AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 9, 1997
REGISTRATION NO. 333-14431
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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)
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BOMBARDIER CREDIT RECEIVABLES CORPORATION
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 9999 03-0340600
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
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)
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BLAINE FILTHAUT
P.O. BOX 5544
BURLINGTON, VERMONT 05402
(802) 655-2824
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE
OF AGENT FOR SERVICE)
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WITH COPIES TO:
ANDREW W. NELSON PAUL WEIFFENBACH
MORGAN, LEWIS & BOCKIUS LLP ORRICK, HERRINGTON & SUTCLIFFE LLP
101 PARK AVENUE WASHINGTON HARBOUR
NEW YORK, NY 10178 3050 K STREET, N.W.
WASHINGTON, D.C. 20007
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Approximate date of commencement of proposed sale to the public: AS SOON AS
PRACTICABLE ON OR AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, 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, please 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT* OFFERING PRICE* FEE**
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Asset Backed
Certificates.......... $427,125,000 100% $427,125,000 $129,431.82
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*Estimated for the purpose of calculating the registration fee.
**A portion of the registration fee has been previously paid ($303.03).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
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CROSS REFERENCE SHEET TO FORM S-1
ITEM AND CAPTION IN FORM S-1 CAPTION OR LOCATION IN PROSPECTUS
---------------------------- ---------------------------------
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus......................... Forepart of Registration Statement;
Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front Cover Page; Outside
Back Cover Page
3. Summary Information; Risk Factors
and Ratio of Earnings to Fixed
Charges............................ Prospectus Summary; Risk Factors
4. Use of Proceeds..................... Use of Proceeds
5. Determination of Offering Price..... *
6. Dilution............................ *
7. Selling Security Holders............ *
8. Plan of Distribution................ Outside Front Cover Page;
Description of the Certificates;
Underwriting
9. Description of Securities to be
Registered......................... Prospectus Summary; Description of
the Certificates
10. Interests of Named Experts and
Counsel............................ *
11. Information with Respect to the
Registrant......................... Prospectus Summary; The Depositor
and the Trust; The Floorplan and
Asset-Based Financing Business; The
Accounts
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................ *
- --------
* Not applicable or answer is negative.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 9, 1997
PROSPECTUS
$427,125,000
BOMBARDIER RECEIVABLES MASTER TRUST I
$400,000,000 Floating Rate Class A
Asset Backed Certificates, Series 1997-1
$27,125,000 Floating Rate Class B
Asset Backed Certificates, Series 1997-1
BOMBARDIER CREDIT RECEIVABLES CORPORATION
DEPOSITOR
BOMBARDIER CAPITAL INC.
SERVICER
-----------
The Floating Rate Class A Asset Backed Certificates, Series 1997-1 (the "Class
A Certificates") and the Floating Rate Class B Asset Backed Certificates,
Series 1997-1 (the "Class B Certificates," and together with the Class A
Certificates, the "Certificates") offered hereby evidence undivided interests
in certain assets of the Bombardier Receivables Master Trust I (the "Trust")
created pursuant to a Pooling and Servicing Agreement among Bombardier Credit
Receivables Corporation, as depositor ("BCRC" or the "Depositor"), Bombardier
Capital Inc., as servicer ("BCI" or the "Servicer"), and Bankers Trust Company,
as trustee (the "Trustee"). The Trust assets include a pool (the "Pool") of
receivables (the "Receivables") generated from time to time in a portfolio
(together with any additional accounts added to the Trust from time to time as
described herein, the "Accounts") consisting of revolving financing
arrangements with certain dealers located in the United States to finance such
dealers' consumer, recreational and commercial product inventory. The Accounts
included in the Pool held by the Trust may, after the Series 1994-1 Final
Payment Date (as defined herein), also include accounts consisting of credit
extended to dealers to finance their working capital needs and to manufacturers
and distributors to finance their production, manufacturing and inventory. The
Receivables have been and will be transferred to BCRC by BCI pursuant to a
Receivables Purchase Agreement, described herein.
(continued on next page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" COMMENCING ON PAGE 21 HEREIN.
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THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN CERTAIN PROPERTY OF THE
TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF BCI, BCRC OR ANY
AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE RECEIVABLES ARE INSURED OR
GUARANTEED BY BCI, BCRC, ANY AFFILIATE THEREOF OR BY ANY GOVERNMENTAL AGENCY.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE DEPOSITOR(1)(3)
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Per Class A Certificates % % %
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Per Class B Certificates % % %
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Total $ $ $
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(1) Plus accrued interest, if any, at the applicable Certificate Rate from the
Closing Date, expected to be January , 1997.
(2) The Depositor has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting expenses, estimated to be $709,431.82.
-----------
The Certificates are offered subject to prior sale, when, as and if issued by
the Trust and accepted by the Underwriters and subject to the Underwriters'
right to reject orders in whole or in part. It is expected that delivery of the
Certificates will be made in book-entry form only through the facilities of The
Depository Trust Company, Cedel Bank, societe anonyme and the Euroclear System
on or about January , 1997. The Certificates will be offered in Europe and the
United States of America.
J.P. MORGAN & CO.
CS FIRST BOSTON
MERRILL LYNCH & CO.
The date of this Prospectus is January , 1997.
(continued from previous page)
Under the Pooling and Servicing Agreement, BCI is responsible for servicing,
managing and making collections on the Receivables, as further described
herein. Certain assets of the Trust will be allocated to the Class A and Class
B Certificateholders, including the right to receive a varying percentage of
each month's collections with respect to the Receivables at the times and in
the manner described herein. The Depositor has previously sold investor
certificates representing interests in assets of the Trust, and from time to
time, subject to certain conditions, the Depositor may offer other series of
investor certificates representing interests in assets of the Trust (each,
including the series offered hereby, a "Series") having terms similar to or
significantly different from the terms of the Certificates. The remaining
interests in the Trust that are not represented by the Certificates or the
investor certificates of any other Series issued by the Trust are represented
by the BCRC Certificate (held by BCRC) and a Variable Funding Certificate
(which is currently held by BCRC and pledged to BCI).
Interest with respect to the Certificates will accrue from the Closing Date,
expected to be January , 1997, and will be payable monthly on or about the
15th day of each month, commencing February 18, 1997. Principal with respect
to the Certificates will be payable monthly following the end of the Revolving
Period, as further described herein. Principal with respect to the Class A
Certificates is expected to be distributed monthly commencing on the November
2001 Distribution Date and the final principal distribution on the Class A
Certificates is expected to be made on the April 2002 Distribution Date;
however, principal on the Class A Certificates may be made earlier or later
under the circumstances described herein. Principal on the Class B
Certificates is expected to be distributed on the April 2002 Distribution
Date; however, distribution of principal on the Class B Certificates may also
be made earlier or later under the circumstances described herein, but will,
in no case, be distributed until all principal of the Class A Certificates has
been paid.
A portion of the Retained Interest held by BCRC will be subordinated to the
rights of the Certificateholders to receive distributions in respect of the
Certificates to the limited extent of the Available Subordinated Amount.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Depositor has filed a Registration Statement (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with the Securities and Exchange Commission (the "Commission") with
respect to the Certificates offered pursuant to this Prospectus. This
Prospectus, which forms part of the Registration Statement, does not contain
all of the information contained in the Registration Statement and the
Exhibits thereto. For further information, reference is made to the
Registration Statement and Amendments thereof and Exhibits thereto, which are
available for inspection without charge at the Public Reference Facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and the 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 Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. In addition, the 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 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. ("Cede"), as nominee of The
Depository Trust Company ("DTC") and registered holder of the Certificates,
pursuant to the Pooling and Servicing Agreement. Such reports may be available
to beneficial owners of Certificates ("Certificate Owners") in accordance with
the regulations and procedures of DTC. See "Description of the Certificates--
Reports" and "--Evidence as to Compliance." Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. The Trust will file with the Commission such periodic reports with
respect to the Trust as are required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder.
2
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Reference is made
to the Index of Defined Terms for the location herein of the definitions of
certain capitalized terms used herein.
TITLE OF SECURITIES....... $400,000,000 Floating Rate Class A Asset Backed
Certificates, Series 1997-1 (the "Class A
Certificates").
$27,125,000 Floating Rate Class B Asset Backed
Certificates, Series 1997-1 (the "Class B
Certificates").
The Class A Certificates and Class B Certificates
are referred to collectively herein as the
"Certificates."
ISSUER.................... Bombardier Receivables Master Trust I (the
"Trust").
DEPOSITOR................. Bombardier Credit Receivables Corporation ("BCRC"
or the "Depositor"), which, on the Closing Date,
will be a wholly-owned subsidiary of Bombardier
Capital Inc.
SERVICER.................. Bombardier Capital Inc. ("BCI" or the "Servicer").
A substitute servicer may be appointed under
certain circumstances. See "Description of the
Certificates--Servicer Default." In addition, BCI
has delegated and may from time to time in the
future delegate all or a portion of its servicing
responsibilities to third parties. See
"Description of the Certificates--Collection and
Other Servicing Procedures."
TRUSTEE................... Bankers Trust Company, a New York banking
corporation or any successor under the Pooling and
Servicing Agreement (the "Trustee").
THE TRUST................. The Trust was formed pursuant to a Pooling and
Servicing Agreement, dated as of January 1, 1994,
among the Depositor, BCI, as Servicer, and the
Trustee, as supplemented and amended from time to
time (the "Pooling and Servicing Agreement"). Each
of the previous two Series of investor
certificates and the Variable Funding Certificate
were issued pursuant to separate supplements and
the Certificates will be issued pursuant to the
Series 1997-1 Supplement (the "Series 1997-1
Supplement"). The assets of the Trust include (a)
certain Receivables existing under the Initial
Accounts on January 1, 1994 (the "Initial Cut-Off
Date"), and certain Receivables existing under
Additional Accounts which have been added to the
Trust and those which are expected to be added in
the future together with Receivables generated
from time to time in such Initial Accounts and
Additional Accounts (less Receivables paid or
charged-off and excluding (i) Receivables
generated in Removed Accounts or Ineligible
Accounts after the applicable Removal Commencement
Date, (ii) Receivables removed from the Trust from
time to time and (iii) after the Series 1994-1
Final Payment Date, any undivided interest (a
"Participation Interest") in the Receivables that
has been transferred to a third party), (b) all
funds collected or to be collected in respect of
such Receivables, (c) all funds on deposit in
certain accounts of the Trust, including the
Reserve Fund, the Excess Funding Account and the
Collection Account (as defined herein),
3
(d) any Enhancement issued with respect to any
other Series (the drawing on or payment of such
Enhancement not being available to
Certificateholders), (e) an assignment of BCRC's
rights and remedies with respect to the
Receivables under the Receivables Purchase
Agreement and (f) an assignment of security
interests in certain products, contracts or other
assets (collectively, the "Collateral Security")
securing such Receivables. The term "Enhancement"
shall mean, with respect to any Series, any letter
of credit, surety bond, cash collateral account,
guaranteed rate agreement, maturity liquidity
facility, tax protection agreement, subordination,
interest rate swap agreement or other similar
arrangement for the benefit of certificateholders
of such Series. Interests in the Trust will be
evidenced by the Certificates, investor
certificates of other Series, the BCRC Certificate
(which represents the Retained Interest and is
retained by BCRC) and the Variable Funding
Certificate (which is currently held by BCRC and
pledged to BCI).
SERIES CUT-OFF DATE....... January 1, 1997.
THE ACCOUNTS.............. The Accounts initially included in the Trust and
those which have been added prior to the issuance
of the Certificates have been established pursuant
to inventory security agreements entered into with
BCI by U.S. dealers to purchase or finance
consumer, recreational and commercial product
inventory. Such Accounts have been selected from
all such inventory security agreements of BCI that
have been transferred to BCRC pursuant to the
Receivables Purchase Agreement and that meet the
criteria provided in the Pooling and Servicing
Agreement. Under certain circumstances, Accounts
may be added to, or removed from, the Trust. After
the Series 1994-1 Final Payment Date, the Trust
may also include Accounts created in favor of
United States dealers to purchase or finance
consumer, recreational and commercial product
inventory (a) which are inventory security
agreements entered into with affiliates of BCI,
(b) which are established by BCI or one of its
affiliates other than pursuant to an inventory
security agreement or (c) which are acquired by
BCI or one of its affiliates through the
acquisition of an Eligible Account from another
lender upon satisfying BCI's customary
underwriting standards. Furthermore, the Trust may
(at BCI's and BCRC's option), after the Series
1994-1 Final Payment Date, and subject to
satisfaction of the Rating Agency Condition prior
to the initial transfer of such type of Accounts,
also include Accounts established by BCI or one of
its affiliates or acquired by BCI or one of its
affiliates from another lender upon satisfying
BCI's customary underwriting standards, in each
case in connection with the extension of credit to
(i) dealers to finance such dealers' working
capital needs and (ii) manufacturers and
distributors to finance the production,
manufacturing and inventory of consumer,
recreational and commercial products. See "The
Floorplan and Asset-Based Financing Business,"
"Description of the Certificates--Addition of
Accounts" and "--Removal of Accounts and
Assignment of Receivables."
4
THE RECEIVABLES........... The Receivables have arisen or will arise in the
Accounts. At the time of issuance of the
Certificates, the Receivables will consist solely
of amounts payable with respect to advances made
directly or indirectly by BCI to consumer,
recreational and commercial products dealers
located in the United States (the "Domestic
Inventory Receivables"). The Receivables may,
after the Series 1994-1 Final Payment Date, also
consist of amounts payable with respect to
extensions of credit made by BCI or one of its
affiliates (or made by another lender and acquired
by BCI or one of its affiliates upon satisfying
BCI's customary underwriting standards) to dealers
to finance such dealers' working capital needs and
to manufacturers and distributors to finance the
manufacturing, production and inventory of
consumer, recreational and commercial products
("Asset-Based Receivables") (such dealers,
manufacturers and distributors, together with the
dealers referred to in the preceding sentence, the
"Obligors"). After the Series 1994-1 Final Payment
Date, Domestic Inventory Receivables may be
originated by one of BCI's affiliates or acquired
by BCI or one of its affiliates through the
acquisition of an Eligible Account from another
lender upon satisfying BCI's customary
underwriting standards. Such advances with respect
to the Domestic Inventory Receivables are used by
the Obligors to purchase or finance consumer,
recreational and commercial products (the
"Eligible Products") which currently consist
primarily of products manufactured by BCI's
affiliates such as Ski-Doo(R) snowmobiles, Sea-
Doo(R) personal watercraft and jet boats and
Celebrity(R) boats, marine equipment (boats,
motors and trailers) manufactured by other
entities, and recreational vehicles, manufactured
housing, motorcycles, lawn and garden equipment,
horse trailers and consumer electronics and
appliances. Such advances with respect to the
Asset-Based Receivables will be used by the
Obligors to provide working capital and to finance
the manufacturing, production and inventory of
Eligible Products. The types of Eligible Products
financed by the Receivables may change over time.
See "The Floorplan and Asset-Based Financing
Business."
