificates and to the
Certificates and the Variable Funding Certificates, and as amended by Amendment
Number 1 dated as of January 1, 1997 and as further supplemented and amended
from time to time.
"PRINCIPAL ACCOUNT" shall be an Eligible Account established and
maintained for the life of the Certificates for the benefit of
Certificateholders in the name of the Trustee and designated as the "Principal
Account."
"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 the relevant
Collection Period.
"RATING AGENCY" means with respect to any series, the rating agencies
which have been requested to rate that series by the depositor.
"RATING AGENCY CONDITION" shall mean, 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 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 this requirement or if
no advance notice is required or no specific time is stated for the notice, the
Rating Agencies have received written notice of the proposed action at least 10
days prior to the proposed effective date of the action and either:
as of the proposed effective date of the action, no Rating Agency
shall have notified the depositor, the Servicer or the Trustee in
writing that the 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
each Rating Agency shall have confirmed in writing to the
depositor, the Servicer or the Trustee that the 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.
"RECEIVABLES" means the receivables existing in or arising in the
Accounts.
"RECEIVABLES PURCHASE AGREEMENT" shall mean the Receivables Purchase
Agreement, dated as of January 1, 1994, between BCI, as seller, and the
depositor, as purchaser, and as
19
<PAGE>
amended by Amendment Number 1 dated as of January 1, 1997 and as otherwise
supplemented or amended from time to time.
"REMOVAL NOTICE" shall mean the notice given by the depositor 5
business days prior to the date on which Receivables in the Removed Accounts
shall cease to be transferred to the trust.
"REMOVED ACCOUNTS" shall mean any Accounts from which the depositor has
ceased to transfer newly originated Receivables to the trust and any Ineligible
Account which has been removed from the trust.
"REQUIRED INVESTOR PERCENTAGE" shall mean, with respect to the
Certificates, 104%; provided, however, that the depositor 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.
"REQUIRED POOL BALANCE" for any date shall mean an amount calculated as
of the end of any business day equal to:
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
the sum of the Available Subordinated Amount and the aggregate
available subordinated amounts for all other outstanding series as
of the end of that business day; minus
[any amount on deposit in any reserve fund on that date, except
that, for Series 1997-1 and Series 1999-1, the amount for this
clause will equal the excess of the applicable reserve fund
required amount over the amount on deposit in the applicable
reserve fund.]
"REQUIRED SUBORDINATED AMOUNT" means, as of any date of determination,
the sum of
(1) [5.82]% of the Invested Amount and
(2) the Incremental Subordinated Amount for the immediately
preceding Distribution Date or, if the date of determination
is a Distribution Date, for that 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 [3.75]% of the initial principal
amount of the Certificates plus the Incremental Subordinated
Amount for
20
<PAGE>
the immediately preceding Distribution Date or, if the date of
determination is a Distribution Date, for that 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 after this
commencement 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 the Early Amortization
Event occurs.
"REQUIRED SUBORDINATION DRAW AMOUNT" shall mean the lesser of the
Deficiency Amount and the Available Subordinated Amount.
"RESERVE FUND" shall be an Eligible Account established and maintained
for the life of the Certificates for the benefit of Certificateholders in the
name of the Trustee and designated as the "Series 1999-1 Reserve Fund."
"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 that Distribution Date, after giving effect to any reduction
thereof on such Distribution Date.
"RETAINED INTEREST" shall mean the ownership interest in the trust
retained by the depositor and which is that portion of the trust not represented
by or allocated to the investors or the Variable Funding Interest.
"RETAINED PERCENTAGE" for any date of determination, means 100% minus
(1) when used with respect to Non-Principal Collections, the sum
of
the aggregate of the floating allocation percentages for each
outstanding series (including the Certificates) and
the Variable Funding Percentage for the date of determination
and
(2) when used with respect to principal collections, the sum of
the aggregate of the floating allocation percentages for each
outstanding series including the Certificates, if applicable
in its revolving period,
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
21
<PAGE>
the Variable Funding Percentage for this date of
determination, but in each case the Retained Percentage shall
not be less than 0%.
"REVOLVING PERIOD" shall mean the period beginning on ________, 1999
and ending on the earliest of:
(1) the Accumulation Period Commencement Date;
(2) the date the Trustee mails notice to the Certificateholders that
BCI has elected not to extend the Initial Principal Payment Date; and
(3) the business day immediately preceding the day on which an Early
Amortization Event occurs.
"SAU" means, with respect to a Receivable, that if that such Receivable
was originally secured by a security interest in an Eligible Product, that
Eligible Product has been sold and that Receivable has not been paid in full.
"SCHEDULED PAYMENT DATE" means the ____________ Distribution Date.
"SERIES 1999-1 AVAILABLE RETAINED COLLECTIONS" means, for any Deposit
Date, an amount equal to the product of the Available Retained Collections for
that day multiplied by a fraction, the numerator of which is the Available
Subordinated Amount and the denominator of which is the sum of the Available
Subordinated Amount and the aggregate available subordinated amounts for all
other outstanding series, in each case on that day.