Any decision to transfer Asset-Based Receivables to
the Trust will be dependent upon a variety of
factors, including whether additional Series are
issued by the Trust as well as BCI's future
financing plans and needs, provided, however, that
Asset-Based Receivables cannot be transferred to
the Trust until after (i) the Series 1994-1 Final
Payment Date and (ii) the Rating Agency Condition
has been satisfied. Asset-Based Receivables may,
after such conditions are met, be included in the
Trust without specific limitation as to the amount
thereof. Neither BCI nor BCRC is under any
obligation to transfer Asset-Based Receivables to
the Trust in the future.
Generally, with respect to Domestic Inventory
Receivables, the principal amount of an advance in
respect of the related Eligible Product equals the
wholesale purchase price of the product and
becomes due upon either the retail sale of the
product or, in certain
5
cases, in accordance with a payment schedule
agreed upon with the related Obligor. See "The
Floorplan and Asset-Based Financing Business--
Creation of the Receivables" and "--Payment
Terms." Collections of principal under the
Receivables are herein referred to as "Principal
Collections," and collections of interest and
other nonprincipal charges (including amounts
recovered with respect to Defaulted Receivables
and insurance proceeds) with respect to
Receivables are referred to herein as "Non-
Principal Collections." From time to time, subject
to certain conditions, certain of the amounts
described above that are included in "Principal
Collections" may be treated as "Non-Principal
Collections." The Domestic Inventory Receivables
currently bear interest at floating rates
described herein. See "The Floorplan and Asset-
Based Financing Business--Revenue Experience."
BCI, as seller, entered into a Receivables Purchase
Agreement dated as of January 1, 1994 (as
supplemented and amended from time to time, the
"Receivables Purchase Agreement") with BCRC, as
purchaser of the Receivables. Pursuant to the
Receivables Purchase Agreement, BCI (a) sold to
BCRC all of its right, title and interest in and
to all of the Receivables in the Eligible Accounts
currently included in the Trust and (b) assigned
its interests in the related Collateral Security
(to the extent such interests secure the
Receivables) to BCRC. See "Description of the
Receivables Purchase Agreement." BCRC in turn has
transferred such Receivables and such interests in
the Collateral Security to the Trust pursuant to
the Pooling and Servicing Agreement. At its
option, BCI may, in the future, rather than
selling Receivables to BCRC, contribute
Receivables and interests in the related
Collateral Security to BCRC.
All new Receivables arising under the Accounts
(including the Initial Accounts, the Additional
Accounts which have been added to the Trust and
any Additional Accounts subsequently added to the
Trust) during the term of the Trust will be sold
or contributed by BCI to BCRC pursuant to the
Receivables Purchase Agreement, and immediately
transferred by BCRC to the Trust pursuant to the
Pooling and Servicing Agreement. 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.
THE CERTIFICATES.......... The Certificates will be issued in the aggregate
initial principal amount of $427,125,000 (the
"Initial Principal Amount"), in minimum
denominations of $1,000 and in integral multiples
thereof. Except in certain limited circumstances
as described herein under "Description of the
Certificates--Definitive Certificates," the
Certificates will be issued in book-entry form
only. A portion of the Trust assets will be
allocated to the Certificateholders and to the
investor certificateholders of any other
outstanding Series (such other investor
certificateholders, together with the
Certificateholders, are referred to as "investor
certificateholders" or "certificateholders"), with
the remainder allocated to the Variable Funding
Certificate and the
6
BCRC Certificate, as further described herein. The
Class A Certificates will evidence undivided
beneficial interests in the assets of the Trust
and will represent the right to receive from
distributions in respect of such assets funds up
to (but not in excess of) the amounts required (x)
to make monthly payments of interest on the
principal balance of the Class A Certificates at a
per annum rate (the "Class A Certificate Rate")
equal to the lesser of (i) the sum of (A) LIBOR
(as defined in "Description of the Certificates--
Interest") and (B) % and (ii) the Net Receivables
Rate (as defined in "Description of the
Certificates--Interest" herein) and (y) to make
monthly payments of principal beginning not later
than the Distribution Date in November 2001, in
six equal installments equal to the Class A
Controlled Distribution Amount (or to make
payments of principal earlier if BCI elects not to
extend the Initial Principal Payment Date or under
certain other circumstances or later under certain
limited circumstances, all as described herein),
in an aggregate amount up to the outstanding
principal balance of the Class A Certificates. The
Class B Certificates will evidence undivided
beneficial interests in the assets of the Trust
and will represent the right to receive from
distributions in respect of such assets funds up
to (but not in excess of) the amounts required (x)
to make monthly payments of interest on the
principal balance of the Class B Certificates at a
per annum rate (the "Class B Certificate Rate")
equal to the lesser of (i) the sum of (A) LIBOR
and (B) % and (ii) the Net Receivables Rate and
(y) to make payment of principal on the April 2002
Distribution Date (the "Class B Expected Payment
Date") (or to make payments of principal earlier
if BCI elects not to extend the Initial Principal
Payment Date or under certain other circumstances
or later under certain circumstances, all as
described herein), in an amount up to the
outstanding principal balance of the Class B
Certificates; provided, however, that no principal
will be distributed on the Class B Certificates
until the entire amount of principal has been
distributed on the Class A Certificates.
"Certificate Rate" means the Class A Certificate
Rate or the Class B Certificate Rate, as the
context requires.
On the date of the issuance of the Certificates
(the "Closing Date") the Invested Amount (which
term is used, among other things, to allocate
collections on the Receivables to the
Certificates) is expected to be $427,125,000
(based on information as of the Series Cut-Off
Date), representing the Initial Principal Amount
of the Certificates. The Invested Amount is
subject to reduction as a result of principal
distributions (other than distributions out of the
Excess Funding Account) and any net Investor
Charge-Offs and is subject to reduction to the
extent deposits are made to the Excess Funding
Account and is subject to increase to the extent
that amounts are subsequently withdrawn from the
Excess Funding Account as described under
"Description of the Certificates--Excess Funding
Account" and "--Allocation Percentages; Allocation
to the Certificates."
7
The Certificates will represent beneficial
interests in the Trust only and will not represent
interests in or obligations of BCI, BCRC or any
affiliate thereof. Neither the Certificates nor
the Receivables are insured or guaranteed by BCI,
BCRC or any affiliate thereof. See "Risk Factors--
Trust's Relationship to BCRC and BCI."
REGISTRATION OF
CERTIFICATES.............. The Certificates will initially be represented by
one or more Certificates registered in the name of
Cede & Co., as the nominee of DTC. No person
acquiring an interest in the Certificates will be
entitled to receive a definitive certificate
representing such person's interest except in the
event that Definitive Certificates are issued
under the limited circumstances described under
"Description of the Certificates--Definitive
Certificates." Certificateholders may elect to
hold their interests through DTC, in the United
States, or Cedel Bank, societe anonyme ("Cedel")
or the Euroclear System ("Euroclear"), in Europe.
Transfers within DTC, Cedel or Euroclear, as the
case may be, will be in accordance with the usual
rules and operating procedures of the relevant
system. Cross-market transfers between persons
holding directly or indirectly through DTC, on the
one hand, and counterparties holding directly or
indirectly through Cedel or Euroclear, on the
other, will be effected in DTC through Citibank,
N.A. ("Citibank") or Morgan Guaranty Trust Company
of New York ("Morgan"), the relevant depositaries
(collectively, the "Depositaries") of Cedel or
Euroclear, respectively, and each participating
member of DTC. See "Description of the
Certificates --Book-Entry Registration."
PRIOR SERIES AND ISSUANCE
OF NEW SERIES............ Under the Pooling and Servicing Agreement the Trust
has issued two prior Series of investor
certificates, referred to in this Prospectus as
the "Series 1994-1 Certificates" and the "Series
1996-1 Certificates," respectively. Certain
information concerning such prior Series is set
forth in Annex I to this Prospectus. The Pooling
and Servicing Agreement provides that pursuant to
any one or more supplements thereto (each, a
"Supplement"), the Depositor may cause the Trust
to issue one or more new Series of investor
certificates (each, a "New Issuance"). The
issuance of the Certificates pursuant to the
Series 1997-1 Supplement will constitute a New
Issuance. The Pooling and Servicing Agreement also
provides that the Depositor may specify, with
respect to any Series, the Principal Terms of the
Series. The Depositor may offer any Series to the
public or other investors under a prospectus or
other disclosure document in transactions either
registered under the Securities Act or exempt from
registration thereunder, directly or through the
Underwriters or one or more other underwriters or
placement agents.
Under the Pooling and Servicing Agreement and
pursuant to a Supplement, a New Issuance may occur
only upon delivery to the Trustee of the
following: (a) a Supplement specifying the
Principal Terms of such Series, (b) the form of
any Enhancement and any related agreement, (c) an
opinion of counsel to the effect that, for federal
and Vermont state tax purposes, (x) such issuance
will not
8
adversely affect the characterization of the
certificates of any outstanding Series or class as
debt of BCRC, (y) such issuance will not cause a
taxable event to any certificateholders or the
Trust and (z) the investor certificates of such
new Series will be characterized as debt of BCRC
and (d) the Rating Agency Condition shall have
been satisfied. See "Description of the
Certificates--New Issuances."
DISTRIBUTION ON THE Distributions on the Certificates will be made
CERTIFICATES.............. monthly on the 15th day of each month or, if such
day is not a business day, on the next succeeding
business day (each, a "Distribution Date"),
commencing February 18, 1997.
ALLOCATIONS............... The Class A and Class B Certificates represent the
right to receive varying percentages of Non-
Principal Collections and Principal Collections
collected during each calendar month (each, a
"Collection Period"). Non-Principal Collections,
Principal Collections and Defaulted Receivables
for any Collection Period will be allocated to the
Certificates as described below and as more fully
described under "Description of the Certificates--
Allocation Percentages." Non-Principal
Collections, Principal Collections and Defaulted
Receivables not allocated to the Certificates will
be allocated to other Series of investor
certificates, the Variable Funding Certificate or
the BCRC Certificate.
Non-Principal Collections and Defaulted Receivables
at all times and Principal Collections during the
Revolving Period will be allocated to the
Certificates based on the Floating Allocation
Percentage applicable to the related Collection
Period. Subject to the fifth succeeding paragraph
below, the Floating Allocation Percentage for any
Collection Period is the percentage (which shall
never exceed 100%) obtained by dividing (x) prior
to and including the Series 1994-1 Final Payment
Date, the Invested Amount on the last day of the
immediately preceding Collection Period by the
aggregate principal balances of the Receivables
that are Eligible Receivables (the "Pool Balance")
on such last day of such immediately preceding
Collection Period and (y) after the Series 1994-1
Final Payment Date, the Invested Amount as of each
day in such Collection Period by the Pool Balance
as of each such day; provided, however, that with
respect to the Collection Period in which the
Certificates are issued, the Floating Allocation
Percentage shall mean the percentage equivalent of
a fraction the numerator of which is the Invested
Amount and the denominator of which is the Pool
Balance on the Series Cut-Off Date, giving pro
forma effect as of the Series Cut-Off Date to the
issuance of the Certificates; provided, further,
that for purposes of allocating Principal
Collections, the Invested Amount used in
determining the Floating Allocation Percentage
shall be reduced by the Pre-Allocated Invested
Amount.
During the Revolving Period, subject to certain
limitations relating to deposits into the Excess
Funding Account, Principal Collections allocable
to the Certificates will be allocated to the BCRC
9
Certificate and to any other outstanding Series
which is in an amortization, early amortization or
accumulation period in exchange for the allocation
to the Certificates of an equal interest in the
Receivables that are new or that would otherwise
be allocable to other outstanding Series of
investor certificates, the Variable Funding
Certificate or the BCRC Certificate. See
"Description of the Certificates--Allocation
Percentages" "--Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of the Retained Interest" "--
Distributions from the Collection Account; Reserve
Fund."
During the Amortization Period and any Initial
Amortization Period or Early Amortization Period,
Principal Collections generally will be allocated
to the Certificates based on the Principal
Allocation Percentage. Subject to the third
succeeding paragraph, the Principal Allocation
Percentage for a Collection Period during the
Amortization Period and any Initial Amortization
Period or Early Amortization Period is the
percentage obtained by dividing the Invested
Amount on the last day of the Revolving Period
less the Pre-Allocated Invested Amount by the Pool
Balance provided that the calculation of the Pool
Balance will be made (x) prior to and including
the Series 1994-1 Final Payment Date, as of the
last day of the immediately preceding Collection
Period and (y) from and after the Series 1994-1
Final Payment Date as of each Deposit Date in such
Collection Period. During the Amortization Period,
distributions of principal on the Class A
Certificates will be limited to the Class A
Controlled Distribution Amount and Available
Investor Principal Collections not used to make
principal distributions on the Class A
Certificates will be paid to the holder of the
BCRC Certificate, deposited in the Excess Funding
Account or applied as Excess Principal Collections
to other Series. During an Initial Amortization
Period or Early Amortization Period, distributions
of principal on the Class A Certificates will not
be limited by the Class A Controlled Distribution
Amount. No distributions of principal on the Class
B Certificates will be made until the principal
amount of the Class A Certificates has been repaid
in full. See "Description of the Certificates--
Allocation Percentages--Principal Collections for
all Series" "--Distributions from the Collection
Account; Reserve Fund--Principal Collections."
The "Pre-Allocated Invested Amount" means, as of
the Closing Date, $251,000,000 and thereafter will
be increased by the aggregate amount of principal
payments made on the Series 1994-1 Certificates
since the Closing Date until the Series 1994-1
Certificates, which are currently in an
amortization period, are paid in full, which is
expected to be the April 1997 Distribution Date,
and after the date on which the Series 1994-1
Certificates are paid in full, the Pre-Allocated
Invested Amount will be zero. On the Closing Date,
the outstanding principal balance of the Series
1994-1 Certificates will be $149,000,000. See
"Description of the Certificates--Allocation
Percentages."
10
The interest in the Trust equal to the excess of
the Pool Balance over the Required Pool Balance
(such excess, the "Variable Funding Amount") will
be represented by the Variable Funding
Certificate. During the Revolving Period, the
Variable Funding Amount 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 Variable Funding Percentage will be
fixed relative to the interests represented by the
Certificates and any other outstanding 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
"Description of the Certificates--Retained
Interest and Variable Funding Certificate" and "--
Allocation of Collections; Deposits in Collection
Account; Limited Subordination of the Retained
Interest."
If, for any Distribution Date, for the purpose of
allocating either Principal Collections or Non-
Principal Collections among the Series and the
Variable Funding Certificate, the sum of the
applicable allocation percentages for each Series
and the Variable Funding Percentage for the
applicable Collection Period exceeds 100%, then,
for such Distribution Date, the collections will
be allocated among the Series and the Variable
Funding Certificate pro rata on the basis of the
respective allocation percentages then in effect
for each Series and for the Variable Funding
Certificate after the pro rata reduction of such
percentages so that the sum thereof equals 100%.
See "Description of the Certificates--Allocation
Percentages."
INTEREST.................. Interest on the respective principal balance of
each class of Certificates will accrue at the
applicable Certificate Rate and will be payable
monthly to Certificateholders on each Distribution
Date, commencing February 18, 1997. Interest will
accrue from and including the preceding
Distribution Date (or, in the case of the first
Distribution Date, from and including the Closing
Date) to but excluding such Distribution Date
(each, an "Interest Period") and will be
calculated on the basis of the actual number of
days elapsed during the related Interest Period
and a 360-day year. Interest due but not paid on
any Distribution Date will be due on the next
Distribution Date together with, to the extent
lawfully payable, interest on such amount at the
applicable Certificate Rate. The Class A
Certificate Rate will equal the lesser of (i) the
sum of (A) LIBOR (as defined in "Description of
the Certificates--Interest") and (B) % and (ii)
the Net Receivables Rate. The Class B Certificate
Rate will equal the lesser of (i) the sum of (A)
LIBOR and (B) % and (ii) the Net Receivables
Rate. The "Net Receivables Rate" for any
Adjustment Date will equal the weighted average of
the interest rates borne by the Receivables during
the preceding Collection Period less, if BCI is
the Servicer, 2% or, if BCI is not the Servicer,
3%.
If the Class A Certificate Rate or the Class B
Certificate Rate for any Distribution Date is
based on the Net Receivables Rate, the Class A
Carry-Over Amount or Class B Carry-Over Amount, as
applicable,
11
will be an amount equal to the excess of (a)
interest on the Class A Certificates or the Class
B Certificates, as applicable, for such
Distribution Date calculated on the basis of the
applicable LIBOR formula set forth above over (b)
interest for such Distribution Date on the Class A
Certificates or the Class B Certificates, as
applicable, calculated on the basis of the Net
Receivables Rate. On subsequent Distribution
Dates, after distribution of the required interest
payments (as described herein) on the Class A and
Class B Certificates, to the extent the Investor
Non-Principal Collections and Investment Proceeds
are sufficient, the Class A Certificateholders
will be paid the Class A Carry-Over Amount and
then the Class B Certificateholders will be paid
the Class B Carry-Over Amount. The ratings of the
Class A Certificates do not address the likelihood
of the payment of any Class A Carry-Over Amount.
The ratings of the Class B Certificates do not
address the likelihood of the payment of any Class
B Carry-Over Amount.
Interest payments on the Certificates will be
derived solely from (i) Investor Non-Principal
Collections for the related Collection Period,
(ii) any amount on deposit in the Reserve Fund,
(iii) Investment Proceeds, if any, and, (iv) under
certain circumstances, Series 1997-1 Available
Retained Collections to the extent of the Required
Subordination Draw Amount. Such amounts available
to make interest payments on the Certificates will
be distributed, first, to the Class A Certificates
and, second, to the Class B Certificates, in each
case up to the accrued and unpaid interest
thereon. See "Description of the Certificates--
Interest."
PRINCIPAL PAYMENTS........ Beginning not later than the November 2001
Distribution Date, Available Investor Principal
Collections will be used to make principal
distributions on the Certificates. Such principal
distributions will be applied first to the Class A
Certificates and are expected to be made in six
installments each equal to one-sixth of the
principal balance of the Class A Certificates as
of the October 2001 Distribution Date (the "Class
A Controlled Amortization Amount"). Such principal
payments will be made on each Distribution Date
with respect to the Amortization Period (each, a
"Class A Amortization Date") commencing on the
November 2001 Distribution Date until the
principal balance of the Class A Certificates has
been reduced to zero. The final distribution of
principal on the Class A Certificates is expected
to occur on the April 2002 Distribution Date (the
"Class A Expected Final Payment Date"). A single
principal payment in respect of the Class B
Certificates, in an amount equal to the principal
balance thereof, is expected to be made on the
April 2002 Distribution Date (the "Class B
Expected Payment Date"); provided, however, that
no principal payments will be made with respect to
the Class B Certificates during the Amortization
Period until the principal balance of the Class A
Certificates has been reduced to zero.
Principal with respect to the Class A Certificates
and the Class B Certificates will be distributed
earlier than the dates described in the preceding
paragraph if the Servicer elects not to extend the
Initial
12
Principal Payment Date. The first "Initial
Principal Payment Date" will be the February 2000
Distribution Date; provided, however, principal
will be paid commencing on such date only if BCI
elects not to extend the Initial Principal Payment
Date. The Initial Principal Payment Date will
successively and automatically be extended from
one Distribution Date to the next (except that the
Initial Principal Payment Date may not be later
than the Class A Expected Final Payment Date)
unless BCI, at any time, elects not to extend the
Initial Principal Payment Date. If BCI elects not
to extend the Initial Principal Payment Date, then
the Revolving Period or the Amortization Period,
as applicable, will end and principal will be paid
to the Class A Certificateholders commencing on
the then-effective Initial Principal Payment Date
and continue on each Distribution Date thereafter
until the earlier of the date on which the Class A
Certificates have been paid in full or the Series
1997-1 Termination Date, and at such time as the
Class A Certificates have been paid in full,
principal will be paid to the Class B
Certificateholders on each Distribution Date until
the earlier of the date on which the Class B
Certificates have been paid in full or the Series
1997-1 Termination Date. The period during which
principal is distributed to the Class A
Certificateholders and the Class B
Certificateholders as a result of BCI's election
not to extend the Initial Principal Payment Date
is called the "Initial Amortization Period."
Principal may also be paid earlier than expected if
an Early Amortization Event occurs, or later under
certain circumstances described herein. See "Risk
Factors--Payments." The final principal
distribution with respect to the Certificates will
be made not later than the April 2004 Distribution
Date (the "Series 1997-1 Termination Date"). See
"Description of the Certificates--Distributions
from the Collection Account; Reserve Fund." If on
any Distribution Date the Available Subordinated
Amount is zero, Investor Charge-Offs for such
Distribution Date will first be allocated to the
Class B Certificates until the principal balance
thereof is reduced to zero, and thereafter to the
Class A Certificates. See "Description of the
Certificates--Investor Charge-Offs."
EXCESS FUNDING ACCOUNT.... During the Revolving Period and the Amortization
Period, Principal Collections and certain other
amounts allocable to the Certificates (on a
Deposit Date during the Amortization Period, after
an amount equal to Monthly Principal for the
related Distribution Date has been deposited in
the Collection Account) will be required to be
deposited in an account held by an Eligible
Institution for the benefit of the
Certificateholders (the "Excess Funding Account")
if the Pool Balance is less than the Required Pool
Balance on the dates described herein. The amount
to be deposited in the Excess Funding Account on
the required dates will be equal to the Excess
Funded Amount minus the amount then held in the
Excess Funding Account. The "Excess Funded Amount"
means an amount equal to the product of (a) the
excess, if any, of (i) the Required Pool Balance
13
over (ii) the Pool Balance and (b) a fraction the
numerator of which is the Series 1997-1 Required
Balance and the denominator of which is the
aggregate of the required balances (including the
Series 1997-1 Required Balance) for all Series
providing for excess funding accounts or similar
arrangements.
Except as provided in the next sentence, funds on
deposit in the Excess Funding Account 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 if the excess
of subclause (i) over subclause (ii) referred to
in clause (a) of the preceding paragraph no longer
exists, which generally would occur as a result of
the addition of Receivables to the Trust. Upon the
commencement of the Initial Amortization Period or
the Early Amortization Period, funds on deposit in
the Excess Funding Account will be deposited in
the Collection Account for distribution as
principal to the Certificateholders as described
herein. In addition, no funds will be deposited in
the Excess Funding Account during any Initial
Amortization Period or Early Amortization Period.
See "Description of Certificates--Excess Funding
Account."
REVOLVING PERIOD.......... During the Revolving Period, Principal Collections
allocable to the Certificates generally will be
paid or made available to the holder of the BCRC
Certificate, deposited to the Excess Funding
Account or allocated to other outstanding Series
(in effect, in exchange for the allocation to the
Certificates of an equal interest in the
Receivables that are new or that would otherwise
be allocated to another outstanding Series or the
BCRC Certificate in order to maintain the sum of
the Invested Amount and the amount on deposit in
the Excess Funding Account at a constant level).
The "Revolving Period" will be the period
beginning on the Series Cut-Off Date and ending on
the earliest of (x) September 30, 2001, (y) the
date the Trustee mails notice to the
Certificateholders that BCI has elected not to
extend the Initial Principal Payment Date, and (z)
the business day immediately preceding the day on
which an Early Amortization Event occurs. See
"Description of the Certificates--Early
Amortization Events" for a discussion of certain
events which might lead to the early termination
of the Revolving Period and, in certain limited
circumstances, the recommencement of the Revolving
Period.
AMORTIZATION PERIOD,
INITIAL AMORTIZATION
PERIOD OR EARLY
AMORTIZATION PERIOD....... The "Amortization Period" is scheduled to commence
on October 1, 2001 and will continue until the
first to occur of (i) the payment in full to the
Certificateholders of the principal balance of the
Certificates, (ii) the commencement of an Early
Amortization Period or an Initial Amortization
Period and (iii) the Series 1997-1 Termination
Date. If an Early Amortization Event occurs prior
to October 1, 2001, the Revolving Period will
thereupon end and an "Early Amortization Period"
will commence. See "Description of
14
the Certificates--Early Amortization Events."
Unless the Revolving Period recommences as
described in the third following paragraph, an
Early Amortization Period will end on the earlier
of the payment in full to the Certificateholders
of the Invested Amount and the Series 1997-1
Termination Date. If BCI elects not to extend the
Initial Principal Payment Date and the Initial
Principal Payment Date occurs during the Revolving
Period or the Amortization Period, the Revolving
Period or Amortization Period, as applicable, will
end and the "Initial Amortization Period" will
begin.
During the Amortization Period, Principal
Collections and certain other amounts allocable to
the Certificates in an amount equal to the Monthly
Principal for the related Distribution Date will
be deposited into the Collection Account and any
balance will be deposited in the Excess Funding
Account (if any deposit thereto is then required)
or allocated to the holder of the BCRC Certificate
or the holders of any other outstanding Series as
described above. Such Principal Collections and
other amounts attributable to principal deposited
into the Collection Account will be distributed
first to the Class A Certificateholders on each
Class A Amortization Date, in an amount up to the
Class A Controlled Distribution Amount, until the
principal balance of the Class A Certificates has
been reduced to zero, and then to the Class B
Certificateholders commencing on the Class B
Expected Payment Date or, if later, the
Distribution Date on which the principal balance
of the Class A Certificates has been reduced to
zero, in an amount up to the principal balance of
the Class B Certificates.
During an Initial Amortization Period or Early
Amortization Period, Principal Collections
allocable to the Certificates and certain other
amounts allocable to the Certificates will no
longer be deposited in the Excess Funding Account
or paid to the holder of the BCRC Certificate or
the holders of any other outstanding Series as
described above. Instead, such Principal
Collections and other amounts attributable to
principal, will be distributed monthly first to
the Class A Certificateholders until the principal
balance of the Class A Certificates is reduced to
zero and then to the Class B Certificateholders
until the principal balance of the Class B
Certificates is reduced to zero, which
distributions shall be made on each Distribution
Date beginning with the Distribution Date
following the Collection Period in which an Early
Amortization Period commences or, if applicable,
beginning on the Initial Principal Payment Date.
See "Description of the Certificates--Early
Amortization Events" for a description of events
that might result in the commencement of an Early
Amortization Period. See "Description of the
Certificates--Extension of Initial Principal
Payment Date" for a description of when an Initial
Amortization Period may occur. In addition, on the
first Distribution Date following the Collection
Period in which an Early Amortization Event occurs
or, if applicable, beginning on the Initial
Principal
15
Payment Date, any amounts on deposit in the Excess
Funding Account will be distributed first to the
Class A Certificateholders up to the outstanding
principal balance of the Class A Certificates with
any remainder to be distributed to the Class B
Certificateholders up to the outstanding principal
balance of the Class B Certificates. See
"Description of the Certificates--Distributions
from the Collection Account; Reserve Fund."
BCRC is required to add Receivables to the Trust
under certain circumstances described under
"Description of the Certificates--Addition of
Accounts." The failure of BCRC to add Receivables
when required will result in the occurrence of an
Early Amortization Event. However, if no other
Early Amortization Event has occurred, the Early
Amortization Period resulting from such failure
will terminate and the Revolving Period will
recommence when BCRC is no longer required to add
Receivables to the Trust, so long as the scheduled
termination date of the Revolving Period has not
occurred. See "Description of the Certificates--
Early Amortization Events."
REALLOCATION OF EXCESS
PRINCIPAL COLLECTIONS.... To the extent that Principal Collections and other
amounts that are allocated to the
Certificateholders constitute Excess Principal
Collections, they may be applied to cover
principal distributions to
or for the benefit of certificateholders of other
Series or Enhancement Providers with respect to
other Series. Any such reallocation will not
result in a reduction in the Invested Amount. In
addition, Principal Collections (and certain other
amounts) otherwise allocable to other Series
during the Amortization Period or any Initial
Amortization Period or Early Amortization Period,
to the extent such collections constitute Excess
Principal Collections with respect to such other
Series, may be applied as principal distributions
to or for the benefit of the Certificateholders.
See "Description of the Certificates--Allocation
Percentages--Principal Collections for all
Series."
SUBORDINATION OF THE
RETAINED INTEREST AND
RESERVE FUND........ A portion of the Retained Interest will be
allocated to cover amounts payable with respect to
the Certificates and the Monthly Servicing Fee as
described below. The interest in the Trust
allocated to the Variable Funding Certificate will
rank pari passu with the Certificates and all
other Series and the BCRC Certificate. See
"Description of the Certificates--Retained
Interest and Variable Funding Certificate" herein.
If the Non-Principal Collections, Investment
Proceeds, amounts in the Reserve Fund and certain
other amounts allocable to the Certificates for
any Collection Period are not sufficient to cover
(i) the interest payable on the Certificates on
the next Distribution Date (plus any overdue
interest and interest thereon), (ii) the Net
Servicing Fee for such Distribution Date, (iii)
any Investor Default Amount for such Distribution
Date and (iv) the Series 1997-1 Investor
Allocation Percentage of any Adjustment Payment
required to be deposited in the Collection
Account, a portion of the Retained Interest will
be applied to make up such deficiency. The amount
of the Retained Interest subject to such
16
subordination is the "Available Subordinated
Amount." It is expected that the Available
Subordinated Amount for the first Distribution
Date will be no less than $24,859,127. The
Available Subordinated Amount for subsequent
Distribution Dates will be determined pursuant to
the calculation described under "Description of
the Certificates--Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of the Retained Interest." The
Available Subordinated Amount will fluctuate based
on, among other things, the increase and decrease,
if any, in the amount on deposit in the Excess
Funding Account and in the Incremental
Subordinated Amount, and will be reduced by the
excess of (x) the sum of (A) the portion of the
Defaulted Amount allocated to the Available
Subordinated Amount for the preceding Collection
Period, (B) the Required Subordination Draw Amount
for the preceding Distribution Date and (C) the
amount of Series 1997-1 Available Retained
Collections deposited in the Reserve Fund to
reimburse any withdrawal from the Reserve Fund
applied to cover any portion of the Investor
Default Amount on the preceding Distribution Date
over (y) the amount, if any, of Excess Servicing
for the preceding Distribution Date allocated and
available to be paid to the holder of the BCRC
Certificate as described under "Description of the
Certificates--Distributions from the Collection
Account; Reserve Fund--Excess Servicing." The
holder of the BCRC Certificate may, but is not
obligated to, increase at any time the Available
Subordinated Amount, but the aggregate amount of
such increases may not exceed an amount equal to
1% of the Initial Principal Amount of the
Certificates. Any such increase may have the
effect of avoiding an Early Amortization Event.