"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 that Collection Period by the sum of the
Invested Amount and the invested amounts for all other outstanding series on
that day.
"SERIES 1999-1 REQUIRED BALANCE" shall mean, with respect to any date,
the sum of the Required Investor Percentage of the Adjusted Invested Amount and
the Available Subordinated Amount.
"SERIES 1999-1 TERMINATION DATE" shall mean the earlier to occur of the
date on which the outstanding principal balance of each class of the
Certificates has been reduced to zero or the _________ Distribution Date.
"SERVICER" shall mean the servicer of the Receivables pursuant to the
Pooling and Servicing Agreement, initially BCI.
"SERVICER DEFAULT" refers to any of the following events:
22
<PAGE>
(1) failure by the Servicer to make any payment, transfer or deposit
into the trust, or into any account created for a series of certificates 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 this failure;
(2) failure on the part of the Servicer duly to observe or perform 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 the depositor or the Servicer
shall have repurchased the related Receivables or, if applicable, all the
Receivables during this period in accordance with the terms and provisions of
the Pooling and Servicing Agreement or 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;
(3) 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 the
depositor shall have repurchased the related Receivables or, if applicable, all
the Receivables during this period in accordance with the provisions of the
Pooling and Servicing Agreement; or
(4) 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 (1) 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 this delay or failure) referred to under clauses (2) or (3)
for a period of up to 60 business days, shall not constitute a Servicer Default
if this delay or failure or continuance was caused by an act of God or other
similar occurrence.
"SUPPLEMENTAL CERTIFICATE" shall mean a certificate issued in exchange
for a portion of the BCRC Certificate.
23
<PAGE>
"TELERATE PAGE 3750" shall mean the display page currently so
designated on the Dow Jones Telerate Service, or any other page as may replace
that page on that service for the purpose of displaying comparable rates or
prices.
"TERMS AND CONDITIONS" shall mean the Terms and Conditions Governing
Use of the Euroclear System and the related Operating Procedures of the
Euroclear System and applicable Belgian law.
"TRANSFER DATE" shall mean each business day on which Receivables are
created in the Eligible Accounts provided that such date is prior to the earlier
of the day following the Distribution Date on which the aggregate invested
amounts for all series is zero and if a Liquidation Event occurs or if the
depositor 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 this violation becomes an Early Amortization
Event.
"TRANSFER DEPOSIT AMOUNT" shall mean the amount by which the Pool
Balance would be less than the Required Pool Balance as a result of the
reduction in the Pool Balance due to the retransfer of Receivables from the
trust to the depositor.
"TRUSTEE" shall mean Bankers Trust Company or any successor appointed
as trustee under the Pooling and Servicing Agreement.
"VARIABLE FUNDING CERTIFICATE" means the certificate representing the
Variable Funding Interest.
"VARIABLE FUNDING INTEREST" shall mean the excess, if any, of the Pool
Balance over the Required Pool Balance.
"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 excess, if any, of the Pool Balance over the Required Pool Balance
as of that day divided by the Pool Balance as of the close of business on the
day preceding that 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 excess, if
any, of the Pool Balance over the Required Pool Balance as of the last day
immediately preceding the date of this 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.
24
<PAGE>
$320,339,000
Bombardier Receivables Master Trust I
Floating Rate Asset Backed Certificates,
Class A
Class B
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 date stated on its cover.
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>
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
<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>
- ---------
* To be filed by amendment.
** Previously filed.
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
<PAGE>
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 10th day of August, 1999.
BOMBARDIER CREDIT RECEIVABLES CORPORATION
By /s/ George W. Calver
-------------------------------------
Name: George W. Calver
Title: President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities indicated, on the 10th day of August, 1999.
<TABLE>
<CAPTION>
Signatures Title
---------- -----
<S> <C>
/s/ George W. Calver
- ------------------------------------------- President (Principal Executive Officer)
George W. Calver
Andrew Baranowsky*
- ------------------------------------------- Treasurer (Principal Financial and Accounting
Andrew Baranowsky Officer)
- ------------------------------------------- Director
Pierre-Andre Roy
R. William Crowe*
- ------------------------------------------- Director
R. William Crowe
Blaine Filthaut*
- ------------------------------------------- Director
Blaine Filthaut
- ------------------------------------------- Director
Frank C. Killackey
</TABLE>
<TABLE>
<S> <C>
Margaret L. Montgomery*
- ------------------------------------------- Director
Margaret L. Montgomery
- ------------------------------------------- Director
Helen C. Rowan
Donald L. Rushford*
- ------------------------------------------- Director
Donald L. Rushford
BY: /s/ George W. Calver
- -------------------------------------------
George W. Calver
Attorney-in-Fact
</TABLE>
Note: Power of Attorney appointing George Calver and Andrew Baranowsky, and
either of them acting singly, to execute the Registration Statement and any
amendments thereto on behalf of the above-named individuals, were previously
filed with the Securities and Exchange Commission.
II-3
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as......................'r'