See "Description of the Certificates--Allocation
of Collections; Deposits in Collection Account;
Limited Subordination of the Retained Interest."
An Eligible Deposit Account will be established and
maintained in the name of the Trustee for the
benefit of the Certificateholders (the "Reserve
Fund"). On the Closing Date, BCRC will deposit in
the Reserve Fund an amount equal to $2,135,625.
Any amounts on deposit in the Reserve Fund will be
withdrawn to make payments of interest on the
Certificates and for certain other purposes, and
funds withdrawn from the Reserve Fund may be
replenished, in the circumstances described under
"Description of the Certificates--Distributions
from the Collection Account; Reserve Fund." A
withdrawal from the Reserve Fund will constitute
an Early Amortization Event in the circumstances
described under "Description of the Certificates--
Early Amortization Events."
SERVICING................. The Servicer is responsible for servicing, managing
and making collections on the Domestic Inventory
Receivables and will, except as provided below,
until the required amounts described herein have
been deposited for such Collection Period, make
deposits from such collections (as well as
collections and remittances with respect to Asset-
Based Receivables to the extent that Asset-Based
Receivables are then included in the Pool) in the
Collection Account within two business days
following BCI's receipt thereof. Generally, the
17
Servicer is not required to deposit amounts into
the Collection Account in excess of the amount of
such collections required to be distributed with
respect to the Certificates for the related
Collection Period. See "Description of the
Certificates--Collection and Other Servicing
Procedures." In certain circumstances, the
Servicer will be permitted to use for its own
benefit and not segregate collections on the
Receivables received by it during each Collection
Period until no later than the business day prior
to the related Distribution Date. See "Description
of the Certificates--Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of Retained Interest." The
Receivables may be subserviced by affiliates of
BCI on behalf of BCI as Servicer. BCI is permitted
to delegate all or a portion of its duties as
Servicer to any third parties, but any such
delegation will not relieve the Servicer of its
obligations under the Pooling and Servicing
Agreement.
The Servicer will calculate the amounts to be
allocated with respect to each Collection Period
to the holders of the Certificates, the investor
certificates of other outstanding Series, the
Variable Funding Certificate and the BCRC
Certificate as described herein. See "Description
of the Certificates--Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of the Retained Interest" and "Risk
Factors--Certain Legal Aspects." In certain
limited circumstances BCI may resign or be removed
as Servicer, in which event either the Trustee,
or, so long as it meets certain eligibility
standards set forth in the Pooling and Servicing
Agreement, a third-party servicer may be appointed
as successor servicer. See "Description of the
Certificates--Certain Matters Regarding the
Servicer" and "--Servicer Default." The Servicer
will receive a monthly servicing fee and certain
other amounts as described herein as servicing
compensation from the Trust. See "Description of
the Certificates--Servicing Compensation and
Payment of Expenses."
MANDATORY REASSIGNMENT
AND TRANSFER OF CERTAIN
RECEIVABLES.............. BCI makes certain representations and warranties in
the Receivables Purchase Agreement with respect to
the Receivables in its capacity as seller or
contributor, which representations and warranties
also are made by BCRC to the Trustee in the
Pooling and Servicing Agreement. In addition, BCI
makes certain representations and warranties in
the Pooling and Servicing Agreement in its
capacity as Servicer. If BCI or BCRC breaches
certain of its representations and warranties with
respect to any Receivables and such breach remains
uncured for a specified period and has a
materially adverse effect on the interest of the
Certificateholders and the investor
certificateholders of other outstanding Series or
the Variable Funding Interest in such Receivables,
such Receivables will, subject to certain
conditions specified herein, be reassigned to BCRC
or BCI, as applicable, unless a Liquidation Event
has occurred. See "Description of the
Certificates--Representations and Warranties" and
"--Removal of Accounts and Assignment of
Receivables" and
18
"Description of the Receivables Purchase
Agreement-- Representations and Warranties." If
BCI, as Servicer, fails to comply in all material
respects with certain covenants and warranties
with respect to any Receivables and such
noncompliance is not cured within a specified
period after BCI becomes aware or receives notice
thereof from the Trustee and such noncompliance
has a materially adverse effect on the interest of
the Certificateholders and the investor
certificateholders of other outstanding Series or
the Variable Funding Interest in such Receivables,
all Receivables affected will be purchased by BCI,
unless a Liquidation Event has occurred. See
"Description of the Certificates--Representations
and Warranties" and "--Removal of Accounts and
Assignment of Receivables" and "Description of the
Receivables Purchase Agreement-- Representations
and Warranties." In the event of a transfer of
servicing obligations to a successor Servicer,
such successor Servicer, rather than BCI, would be
responsible for any failure to comply with the
Servicer's covenants and warranties arising
thereafter. See "Description of the Certificates--
Servicer Covenants."
AMENDMENTS TO THE
AGREEMENT................. On or prior to the Closing Date, BCI, BCRC and the
Trustee will enter into Amendment Number 1 to the
Pooling and Servicing Agreement and BCI and BCRC
will enter into Amendment Number 1 to the
Receivables Purchase Agreement. Some of the
amendments contained in such documents will become
effective upon the execution of such documents and
some will become effective only after the date on
which the Series 1994-1 Certificates have been
paid in full (the "Series 1994-1 Final Payment
Date"). The terms of the Pooling and Servicing
Agreement and of the Receivables Purchase
Agreement, as so amended, are described in this
Prospectus. Those provisions which will become
effective only following the Series 1994-1 Final
Payment Date are so noted in this Prospectus. Such
delayed amendments (the "Delayed Amendments") are
more fully described throughout this Prospectus
and are summarized under the caption "Amendments
to Pooling and Servicing Agreement and Receivables
Purchase Agreement." Such Delayed Amendments
include, but are not limited to, (i) amendments to
the definitions of Eligible Accounts, Eligible
Receivables, Eligible Obligor and related terms,
(ii) amendments relating to the frequency of
additions and tests for adding Accounts to the
Trust, (iii) amendments to provide the terms under
which Asset-Based Receivables may be added to the
Trust and to make other revisions to accommodate
Asset-Based Receivables if included in the Trust,
(iv) amendments which allow certain calculations,
allocations and withdrawals to be made on a daily
basis, and (v) amendments which permit the
assignment of and the granting of participation
interests in the Receivables. By purchase and
acceptance of the Certificates, the holders of the
Certificates will accept the terms of the
documents as amended, including the Delayed
Amendments and the current amendments to the
Pooling and Servicing Agreeement and the
Receivables Purchase Agreement.
19
TAX STATUS................ In the opinion of special tax counsel for the
Depositor and the Trust, the Certificates will be
characterized as debt for federal income tax
purposes. Each Certificateholder, by the
acceptance of a Certificate, will agree to treat
the Certificates as debt for federal, state and
local income tax purposes. See "Certain Federal
Income Tax Consequences."
EMPLOYEE BENEFIT PLAN
CONSIDERATIONS........... An employee benefit plan subject to the
requirements of the fiduciary responsibility
provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the
provisions of Section 4975 of the Code shall not
be permitted to purchase the Class B Certificates.
Any such plan contemplating the purchase of Class
A Certificates should consult with its counsel
before making a purchase and the fiduciary and
such legal advisors should consider whether the
Class A Certificates will satisfy all of the
requirements of the "publicly offered securities"
exemption described herein or the possible
application of other ERISA prohibited transaction
exemptions described herein. See "Employee Benefit
Plan Considerations."
CERTIFICATE RATINGS....... 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. The ratings of the Certificates
address the likelihood of the ultimate payment of
principal and timely payment of interest on the
Certificates. However, the ratings of the
Certificates do not address, in the case of the
Class A Certificates, the likelihood of payment of
any Class A Carry-Over Amount, the likelihood that
any Class A Controlled Distribution Amount will be
paid on any Class A Amortization Date or the
likelihood of payment in full of the outstanding
principal balance of the Class A Certificates on
the Class A Expected Final Payment Date or, in the
case of the Class B Certificates, the likelihood
of payment of any Class B Carry-Over Amount, the
likelihood of payment in full of the outstanding
principal balance of the Class B Certificates on
the Class B Expected Payment Date. A rating is
based primarily on the credit underlying the
Receivables and the level of subordination of the
Retained Interest and any amounts in the Reserve
Fund and, in the case of the Class A Certificates,
the subordination of interest and principal
distributions of the Class B Certificates to the
prior distribution of interest and principal of
the Class A Certificates. A security rating is not
a recommendation to buy, sell or hold securities
and is subject to revision or withdrawal in the
future by the assigning rating agency. See "Risk
Factors--Ratings of the Certificates."
20
RISK FACTORS
Limited Liquidity. There is currently no market for the Certificates. The
Underwriters currently intend to make a market in the Certificates, but the
Underwriters are under no obligation to do so. There can be no assurance that
a secondary market will develop or, if a secondary market does develop, that
it will provide the Certificateholders with liquidity of investment or that it
will continue for the life of the Certificates.
Certain Legal Aspects. There are certain limited circumstances under the
Uniform Commercial Code (the "UCC") and applicable federal law in which prior
or subsequent transferees of Receivables could have an interest in such
Receivables with priority over the Trust's interest. See "Certain Legal
Aspects of the Receivables--Transfer of Receivables and Certificates." Under
the Receivables Purchase Agreement BCI warrants to BCRC, and under the Pooling
and Servicing Agreement BCRC warrants to the Trust, that the Receivables have
been or will be 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, after the Series 1994-1 Final
Payment Date, any Participation Interest. Each of BCI and BCRC also covenants
that it will not sell, pledge, assign, transfer or grant any lien on any
Receivable other than pursuant to the Receivables Purchase Agreement and the
Pooling and Servicing Agreement, respectively, except for tax and other
statutory liens (including liens in favor of the Pension Benefit Guaranty
Corporation); provided that after the Series 1994-1 Final Payment Date, BCRC
and BCI may assign or participate out a portion of the Receivables. See "The
Floorplan and Asset-Based Financing Business--Participation Arrangements" and
"Description of the Certificates--Removal of Accounts and Assignment of
Receivables." BCRC also covenants that it will not sell, pledge, assign,
transfer or grant any lien on the Retained Interest or the Variable Funding
Interest other than pursuant to the Pooling and Servicing Agreement. The
Variable Funding Certificate has been pledged by BCRC to BCI. See "Description
of the Certificates--Retained Interest and Variable Funding Certificate."
BCI warrants in the Receivables Purchase Agreement that the transfer of the
Receivables by it to BCRC is a valid sale of the Receivables. In addition, BCI
and BCRC have agreed to treat the transactions described herein as a sale of
the Receivables to BCRC, and BCI has agreed take all actions that are required
under Vermont law to perfect BCRC's ownership interest in the Receivables. See
"Certain Legal Aspects of the Receivables--Transfer of Receivables and
Certificates." Notwithstanding the foregoing, if BCI were to become a debtor
in a bankruptcy case and if a creditor or bankruptcy trustee of such debtor or
such debtor itself were to take the position that the transfer of Receivables
to BCRC should be recharacterized as a pledge of such Receivables to secure a
borrowing of such debtor, then delays in payments of collections of
Receivables to BCRC could occur or (should the court rule in favor of any such
trustee, debtor or creditor) reductions in the amount of such payments could
result. If the transfer of Receivables to BCRC is recharacterized as a pledge,
a tax or government lien or other non-consensual lien on the property of BCI
arising before any Receivables come into existence may have priority over
BCRC's interest in such Receivables (and, therefore, the Trust's interest in
such Receivables). See "Certain Legal Aspects of the Receivables--Certain
Matters Relating to Bankruptcy." If the transactions contemplated herein are
treated as a sale, the Receivables would not generally be part of BCI's
bankruptcy estate and would not be available to BCI's creditors. BCRC's rights
under the Receivables Purchase Agreement (other than repurchase agreements and
other agreements with manufacturers, importers or distributors) have been
assigned to the Trust. In a 1993 case, however, the U.S. 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
the conclusions in that case were applied in a BCI bankruptcy, the Receivables
would be subject to claims of certain creditors and would be subject to the
potential delays and reductions in payment to BCRC and the Certificateholders.
In addition, if BCI were to become a debtor in a bankruptcy case and if a
creditor or bankruptcy trustee of BCI or BCI itself were to request a
bankruptcy court to order that BCI be substantively consolidated with BCRC,
delays in and reductions in the amount of distributions on the Certificates
could occur. BCRC has been structured such that (i) the voluntary or
involuntary application with respect to BCRC for relief under Title 11 of the
United States Code (the "Bankruptcy Code") or similar applicable state laws
and (ii) the substantive consolidation of BCRC and BCI are unlikely. BCRC is a
separate, limited purpose subsidiary, the certificate of incorporation of
which contains limitations on the nature of BCRC's business and restrictions
on the ability of BCRC to
21
commence voluntary cases or proceedings under such laws without the prior
unanimous vote of all its directors. Further, BCRC does not intend to file,
and BCI has agreed that it will not file, a voluntary petition for relief
under the Bankruptcy Code or any similar applicable state laws with respect to
BCRC.
BCRC represents in the Pooling and Servicing Agreement that the transfer of
the Receivables by it to the Trust is a valid transfer and assignment of such
Receivables to the Trust. See "Description of the Certificates--
Representations and Warranties." BCRC has agreed to take all actions required
under Vermont law to perfect the Trust's ownership interest in the
Receivables. BCRC warrants that if the transfer by it to the Trust is deemed
to be a grant to the Trust of a security interest in such Receivables, then
the Trustee will have, subject to certain exceptions, a first priority
perfected security interest therein at the time of such transfer and in the
proceeds thereof. Nevertheless, a tax, government or other lien on property of
BCRC arising before Receivables come into existence may have priority over the
Trust's interest in such Receivables. BCRC treats and intends to continue to
treat the transfer of the Receivables to the Trust as a sale for accounting
and financial reporting purposes. If BCRC were to become a debtor in a
bankruptcy case and if a creditor or bankruptcy trustee of such debtor or such
debtor itself were to take the position that the transfer of Receivables to
the Trust should be recharacterized as a pledge of such Receivables to secure
a borrowing of such debtor, then delays in distributions on the Certificates
could occur or (should the court rule in favor of any such trustee, debtor or
creditor) reductions in such distributions could result.
In the event of a Servicer Default relating to the bankruptcy or insolvency
of the Servicer, and no Servicer Default other than such bankruptcy or
insolvency-related Servicer Default exists, the bankruptcy trustee may have
the power to prevent the Trustee from appointing a successor Servicer. If
certain events relating to the bankruptcy of BCI or BCRC were to occur, then
an Early Amortization Event would occur and, pursuant to the terms of the
Pooling and Servicing Agreement, additional Receivables would no longer be
transferred to the Trust and distributions of principal on the Class A
Certificates would not be subject to the Class A Controlled Distribution
Amount. If no Early Amortization Event other than such bankruptcy or
insolvency of BCRC exists, then the bankruptcy trustee (or BCRC as debtor in
possession) may have the power to prevent the early sale, liquidation or
disposition of the Receivables and the commencement of the Early Amortization
Period and may be able to require that new Receivables be transferred to the
Trust. In addition, the trustee, receiver or conservator for BCRC may have the
power to cause the early sale of the Receivables and the early payment of the
Certificates or to prohibit the continued transfer of Receivables to the
Trust. See "Certain Legal Aspects of the Receivables--Transfer of Receivables
and Certificates" and "--Certain Matters Relating to Bankruptcy."
Application of federal and state bankruptcy and debtor relief laws could
affect the interests of the Certificateholders in the Receivables if such laws
result in any Receivables being reduced or written off as uncollectible or
result in delays in payments due on such Receivables. See "Description of the
Certificates--Defaulted Receivables and Recoveries."
BCI represents and warrants in the Receivables Purchase Agreement, and BCRC
represents and warrants in the Pooling and Servicing Agreement, that each
Domestic Inventory Receivable originated pursuant to an inventory security
agreement or other floorplan financing agreement is at the time of creation
secured by a first priority perfected security interest in the related
Eligible 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 UCC financing statements. BCI
takes all actions necessary under applicable state laws to perfect such
security interest in the related Eligible Products. However, at the time such
Eligible Product is sold by the Obligor, the security interest in the Eligible
Product will terminate. Therefore, with respect to Domestic Inventory
Receivables originated pursuant to an inventory security agreement or other
floorplan financing agreement, if a dealer fails to remit to BCI amounts owed
with respect to Eligible Products that have been sold, the related Domestic
Inventory Receivables will no longer be secured by those Eligible Products. If
Asset-Based Receivables are added to the Trust, the obligations represented
thereby will at the time of transfer to the Trust be secured by a first
priority perfected security interest in goods, accounts, work in process, raw
materials, component parts or other assets of the Obligor. In the event that
Asset-Based Receivables are secured
22
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.
Payments. Domestic Inventory Receivables are generally payable by dealers
either upon the sale by the dealer of the Eligible Product or, in certain
cases, in accordance with a payment schedule set forth in the related inventory
security agreement or other floorplan financing agreement that at the time of
creation perfected the security interest in the Eligible Products. The timing
of the sale of the Eligible Products by dealers is uncertain. Asset-Based
Receivables are expected to be payable as described under "The Floorplan and
Asset-Based Financing Business--Payment Terms." There is no assurance that
there will be additional Receivables created under the Accounts or that any
particular pattern of Obligor repayments will occur. The payment of principal
on the Certificates is dependent on Obligor repayments and the Certificates may
not be fully amortized on the Series 1997-1 Termination Date. See "Description
of the Certificates--Termination." In addition, a significant decline in the
amount of Receivables generated could cause an Early Amortization Event.
However, a decline in the amount of Receivables generated during the Revolving
Period would initially be absorbed by an increase in the Excess Funded Amount
and the excess funded amounts for other outstanding Series. In certain
circumstances, BCRC will be required to designate additional Eligible Accounts
relating to Receivables of the same type as those which are then in the Trust
(which on the Closing Date will be Domestic Inventory Receivables); upon
transfer of Receivables arising under such additional Eligible Accounts from
BCI to BCRC pursuant to the Receivables Purchase Agreement, BCRC will convey
the Receivables arising under such additional Eligible Accounts to the Trust.
If such additional Eligible Accounts do not exist or the Receivables arising in
such additional Eligible Accounts otherwise are not transferred by BCRC when
required, an Early Amortization Event will occur and result in the commencement
of an Early Amortization Period, although in certain circumstances the
resulting Early Amortization Period may terminate and the Revolving Period
recommence. If an insolvency event relating to BCI or BCRC were to occur, then
an Early Amortization Event would occur, additional Receivables would not be
transferred to the Trust and distributions of principal on the Class A
Certificates would not be subject to the Class A Controlled Distribution
Amount. If no Early Amortization Event other than such bankruptcy or insolvency
of BCRC exists, then the bankruptcy trustee (or BCRC as debtor in possession)
may have the power to prevent the early sale, liquidation or disposition of the
Receivables and the commencement of the Early Amortization Period and may be
able to require that new principal Receivables be transferred to the Trust. In
addition, the trustee, receiver or conservator for BCRC may have the power to
cause early sale of the Receivables and the early payment of the Certificates
or to prohibit the continued transfer of Receivables to the Trust. 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.
Addition to Trust Assets; Additional Product Types; Limited Experience. BCRC
expects, and in some cases will be obligated, to designate Additional Accounts,
the Receivables in which will be conveyed to the Trust. Although such
Additional Accounts must be Eligible Accounts, they may include accounts with
Obligors originated by BCI (or an affiliate of BCI) or another lender under
criteria different from those which were applied to the Obligors on the
Accounts previously designated and added to the Trust. Such Additional Accounts
may also provide financing for types of products different from those included
in the Trust on the Closing Date and, if the Rating Agency Condition is
satisfied, Asset-Based Receivables may be added to Trust. 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 new product types, or other forms of
security, if any, that may secure the Receivables in new Accounts will provide
security that is as favorable as that provided by the Eligible Products
securing the Receivables currently included in the Trust.
The historical experience of the Domestic Inventory Receivables portfolio is
presented under "The Floorplan and Asset-Based Financing Business" and "The
Accounts." Because BCI to date has only had 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. BCI expects to create a number of Additional
Accounts that will be transferred to the Trust in the future. The actual
historical experience with respect to these Additional Accounts that
23
will be held by the Trust may be different from the Accounts currently held by
the Trust. There can be no assurance that the historical experience of the
portfolio of Domestic Inventory Receivables and Asset-Based Receivables
included in the Trust in the future will be similar to the Receivables
currently included in the Trust.
Social, Economic and Other Factors; Competition. Payment of the Domestic
Inventory Receivables is largely dependent upon the retail sale of the related
Eligible Products. Generation of new Domestic Inventory Receivables and of
Asset-Based Receivables is dependent upon the general level of sales of
Eligible Products or expected need for Eligible Products. The level of sales
of Eligible Products and the manufacturing and acquisition of Eligible
Products may change as the result of a variety of social and economic factors.
Economic factors include interest rates, unemployment levels, the rate of
inflation and customer perception of economic conditions generally. The use of
incentive programs (e.g., manufacturers' rebate programs) may affect sales. If
any of the manufacturers, importers, or distributors of the Eligible Products
were temporarily or permanently no longer in their respective businesses, the
rate of sales of Eligible Products generating Domestic Inventory Receivables
and Asset-Based Receivables could decrease, adversely affecting payment rates
with respect to the Domestic Inventory Receivables and Asset-Based Receivables
and the generation of new Domestic Inventory Receivables and of Asset-Based
Receivables. Moreover, if any of the manufacturers, importers or distributors
were temporarily or permanently no longer manufacturing, importing or
distributing the related Eligible Products, the loss experience with respect
to the related Domestic Inventory Receivables could be adversely affected.
Similar issues relate to the Asset-Based Receivables. In addition, BCI
competes with various other financing sources, including, without limitation,
independent finance companies, captive finance companies of manufacturers,
banks, investment companies and leasing companies, who are in the business of
providing floorplan financing arrangements to dealers.
Trust's Relationship to BCRC and BCI. Neither BCRC nor BCI or any affiliate
thereof is obligated to make any payments in respect of the Certificates or
the Receivables (other than the obligation of BCRC or BCI to purchase certain
Receivables from the Trust due to the failure to comply with certain covenants
or the breach by BCRC or BCI of certain representations and warranties, as
described below and under "Description of the Certificates--Representations
and Warranties" and "--Servicer Covenants," and other than certain affiliate
support agreements relating to certain Receivables described under "The
Floorplan and Asset-Based Financing Business--Relationship with Manufacturers,
Importers and Distributors"). However, the Trust is completely dependent upon
BCI for the generation of new Receivables. The ability of BCI to generate
Receivables is in turn dependent to a large extent on the sales of Eligible
Products. There can therefore be no assurance that BCI will continue to
generate Receivables at the same rate as in prior years. In addition, if BCI
were to cease acting as Servicer, delays in processing payments on the
Receivables and information in respect thereof could occur and result in
delays in payments to the Certificateholders.
In connection with the transfer of Receivables by BCI to BCRC and the
transfer of Receivables by BCRC to the Trust, each of BCI and BCRC makes
representations and warranties with respect to the characteristics of such
Receivables. BCI and BCRC are required to determine the accuracy of such
representations and warranties and in certain circumstances they are required
to accept reassignment of Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Certificates--Representations and Warranties" and "Description of the
Receivables Purchase Agreement--Representations and Warranties." In addition,
subject to certain limitations, BCI has the ability to change the terms of the
Accounts, including the amount or the timing of charge-offs and the rate of
the finance charge, if any, as well as underwriting procedures.
Credit Enhancement. Credit enhancement of the Certificates will be provided
by the subordination of the Retained Interest to the extent of the Available
Subordinated Amount as described herein as well as from amounts on deposit in
the Reserve Fund. The amount of such credit enhancement is limited and will be
reduced from time to time as described herein. See "Description of the
Certificates--Allocation of Collections; Deposits in Collection Account;
Limited Subordination of the Retained Interest."
Subordination of Class B Certificates. 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. Reductions of the Invested Amount as a
result of Investor Charge-Offs will result in reductions of amounts available
to distribute principal on the Class B Certificates before any such reductions
will be incurred in respect of the Class A Certificates.
24
Negative Carry; Decrease in Investor Non-Principal Collections. Funds, if
any, deposited in the Excess Funding Account will be invested in Eligible
Investments and, as a result, will likely earn a rate of return lower than the
interest rates borne by a comparable amount of principal Receivables.
Accordingly, during any period during which funds are on deposit in the Excess
Funding Account, such funds will reduce the amount of Non-Principal
Collections available to the Certificates on each business day, until BCI
generates sufficient Eligible Receivables to permit such funds to be released
from the Excess Funding Account.
Control. Under certain circumstances, the consent or approval of the holders
of a specified percentage of the aggregate unpaid principal amount of all
outstanding certificates of all outstanding Series will be required to permit
or to take certain actions, including amending the Pooling and Servicing
Agreement in certain circumstances and directing a reassignment of the entire
portfolio of the Receivables. In addition, following the occurrence of an
insolvency event with respect to BCRC or an Early Amortization Event as a
result of BCRC 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; provided, however, that if such sale,
disposition or liquidation is being made solely on account of BCRC's violation
of its covenant not to create any lien on any Receivable, the Trustee will
effect such sale only if the net proceeds would be sufficient to pay accrued
interest and the outstanding principal balance of each Series.
Basis Risk. 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 October 25, 1996, from 0% to 8.5%. It is possible that
with respect to any Interest Period, LIBOR plus the margin used to compute the
applicable Class A Certificate Rate or Class B Certificate Rate will exceed
the Net Receivables Rate. In such event, interest will accrue on the Class A
Certificates or Class B Certificates, as applicable, during such Interest
Period at a rate equal to the Net Receivables Rate. In addition, BCI may
reduce the interest rates applicable to any of the Receivables, so long as BCI
does not reasonably expect any such reduction to result in an Early
Amortization Event. Furthermore, as of October 25, 1996, approximately 0.62%
(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 Pool, could have the effect of
reducing or possibly eliminating the positive spread, if any, between the Net
Receivables Rate and the Class A Certificate Rate or the Class B Certificate
Rate based upon LIBOR, with a corresponding risk of a reduction in yield to
holders of the Class A Certificates or the Class B Certificates.
BCI Liquidation Event. Upon the occurrence of a Liquidation Event, the
interest represented by the Variable Funding Certificate will be fixed
relative to the interests represented by the Certificates for purposes of
further allocations of Principal Collections 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. If a Liquidation Event occurs, delays in distributions on
the Certificates or reductions in such distributions could result. Prior to
the Series 1994-1 Final Payment Date, the definition of "Liquidation Event"
will include certain cross default provisions relating to other obligations of
BCI. The Variable Funding Certificate has been pledged to BCI to support the
payment of the Note (as defined herein) issued to BCI by BCRC as part of the
consideration for the sale of the Receivables by BCI to BCRC. Various lenders
to BCI may view the Variable Funding Certificate as an asset of BCI. If such
lenders were to accelerate performance of BCI's obligations under certain
credit documents, a Liquidation Event could occur and the interest represented
by the Variable Funding Certificate would be fixed as discussed and with the
consequences described above in this paragraph.
Master Trust Considerations. The Trust, as a master trust, has previously
issued two Series of investor certificates and may issue additional Series of
investor certificates (which may be represented by different classes within a
Series) from time to time. A Supplement delivered in connection with the
issuance of other Series will specify certain Principal Terms applicable to
such Series. Such Principal Terms may include provisions creating different or
additional security or other credit enhancement, different classes of investor
certificates (including subordinated classes of investor certificates),
different methods of allocating collections from the Pool and any
25
other amendment or supplement to the Pooling and Servicing Agreement which is
made applicable only to such Series. No Supplement, however, may change the
terms of the Certificates or the terms of the Pooling and Servicing Agreement
as applied to the Certificates. There can be no assurance, however, that
previously issued Series or the issuance of any other Series from time to time
hereafter might not have an impact on the timing or amount of payments
received by the Certificateholders. Furthermore, Excess Principal Collections
may be available for reallocation to the Certificates during any Early
Amortization Period or Initial Amortization Period from other Series that are
not in amortization, early amortization or accumulation periods, which may
shorten the maturity of the Certificates. As long as the Certificates are
outstanding, a condition to the execution of any Supplement will be that
notice be given to the Rating Agencies and the Rating Agency Condition
satisfied. The issuance of an additional Series does not require the consent
of any Certificateholders. See "Description of the Certificates--New
Issuances."
Pre-Allocated Invested Amount. The Pre-Allocated Invested Amount will not be
included in the Invested Amount for purposes of allocating Principal
Collections to the Certificates and calculating the Required Pool Balance. The
"Pre-Allocated Invested Amount" is the portion of the Invested Amount that is
used in allocating Principal Collections to Series 1994-1, which is in an
amortization period. The initial Pre-Allocated Invested Amount will be
$251,000,000, and will be increased by the aggregate amount of principal
payments made on the Series 1994-1 Certificates after the Closing Date,
provided that after the date on which the Series 1994-1 Certificates have been
paid in full, which is expected to be on the April 1997 Distribution Date, the
Pre-Allocated Invested Amount will be zero; however, there can be no assurance
of the payment in full of the Series 1994-1 Certificates by April 1997. If an
Early Amortization Event occurs with respect to the Certificates prior to the
payment in full of the Series 1994-1 Certificates, Certificateholders will
receive principal payments at a reduced rate (due to the Pre-Allocated
Invested Amount reducing the amount of Principal Collections allocated to the
Certificates) until the Series 1994-1 Certificates are paid in full. See
"Description of Certificates--Allocation Percentages."
Ratings of the 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 (such rating agency and each
other rating agency designated by the Depositor in the related Supplement in
respect of any outstanding Series or class, a "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. A
rating of the Certificates 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, in the
case of the Class A Certificates, the likelihood that any Class A Carry-Over
Amount will be paid, the likelihood that any Class A Controlled Distribution
Amount will be paid on any Class A Amortization Date or the likelihood of
payment in full of the outstanding principal balance of the Class A
Certificates on the Class A Expected Final Payment Date or, in the case of the
Class B Certificates, the likelihood that any Class B Carry-Over Amount will
be paid or the likelihood of payment of the outstanding principal balance of
the Class B Certificates on the Class B Expected Payment Date. A rating is not
a recommendation to buy, sell or hold securities, inasmuch as such rating does
not comment as to the market price or suitability for a particular investor.
There is no assurance that a rating will remain for any given period of time
or that a rating will not be lowered or withdrawn entirely by a Rating Agency
if in its judgment circumstances so warrant.
Book-Entry Registration. The Certificates will be initially represented by
two or more certificates registered in the name of Cede, the nominee for DTC,
and will not be registered in the names of the Certificateholders or their
nominees. Because of this, unless and until Definitive Certificates are
issued, beneficial owners of Certificates ("Certificate Owners") will not be
recognized by the Trustee as "Certificateholders" (as that term is used in the
Pooling and Servicing Agreement). Consequently, until such time, Certificate
Owners will only be able to exercise the rights of Certificateholders
indirectly through DTC, Cedel, Euroclear and their participating
organizations. See "Description of the Certificates--Book-Entry Registration"
and "--Definitive Certificates."
26
THE DEPOSITOR AND THE TRUST
THE DEPOSITOR
Bombardier Credit Receivables Corporation (the "Depositor" or "BCRC"),
which, as of the Closing Date, will be a wholly-owned subsidiary of BCI and an
indirect wholly-owned subsidiary of Bombardier Corporation (which is a direct
wholly-owned subsidiary of Bombardier Inc.), was incorporated on November 9,
1993. The Depositor was organized for limited purposes, which include
purchasing receivables, beneficial ownership interests and participation
interests in receivables, debt obligations secured by receivables and other
forms of indebtedness and transferring such receivables, interests, debt
obligations and indebtedness to third parties and any activities incidental to
and necessary or convenient for the accomplishment of such purposes
(including, without limitation, entering into and performing its obligations
under the Pooling and Servicing Agreement and the Receivables Purchase
Agreement).
The Depositor's mailing address is P.O. Box 5544, Burlington, Vermont 05402.
The Depositor's telephone number is (802) 655-2824.
The Depositor has taken steps intended to assure that the voluntary or
involuntary application with respect to Bombardier Corporation or BCI for
relief under the Bankruptcy Code or other bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
enforcement of creditors' rights generally (collectively, "Insolvency Laws")
will not result in the substantive consolidation of the assets and liabilities
of the Depositor with those of Bombardier Corporation or BCI. These steps
include the creation of the Depositor as a separate, limited-purpose
subsidiary pursuant to a certificate of incorporation containing certain
limitations (including restrictions on the nature of the Depositor's business,
as described above, and a restriction on the Depositor's ability to commence a
voluntary case or proceeding under any Insolvency Law without the unanimous
affirmative vote of all of its directors). The Depositor's certificate of
incorporation includes a provision that requires it to have among its
directors at least two directors who qualify under the certificate of
incorporation as independent directors. However, there can be no assurance
that the activities of the Depositor would not result in a court concluding
that the assets and liabilities of the Depositor should be substantively
consolidated with those of Bombardier Corporation or BCI in a proceeding under
any Insolvency Law.
In addition, tax and certain other statutory liabilities, such as
liabilities to the Pension Benefit Guaranty Corporation relating to the
underfunding of pension plans of Bombardier Inc. or any of its subsidiaries
including Bombardier Corporation and BCI, can be asserted against the
Depositor. To the extent that any such liabilities arise after the transfer of
Receivables to the Trust, the Trust's interest in the Receivables would be
prior to the interest of the claimant with respect to any such liabilities.
However, the existence of a claim against the Depositor could permit the
claimant to subject the Depositor to an involuntary proceeding under the
Bankruptcy Code or other Insolvency Law.
THE TRUST
The Trust was formed under and is administered in accordance with the laws
of the State of New York pursuant to the Pooling and Servicing Agreement. The
Depositor conveys to the Trust, without recourse, the Receivables arising
under the Accounts. To date, the Trust has issued the Series 1994-1
Certificates and the Series 1996-1 Certificates. The property of the Trust
consists of the Receivables existing in the Accounts on the Initial Cut-Off
Date, the Receivables existing in the Additional Accounts added since the
issuance of the Series 1994-1 Certificates as set forth in Annex II hereto and
all Receivables generated in the Accounts from time to time thereafter during
the term of the Trust as well as Receivables generated in any Accounts added
to the Trust from time to time hereafter (less Receivables paid or charged-off
and excluding (i) Receivables generated in Removed Accounts or Ineligible
Accounts after the applicable Removal Commencement Date, (ii) Receivables
removed from the Trust from time to time after the Initial Cut-Off Date, and
(iii) after the Series 1994-1 Final Payment Date, 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"), an assignment of substantially all of
27
BCRC's rights and remedies under the Receivables Purchase Agreement, all funds
collected or to be collected in respect of such Receivables included as
property of the Trust, all funds on deposit in certain accounts of the Trust
(including funds on deposit in the Excess Funding Account, the Collection
Account and the Reserve Fund), the Collateral Security relating to such
Receivables included as property of the Trust, and any Enhancement issued with
respect to any other Series. See "Description of the Certificates--Addition of
Accounts." See "Description of the Receivables Purchase Agreement" for a
summary of certain terms of the Receivables Purchase Agreement.
The property of the Trust may in the future include Enhancements for the
benefit of investor certificateholders of other Series. The Certificateholders
will not have any interest in any Enhancement provided for the benefit of the
investor certificateholders of other Series.
The Trust was formed for the transactions relating to the issuance of
certificates such as the Series 1994-1 Certificates, the Series 1996-1
Certificates, the Series 1997-1 Certificates and similar transactions, as
contemplated by the Pooling and Servicing Agreement, and prior to formation
had no assets or obligations. The Trust has not engaged and will not engage in
any business activity, other than as described herein, but rather will only
acquire and hold the Receivables and the other assets of the Trust and
proceeds therefrom, issue the Certificates, other Series of investor
certificates, the BCRC Certificate and the Variable Funding Certificate, issue
additional Series and make payments thereon and related activities. As a
consequence, the Trust is not expected to have any need for, or source of,
capital resources other than the assets of the Trust.
See also "Description of the Certificates--The Trustee."
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the
Depositor, which will use such proceeds, except the portion used to fund the
Reserve Fund, to repay amounts owing to BCI under the Note or to purchase
Receivables from BCI and to provide for amortization of a portion of the
principal amount of the Series 1996-1 Certificates. BCI will use the related
proceeds to reduce commercial paper borrowings and for general corporate
purposes.
THE FLOORPLAN AND ASSET-BASED FINANCING BUSINESS
GENERAL
The following discussion includes descriptions of the Domestic Inventory
Receivables and the Asset-Based Receivables. Currently, however, the Pool
consists solely of Domestic Inventory Receivables. The Pool may, in the
future, include Asset-Based Receivables as provided herein. The descriptions
below of practices and procedures apply to current practices and procedures;
these practices and procedures may change over time.
Without limiting the foregoing, BCI expects to provide financing to
additional dealers, and directly to manufacturers and distributors. In
addition, BCI expects that the financing needs of Obligors will change over
time, whether as a result of seasonality or other changes in such Obligors'
businesses. In certain cases, after the Series 1994-1 Final Payment Date,
designated Accounts and the Receivables arising thereunder transferred to the
Trust may be acquired by BCI (or an affiliate of BCI) from another lender.
Accordingly, the types of credit arrangements designated as Accounts and the
Receivables arising thereunder that are transferred to the Trust, the products
or other assets financed by those Receivables and the security, if any,
provided in connection with such arrangements, are expected to change over
time, and the relative proportions of the various types of credit arrangements
and collateral may change over time. Consequently, there can be no assurance
that Additional Accounts designated in the future will relate to the same
types of products or will be of the same credit quality as previously
designated Accounts or that the Receivables in the new Accounts will be
supported by the same security that is currently provided for the Domestic
Inventory Receivables. The (a) designation of Additional Accounts and (b)
addition of Asset-Based Receivables (which will not be permitted until after
the Series 1994-1 Final Payment Date) are subject to satisfaction of certain
conditions described herein under "Description of the Certificates--Addition
of Accounts."
28
Currently, the Receivables sold to BCRC consist solely of extensions of
credit and advances (referred to as inventory, wholesale or floorplan
financing) made by BCI (or, after the Series 1994-1 Final Payment Date, made
by an affiliate of BCI or another lender and acquired by BCI or one of its
affiliates) to dealers (as of October 25, 1996, approximately 3228 Eligible
Obligors) of consumer, recreational and commercial products ("Domestic
Inventory Receivables"). The Receivables may, after the Series 1994-1 Final
Payment Date, at the options of BCI and BCRC (but subject to certain
conditions), also consist of extensions of credit and advances by BCI (or an
affiliate) (or made by another lender and acquired by BCI or one of its
affiliates) to (i) dealers to finance such dealers' working capital needs and
(ii) manufacturers and distributors to finance such manufacturers' and
distributors' production, manufacturing and inventory of consumer,
recreational and commercial products ("Asset-Based Receivables"). BCI and BCRC
are under no obligation to make the decision that the Trust will include
Asset-Based Receivables in addition to the Domestic Inventory Receivables. No
selection procedures believed by BCI to be adverse to the holders of the
Certificates were or will be used in selecting the Receivables to be sold or
contributed to BCRC. The accounts (whether or not they would be "Eligible
Accounts") with respect to Domestic Inventory Receivables are referred to in
this section and in the historical information provided under the sections
"The Accounts" and "Maturity and Principal Payment Considerations" as the "BCI
Domestic Inventory Portfolio." The Domestic Inventory Receivables are secured
by the products financed for such dealers and occasionally by mortgages,
assignments of certificates of deposit or letters of credit. The Asset-Based
Receivables would be generally expected to be secured by finished goods
inventory, accounts receivable arising from the sale of such inventory,
certain work-in-process, raw materials and component parts, as well as other
assets of the borrower.
With respect to Domestic Inventory Receivables, BCI generally provides
dealers with inventory financing by paying to manufacturers, importers or
distributors the wholesale cost of inventory items purchased by such dealers.
These dealers are located in the United States and the Domestic Inventory
Receivables are denominated in U.S. dollars. In most instances a manufacturer,
importer or distributor may make a number of financing sources other than BCI
available to its dealers. BCI has, however, in the past entered into, and may
in the future enter into, captive financing arrangements with manufacturers,
importers or distributors whereby BCI is made the primary source of financing
for such manufacturer's, importer's or distributor's dealers. In some cases,
BCI has in the past offered (and BCI may in the future offer) attractive
financing rates in order to obtain captive financing arrangements with certain
manufacturers, importers or distributors.
Asset-Based Receivables that may be sold to the Trust would be generally
expected to arise from asset-based revolving credit facilities provided to
dealers, manufacturers and distributors and would be denominated in U.S.
dollars.
As of October 25, 1996, no single Obligor represented more than 3% of the
BCI Domestic Inventory Portfolio.
The principal products for which BCI currently provides domestic inventory
financing (which gives rise to Domestic Inventory Receivables) include, but
are not limited to, marine products (boats, motors and trailers) other than
Bombardier products, Bombardier products (such as Ski-Doo(R) snowmobiles, Sea-
Doo(R) personal watercraft and jetboats and Celebrity(R) boats), recreational
vehicles, manufactured housing, motorcycles, lawn and garden equipment, horse
trailers and consumer electronics and appliances. BCI expects to expand the
type of products for which it provides domestic inventory financing to
include, among others, musical instruments, medical equipment, heating,
ventilation and air conditioning related products and specialty vehicles (e.g.
vehicles made specially for certain uses, such as ambulances or airport
buses). As of October 25, 1996, approximately 35.0% (based on outstanding
receivables) or 47.3% (based on financing volume for the nine month period
ended October 25, 1996) of the Domestic Inventory Receivables were
attributable to products manufactured by Bombardier Inc. or its subsidiaries.
The products for which BCI expects to provide dealer, manufacturer or
distributor financing (which gives rise to Asset-Based Receivables) would be
expected to be varied. The types of products covered by Domestic Inventory
Receivables and Asset-Based Receivables may change over time.
29
BCI services the Domestic Inventory Receivables, and expects to service the
Asset-Based Receivables, through its executive offices in Colchester, Vermont
and through various regional offices.
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 such inventory to the financed dealers with BCI generally
advancing funds directly to the manufacturer, importer or distributor on
behalf of the dealer. 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 inventory acquired by dealers
for whom BCI provides inventory financing.
Once a dealer has commenced the floorplanning of a manufacturer's,
importer's or distributor's inventory through BCI, BCI, if requested, will
generally finance all purchases of inventory by such dealer from such
manufacturer, importer or distributor, up to the credit limits established
from time to time for such dealer. BCI may limit or cancel this arrangement if
a dealer fails to perform its obligations under its inventory security
agreement or other floorplan financing agreement with BCI, if the relevant
manufacturer, importer or distributor fails to perform its obligations under
its repurchase agreement, if the aggregate outstanding amount of receivables
with respect to any one manufacturer, importer or distributor reaches BCI's
predetermined limit or if the dealer (or manufacturer, importer or
distributor) is experiencing financial difficulties.
Asset-Based Receivables. BCI expects to offer extensions of credit and
advances to dealers to finance such dealers' working capital needs and to
manufacturers and distributors to enable such manufacturers and distributors
to finance production, manufacturing and inventory of consumer, recreational
and commercial products. Asset-Based Receivables would typically be expected
to involve a revolving line of credit, for a contractually committed period of
time, pursuant to which the borrower may receive extensions of credit, subject
to availability of adequate collateral. The amount of Asset-Based Receivables
arising under an Account at any time would be determined primarily by the
financing needs of the borrower.
CREDIT UNDERWRITING PROCESS AND SECURITY
Domestic Inventory Receivables. BCI's credit underwriting process generally
begins by obtaining the endorsement of its program by a manufacturer, importer
or distributor and entering into a repurchase agreement with such
manufacturer, importer or distributor. Under the repurchase agreement, the
manufacturer, importer or distributor generally agrees to repurchase any of
its goods which were financed by BCI and which are repossessed by BCI after a
dealer defaults, subject to certain conditions which are contained in the
agreements (for further discussion of repurchase agreements, see "--
Relationship with Manufacturers, Importers and Distributors" below).
Thereafter, BCI will, with the assistance of such manufacturer, importer or
distributor, generally prepare and distribute promotional material for the
purpose of encouraging all eligible and credit worthy dealers of such
manufacturer, importer or distributor to participate in the program. In
certain cases, the manufacturer, importer or distributor is the primary
promoter of the program offered by BCI.
A list of dealers together with the recommended credit line limits for such
dealers is generally obtained from the manufacturer, importer or distributor.
The dealers are then normally contacted by either BCI's telemarketing
department or personnel from BCI's field force. If a dealer is interested in
the program, an application for financing is completed. After receipt of such
application, BCI currently investigates the dealer by reviewing, among other
things, the dealer's financial statements, trade references, past actual
performance and anticipated future performance and personal credit history.
Upon approval, credit limits are established for approved dealers and the
dealer executes an inventory security agreement or other floorplan financing
agreement in favor of BCI. Credit limits are generally subject to different
levels of management approval generally based on the amount of the proposed
credit limit.
30
Domestic inventory financing originated by BCI is typically documented by an
inventory security agreement or other floorplan financing agreement providing
for a security interest in favor of BCI in all inventory of the dealer the
purchase of which was financed or floorplanned by BCI. The agreements
generally also set forth the dealer's obligations with respect to payment
terms, the maintenance and security (including insurance) of the inventory,
remedies of BCI upon a default by such dealer and other matters relating to
the dealer's inventory and business and BCI's rights. The inventory security
agreements and other floorplan financing agreements generally require the
dealer to maintain insurance (for the benefit of BCI) with respect to the
inventory being financed by BCI. Although BCI's right to the proceeds of such
insurance will not be transferred by BCI to BCRC (or by BCRC to the Trust),
BCI has agreed under the Pooling and Servicing Agreement to treat such
insurance proceeds received by BCI as recoveries on the related Domestic
Inventory Receivables. The inventory security agreements and other floorplan
financing agreements generally also require the dealer to take (or assist BCI
in taking) all actions as may be necessary for BCI to perfect its security
interest in the financed products. After the Series 1994-1 Final Payment Date,
BCI or one of its affiliates may also acquire Domestic Inventory Receivables
from third-party lenders, and although such receivables may not arise in an
account pursuant to an inventory security agreement or other floorplan
financing agreement established by BCI (or such affiliate), such account will
satisfy BCI's customary underwriting standards.
BCI generally maintains an active and ongoing relationship with the dealers
to whom it provides floorplan financing and generally reevaluates individual
dealers' credit limits (i) prior to increasing such credit limit, (ii) on an
annual basis and (iii) if a dealer is experiencing financial difficulties or
is not complying with its obligations under its inventory security agreement
or other floorplan financing agreement with BCI. BCI reserves the right to
deny any new or increased credit requests. At times, based upon BCI's
relationship with the manufacturer, importer or distributor and, in the case
of a manufacturer, importer or distributor who has entered into a repurchase
agreement, the past practice of such manufacturer, importer or distributor in
performing its obligations under such repurchase agreement (discussed under
"--Relationship with Manufacturers, Importers and Distributors" below), BCI
may establish a dealer line of credit that would otherwise not be granted on
the strength of dealer credit alone.
Asset-Based Receivables. BCI's credit underwriting process with respect to
Asset-Based Receivables is expected to give consideration to a variety of
factors, including, among others, the financial condition of the borrowing
entity, its credit history and relationship with current and previous lenders
and its historical performance and trends. Upon satisfaction of certain credit
criteria, terms and conditions, an account would be approved for a revolving
line of credit, the size of which would be based on a variety of factors
including the need of the borrower.
Upon approval of the credit, an evaluation of the borrowing base of the
borrower would be performed and advance rates would be established based on
the type of collateral. For purposes of evaluating items such as finished
goods inventory, work-in-process, raw materials, component parts and real
estate, an independent appraisal may be obtained and used in connection with
establishing advance rates. With respect to accounts receivable, eligibility
criteria, typically excluding items past due in excess of, or aged over, a
specific number of days from invoice date, would be established, and
concentration limits would be set with respect to the individual items within
the receivables base. Next, an advance rate on eligible receivables would be
determined based on a review of historical and projected data, giving
consideration to factors such as credit loss experience, dilution, contingent
sales and aged items. The intended result of the above analyses would be to
set eligibility criteria and advance rates such that, upon any necessary
collateral liquidation, BCI would fully recover any principal dollars advanced
on the revolving line of credit.
The adequacy of the borrowing base would be monitored periodically. In
addition, the financial condition of the borrower would be monitored in
connection with financial covenants set forth in the loan agreements, and the
borrower would be subject to audit by BCI.
PAYMENT TERMS
Domestic Inventory Receivables. BCI is generally entitled to receive
repayment in full of the related loan upon sale of the inventory for which
floorplan financing has been provided. This payment system is commonly
31
known as the Pay-as-Sold Program. Interest is generally payable monthly. See
"--Billing and Collection Procedures" below. A scheduled payment program is
made available in limited instances to certain manufacturer's, importer's and
distributor's eligible dealers pursuant to which such dealers may schedule the
repayment of financed inventory over several months (generally 90 to 180
days), whether sold or not. The sum of all payments under the scheduled
payment program will equal the advance to the dealer, which advance in most
cases will be the full price of the financed product (rather than the
discounted price which is paid to the manufacturer, importer or distributor in
scheduled payment situations), plus in certain instances interest on the
amount advanced to the dealer. In certain cases where there is a scheduled
payment program, there is no interest collected on such Domestic Inventory
Receivable, since the advances were made at a discount from the face amount of
the receivables. See "Description of the Certificates--Discount Option." The
first payment is generally due 30 days from the invoice date and subsequent
payments are generally due each 30 days thereafter.
Asset-Based Receivables. Obligors would be generally obligated to pay
interest on outstanding borrowings pursuant to a schedule, which normally
would be expected to be monthly or quarterly. Principal payments and draws
would also generally be settled on a periodic basic (which may be weekly,
monthly or quarterly) or, if earlier, when and to the extent principal
outstanding balances exceed eligible collateral at negotiated advance rates
(i.e., the maximum percentage of the borrowing base, or portion thereof, that
the borrowed amount can represent).
BILLING AND COLLECTION PROCEDURES
Domestic Inventory Receivables. A statement setting forth billing and
related account information is prepared by BCI and generally mailed or
otherwise transmitted to each dealer on a monthly basis. Each dealer's
statement is generally generated and distributed on the second or third day
following BCI's month-end cut-off date. Interest and other nonprincipal
charges are usually required to be paid by the fifteenth day of each month and
in all cases prior to the month-end cut-off date for the month in which such
amounts are generally billed. Both interest and other nonprincipal charges are
generally billed in arrears. Generally, dealers remit payments to bank lock
boxes. In cases where a manufacturer, importer or distributor is responsible
for a payment (such as interest payments in certain situations), billing goes
to such manufacturer, importer or distributor.
REVENUE EXPERIENCE
Domestic Inventory Receivables. BCI generally charges dealers interest at a
floating rate determined by BCI on each business day. BCI is currently
determining the rate to be the "prime rate" designated in the "Wall Street
Journal," plus a spread generally ranging from 0% to 8.5% per annum based on
risk and/or other factors including the manufacturer's, importer's or
distributor's support of the dealer. The interest rate for any given period is
the average daily prime rate plus the applicable spread and is applied to the
average balances outstanding during the applicable period. The average spread
over the average prime rate charged to dealers for the Domestic Inventory
Receivables for the fiscal years ended January 31, 1996, 1995, 1994, 1993 and
1992 was approximately 3.98%, 4.45%, 4.50%, 4.85% and 4.71%, respectively. The
average prime rate for the fiscal years ended January 31, 1996, 1995, 1994,
1993 and 1992 was 8.85%, 7.34%, 6.00%, 6.21% and 8.21%, respectively.
There is seasonality in the level of outstanding Domestic Inventory
Receivables and in repayments of principal. See "Maturity and Principal
Payment Considerations." Dealer inventory financed by Domestic Inventory
Receivables typically increases during the fall and winter months reaching a
peak during the late winter or early spring, at which point the outstanding
Domestic Inventory Receivables then begin liquidating during the spring and
summer. In large part, this seasonality is attributable to the Domestic
Inventory Receivables related to marine products and Bombardier products.
RELATIONSHIP WITH MANUFACTURERS, IMPORTERS AND DISTRIBUTORS
Domestic Inventory Receivables. BCI's primary marketing focus is the
manufacturer, importer or distributor of the financed product. Affiliates of
BCI (which manufacture Ski-Doo(R) snowmobiles, Sea-Doo(R) personal watercraft
and jetboats and Celebrity(R) boats) in the aggregate manufacture products
which are financed
32
directly by BCI and with respect to which the resulting Domestic Inventory
Receivables represented, as of October 25, 1996, approximately 34.96% of BCI's
Domestic Inventory Receivables portfolio. With the exception of four other
independent manufacturers who accounted, as of October 25, 1996, for
approximately 12.90%, 5.69%, 4.05% and 3.79%, respectively, of BCI's Domestic
Inventory Receivables portfolio, no other manufacturer, importer, or
distributor currently accounts for more than 2% of BCI's Domestic Inventory
Receivables portfolio.
In most instances, rates, terms and procedures are agreed upon at the
manufacturer, importer or distributor level, although for large dealers
specific arrangements may be made with the individual dealer. In the event of
the bankruptcy or insolvency of a manufacturer, importer or distributor, the
enforceability of the obligations of a dealer under its inventory security
agreement or other floorplan financing agreement with BCI would remain
unimpaired.
In certain situations, the manufacturer, importer or distributor will pay
all or a portion of the interest that would otherwise be payable for some
period by a dealer with respect to a Domestic Inventory Receivable; in such
cases, the manufacturer, importer or distributor makes such payment to BCI and
the dealer has a corresponding interest moratorium.
In the past, most financing to dealers has involved a commitment by the
manufacturer, importer or distributor to repurchase the financed products if
BCI repossesses such products after a dealer defaults. In some cases, these
repurchase obligations lapse when an unsold product reaches a certain age. The
repurchase price to be paid to BCI is generally equal to (i) the unpaid
principal amount of the Receivable with respect to the repossessed products
plus (ii) certain costs of repossession and (iii) in certain circumstances,
less a scheduled amount determined according to the age of the repossessed
products. In certain cases, manufacturers, importers and distributors are also
subject to recourse agreements which obligate the manufacturer, importer or
distributor to repurchase the receivables in the event of a dealer default.
The obligations of the manufacturer, importer or distributor do not relieve
the dealers of any of their obligations to BCI. However, in certain cases, the
manufacturer, importer or distributor who makes a payment with respect to a
Domestic Inventory Receivable due from a dealer may become subrogated to the
related claims by BCI against the dealer and may require a transfer of BCI's
corresponding claims against the dealer to the extent of the payment.
The terms of such repurchase commitments (including pricing) may vary, both
by industry and by manufacturer, importer or distributor. In addition, current
trends in the domestic inventory financing business indicate that repurchase
commitments may not always be available from manufacturers, importers and
distributors.
To the extent repurchase agreements and other agreements are entered into
with manufacturers, importers or distributors relating to the dealers who are
being financed by Domestic Inventory Receivables, such agreements will,
pursuant to the Receivables Purchase Agreement, be assigned by BCI to BCRC,
but not by BCRC to the Trust. BCI agrees under the Pooling and Servicing
Agreement to use reasonable efforts to collect under such agreements (on
behalf of BCRC) with manufacturers, importers and distributors with respect to
the Domestic Inventory Receivables, and BCRC and BCI will agree to deposit all
such collections into the Trust, where such collections will be treated as
recoveries on the related Domestic Inventory Receivables.
Asset-Based Receivables. Asset-Based Receivables are not expected to be
supported by any commitment from a manufacturer, importer or distributor to
repurchase any financed products.
MONITORING
Domestic Inventory Receivables. Once the dealer credit line is established,
the relevant manufacturer, importer or distributor may, after obtaining BCI's
approval for each shipment, ship products to the dealer and receive payment
therefor (as a loan to the dealer) from BCI so long as such dealer's BCI
financed inventory level remains within the limits of that dealer's credit
line. Provided the relevant account is in good standing,
33
performing under its inventory security agreement or other floorplan financing
agreement and the credit line has not been withdrawn, approval will normally
be given.
In order to ensure compliance with the Pay-As-Sold Program, BCI periodically
conducts audit inspections of dealers. In most cases, inventory is normally
inspected at least four times a year. The audits are intended to ensure that
the dealers are paying for floorplanned products as they are sold. The
inspections are performed by BCI field representatives or outside inspection
service personnel who have been specially trained to audit the inventory of
dealers. The field representatives or outside inspection service personnel
performing the audit will generally do the following: (i) check the actual
inventory; (ii) inspect products for signs of use or excessive wear and tear;
(iii) spot check dealer sales orders; (iv) complete condition reports on
product that is worn; (v) inspect the dealer's place of business and report
unusual conditions; (vi) collect for interest and principal as needed; and
(vii) obtain the dealer's signature certifying the audit. Should discrepancies
in a dealer's inventory and payment schedule or other problems be discovered
by the auditing representative, BCI's management is promptly apprised of the
situation.
Asset-Based Receivables. Once BCI establishes a credit line with a borrower,
BCI expects to monitor the adequacy of the borrowing base on a periodic basis
and expects to perform periodic audits. In addition, BCI expects to monitor
the financial condition of the borrower periodically in connection with loan
covenants set forth in the loan agreements, and the borrower would be subject
to audit by BCI.
Outsourcing. BCI has delegated certain of its servicing, monitoring and
administrative duties to third parties and BCI may from time to time in the
future delegate all or a portion of its servicing, monitoring and
administrative duties with respect to the Receivables to third parties,
provided that no such delegation shall relieve BCI of its responsibility as
Servicer with respect to such duties.
COLLECTION ACTIVITY
Domestic Inventory Receivables. BCI's field management and representatives
are responsible for all normal collection activity with respect to Domestic
Inventory Receivables. When it has been determined that any further collection
activity will require repossession, any remaining inventory is generally
repossessed by BCI in conjunction with the applicable manufacturer, importer
or distributor. In such instances, if the manufacturer, importer or
distributor has entered into a repurchase agreement, such manufacturer,
importer or distributor is generally obligated under such repurchase agreement
to pay BCI (i) the unpaid principal amount of the Receivables with respect to
the repossessed product plus (ii) certain costs of repossession and (iii) in
certain circumstances, less a scheduled amount determined according to the age
of the repossessed products. The dealer, however, remains obligated to pay BCI
for any unpaid interest, other nonprincipal 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 a recovery in
respect of the related Receivables. Any legal action against a dealer is
generally initiated by BCI.
BCI has not had a formal loan extension policy in place with respect to the
Domestic Inventory Receivables. All payments on such receivables are due when
the related inventory is sold or when payment is otherwise scheduled to be
made and a default will exist if payment is not made when due. BCI has in the
past entered into (and may in the future agree to) an extended payment term
arrangement with a defaulted dealer, but such arrangements are considered to
be workout situations by BCI and no general policy is followed in this regard.
When a dealer is on a scheduled payment program and a payment is missed or
cannot be made, the usual course of action by BCI involves an inspection of
the dealer's inventory. Based on such inspection, a decision is generally made
either to extend the payment due date or to institute other collection
measures.
Asset-Based Receivables. Upon default by the borrower under an Asset-Based
Receivable credit arrangement, which, among other conditions, may arise as a
result of the borrower's failure to comply with certain covenants or failure
to maintain an adequate borrowing base to support outstanding balances, BCI
would be expected to continue its ongoing assessment of the borrower's
financial condition and determine its best course of action for purposes of
obtaining repayment, including the possibility of immediate liquidation of all
collateral.
34
Charge-Off Policy. BCI's historical charge-off policy regarding accounts
included in the BCI Domestic Inventory Portfolio has been generally to pursue
all collection activities prudently before charging-off the account. The
accounts are reviewed semi-annually by BCI's chief executive officer, at which
time a decision is made as to which accounts to charge-off.
PARTICIPATION ARRANGEMENTS
From time to time BCI may permit other financing sources to participate in
certain of its financing arrangements with Obligors and in such cases, BCI
will provide for such participation by granting to or transferring to such
other financing sources an undivided interest in the receivables, related
collateral security and other rights associated therewith (a "Participation
Interest"). The documentation for the underlying line of credit will remain in
the name of BCI, as lender and BCI will be the Servicer under such
arrangement. In a separate contractual arrangement with BCI, the holder of the
Participation Interest will agree to provide a portion of the funding for such
financing to BCI and will have the right to receive a portion of the payments
received on account of principal, interest and other fees and charges due from
the Obligor and with respect to the related collateral security and other
rights associated therewith. BCI may advise an Obligor that the size of its
line of credit is conditioned upon participants in the financing. In other
circumstances, there will be no such condition and BCI may be obligated to
maintain the full amount of the line of credit notwithstanding its expectation
that a portion of it will be participated. After the Series 1994-1 Final
Payment Date and subject to the Rating Agency Condition being satisfied with
respect to the form of the documentation pursuant to which Participation
Interests are to be granted, the receivables, related collateral security and
other associated rights to be sold by BCI to the Depositor, and in turn by the
Depositor to the Trust, may be subject to Participation Interests granted
pursuant to such documentation.
In addition, after the Series 1994-1 Final Payment Date, the Depositor may
cause the Trust to transfer an undivided interest in certain Receivables,
related Collateral Security and other associated rights included in the
Trust's assets to the Depositor, which may thereafter transfer such interest
to a third party in the form of a Participation Interest subject to the Rating
Agency Condition being satisfied with respect to the form of the documentation
pursuant to which such Participation Interests are to be granted.
THE ACCOUNTS
GENERAL
The following discussion includes descriptions of the Domestic Inventory
Receivables and the Asset-Based Receivables. Currently, however, the Accounts
consist solely of Eligible Accounts in the BCI Domestic Inventory Portfolio as
provided herein. BCI and BCRC have the option, after the Series 1994-1 Final
Payment Date and subject to certain conditions, to include accounts containing
Asset-Based Receivables.
The Receivables arise in the Accounts. The Accounts consist of accounts in
the BCI Domestic Inventory Portfolio (and may in the future also consist of
all or a portion of the accounts in BCI's Asset-Based Receivables portfolio)
that were, in either case, Eligible Accounts at the time of such selection. In
order to be an Eligible Account, each Account must meet certain criteria
provided in the Pooling and Servicing Agreement. See "Description of the
Certificates--Representations and Warranties" and "--Eligible Accounts and
Eligible Receivables." All Eligible Accounts sold or contributed to BCRC by
BCI pursuant to the Receivables Purchase Agreement will be deposited by BCRC
into the Trust pursuant to the Pooling and Servicing Agreement. No selection
procedures believed by BCI to be adverse to the holders of the Series have
been or will be used by BCI in selecting the Accounts to be transferred to
BCRC.
As long as an Account is an Eligible Account, the Receivables in such
Account (which will be part of the Trust's assets) may be performing or non-
performing Receivables and may be Eligible Receivables or Ineligible
Receivables; however, only Eligible Receivables will be considered in
determining the Pool Balance (and therefore in determining various amounts or
percentages which are based on the Pool Balance).
35
The Accounts pursuant to which the Domestic Inventory Receivables have been
or will be generated by BCI (or after the Series 1994-1 Final Payment Date, an
affiliate of BCI) are inventory security agreements or other floorplan
financing agreements entered into with BCI by dealers to finance the purchase
by the dealers of inventory. The standard form of inventory security agreement
currently used by BCI is filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. However, the actual inventory financing
agreements entered into with dealers, as well as the terms and conditions of
other floorplan financing agreements entered into by BCI (or after the Series
1994-1 Final Payment Date, an affiliate of BCI) with dealers, may differ
materially from the standard form of inventory security agreement filed as an
exhibit to the Registration Statement. The accounts pursuant to which the
Asset-Based Receivables will be generated (which accounts may in the future
also be included in the Pool as Accounts) are expected to be revolving credit
arrangements entered into with BCI or affiliates of BCI by dealers to finance
working capital needs and by manufacturers and distributors to finance such
manufacturers' and distributors' production, manufacturing and inventory of
consumer, recreational and commercial products. The terms of such revolving
credit arrangements would be generally negotiated between BCI (or an affiliate
of BCI) and its borrower and, therefore, no general form of financing
agreement exists with respect to the Asset-Based Receivables.
Pursuant to the Pooling and Servicing Agreement, BCRC has the right (subject
to certain conditions), and in some circumstances is obligated, to designate
from time to time additional qualifying accounts to be included as Accounts
and to convey to the Trust the Receivables of such Additional Accounts,
including Receivables thereafter created. These accounts must meet the
eligibility criteria to qualify as Eligible Accounts as of the date such
accounts are designated as Additional Accounts. Pursuant to the Receivables
Purchase Agreement, BCI will from time to time sell or contribute the
Receivables then existing, with certain exceptions, or thereafter created
under the Accounts and under any such Additional Accounts to BCRC, which will
transfer such Receivables to the Trust pursuant to the Pooling and Servicing
Agreement. See "Description of the Certificates--Addition of Accounts" and "--
Representations and Warranties." Eligible Receivables in the BCI Domestic
Inventory Portfolio or Asset-Based Receivables portfolio may consist of
performing Receivables which were previously non-performing. However, based on
the historical performance of the receivables in the BCI Domestic Inventory
Portfolio, the percentage of Eligible Receivables in the Trust which are
Domestic Inventory Receivables and which were previously non-performing should
be insignificant in relation to the aggregate amount of Domestic Inventory
Receivables in the Trust at any one time.
Subject to certain conditions specified in the Pooling and Servicing
Agreement, BCRC has the right to remove Accounts and Receivables from the
Trust. See "Description of the Certificates--Removal of Accounts and
Assignment of Receivables." Throughout the term of the Trust, the Accounts
from which the Receivables arise will be the Accounts designated by BCRC on
the Initial Cut-Off Date plus any Additional Accounts, minus any Accounts
removed from the Trust.
Pursuant to the Pooling and Servicing Agreement, the Servicer (expected to
be BCI) or any subservicer (which may include a BCI affiliate) may, subject to
certain conditions, change the terms relating to the Accounts and the
Receivables. See "Description of the Certificates--Collection and Other
Servicing Procedures."
As of October 25, 1996, with respect to the accounts in the BCI Domestic
Inventory Portfolio: (a) there were approximately 3,228 Eligible Accounts
which had been designated to the Trust; the Receivables in such Accounts had
an aggregate principal balance of approximately $678.05 million and all of
such Receivables in such Eligible Accounts had been transferred to BCRC and
deposited into the Trust; (b) with respect to such Eligible Accounts: (i)
10.48% of the Receivables were in Accounts with credit limits per Account
ranging from approximately $0 to $249,999, 24.64% of the Receivables were in
Accounts with credit limits per Account ranging from $250,000 to $499,999,
31.57% of the Receivables were in Accounts with credit limits per Account
ranging from $500,000 to $999,999, 31.05% of the Receivables were in Accounts
with credit limits per Account ranging from $1,000,000 to $14,999,999, and
2.26% of the Receivables were in Accounts with credit limits per Account
ranging from approximately $15,000,000 to $30,000,000, (ii) the average
aggregate credit limit per Account was approximately $410,880.59, and (iii)
the average principal balance of Receivables per Account was
36
approximately $210,053.98; (c) with respect to such Eligible Accounts, the
aggregate principal balance of Receivables as a percentage of the aggregate
credit limits of such Eligible Accounts was approximately 51.12%; and (d) with
respect to such Eligible Accounts, approximately 8.00% of the Receivables were
in Accounts for which the related credit lines were initially established in
the 1996 calendar year, approximately 16.73% in the 1995 calendar year,
approximately 12.00% in the 1994 calendar year, approximately 8.53% in the
1993 calendar year and approximately 54.74% in the 1992 and prior calendar
years. With respect to Eligible Accounts pursuant to which Domestic Inventory
Receivables are generated, the weighted average spread over the prime rate
charged to dealers for the period January 1, 1996 through October 25, 1996 was
approximately 3.95%. All of the historical information (including tables and
numbers) contained in this Prospectus regarding BCI or any Receivables or
Accounts also includes receivables and accounts held by BCI Finance Inc.
(formerly BCI Recovery Inc.). BCI Finance Inc., which was incorporated in
1991, is a wholly-owned subsidiary of Bombardier Corporation, which is the
parent company of BCI. In October 1991 and June 1993, pools of then non-
performing receivables held by BCI were sold to BCI Finance Inc. In January
1993, an additional pool of non-performing receivables held by BCI was
transferred to BCI Finance Inc. in exchange for receivables held by BCI
Finance Inc. which had become performing receivables.
BCI and BCRC may designate Additional Accounts from time to time and
transfer the Receivables arising therein to the Trust. As a result, the actual
composition of the Receivables by business line represented by the Trust's
assets is expected to change over time. In addition, due to the variability
and uncertainty with respect to the rates at which Receivables in the Trust
are created, paid or otherwise reduced, the information set forth below may
vary significantly over time.
HISTORICAL SIZE
The following table sets forth aggregate year-end outstanding principal
balances of receivables in the BCI Domestic Inventory Portfolio for each of
the dates shown. The Eligible Accounts comprise only a portion of the entire
receivables in the BCI Domestic Inventory Portfolio, which portfolio would
also include accounts which would not qualify as Eligible Accounts. As a
result, the historical information with respect to Eligible Accounts may be
different than the historical information set forth below.
AGGREGATE YEAR-END OUTSTANDING PRINCIPAL BALANCES
JANUARY 31,
----------------------------------
PORTFOLIO 1996 1995 1994 1993 1992
--------- ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
Domestic Inventory Receivables........ $759.7 $652.8 $542.0 $432.5 $388.0
The following table sets forth information on the average number of dealers
financed, average month-end outstanding principal balance on receivables and
average volume per dealer for each of the periods shown.
SIZE OF BCI DOMESTIC INVENTORY PORTFOLIO
YEAR ENDED JANUARY 31,
----------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
(U.S. DOLLARS IN THOUSANDS)
Average Number of Dealers............ 3,377 3,945 4,107 4,090 4,269
Average Month-End Principal Balances
Per Dealer.......................... $184.9 $131.8 $107.7 $ 92.0 $ 83.0
Average Financing Volume Per Dealer.. $527.7 $404.7 $330.6 $265.0 $195.0
37
DELINQUENCY
The following table shows delinquency information for the BCI Domestic
Inventory Portfolio as of the dates shown.
DELINQUENCY EXPERIENCE
JANUARY 31,
--------------------------------------
OCTOBER 25, 1996 OCTOBER 27, 1995 1996 1995 1994 1993 1992
---------------- ---------------- ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
Aggregate Principal Bal-
ance................... $773.1 $559.5 $759.7 $652.8 $542.0 $432.5 $388.0
Delinquent Amount (1)... $ 4.6 $ 8.4 $ 4.8 $ 9.6 $ 8.8 $ 19.7 $ 22.9
Delinquent
Amount/Aggregate Prin-
cipal Balance.......... 0.6% 1.5% 0.6% 1.5% 1.6% 4.6% 5.9%
Allowance for Credit
Losses on
BCI's Books............ $ 11.1 $ 13.2 $ 9.7 $ 12.8 $ 10.7 $ 19.4 $ 22.3
Allowance/Aggregate
Principal
Balance................ 1.4% 2.4% 1.3% 2.0% 2.0% 4.5% 5.7%
- --------
(1) Consists of the total principal and past due charges on receivables which
were (i) unpaid when due as a result of retail sale of the underlying
product (i.e., sold out of trust) or (ii) unpaid when due under a
scheduled payment program and with respect to which BCI determined that
the payment was undercollateralized after the due date. The percentage of
outstanding Domestic Inventory Receivables which were on a scheduled
payment program as of the above dates was generally less than 4% by
principal balance.
See the last two paragraphs under "General" above.
LOSS EXPERIENCE
The following tables set forth BCI's average principal receivables balance
and loss experience for each of the periods shown with respect to the
receivables in the BCI Domestic Inventory Portfolio. The Eligible Accounts
will comprise only a portion of the entire receivables in the BCI Domestic
Inventory Portfolio, which also includes accounts that would be ineligible. In
addition, the Eligible Accounts may also in the future comprise all or a
portion of the receivables in the Asset-Based Receivables portfolio for which
there is currently no historical loss experience information available. As a
result, actual loss experience with respect to the Eligible Accounts may be
different. There can be no assurance that the loss experience for the
Receivables in the future will be similar to the historical experience set
forth below.
LOSS EXPERIENCE FOR DOMESTIC INVENTORY RECEIVABLES
NINE MONTHS ENDED YEAR ENDED JANUARY 31,
--------------------------------- --------------------------------------
OCTOBER 25, 1996 OCTOBER 27, 1995 1996 1995 1994 1993 1992
---------------- ---------------- ------ ------ ------ ------ ------
(U.S. DOLLARS IN MILLIONS)
Average Principal Re-
ceivables Balance(1)... $772.4 $603.9 $624.4 $520.1 $442.1 $378.0 $353.9
Net Losses(2)(4)........ $ 1.4 $ 2.4 $ 7.1 $ 0.7 $ 11.0 $ 7.6 $ 5.0
Net
Losses/Liquidations.... 0.08% 0.18% 0.42% 0.04% 0.88% 0.71% 0.62%
Net Losses/Average
Principal Receivables
Balance(3)............. 0.18% 0.39% 1.13% 0.13% 2.49% 2.02% 1.42%
- --------
(1) Average Principal Receivables Balance is the average of the month-end
outstanding principal balances for the twelve months ending on the last
day of the period, except for the periods ended October 25, 1996 and
October 27, 1995, each of which is based on a nine-month average.
(2) Net losses in any period are gross losses less recoveries for such period.
Recoveries include recoveries from collateral security in addition to the
products.
(3) Percentages for the nine-month periods ended October 27, 1995 and October
25, 1996 are expressed on an annualized basis.
(4) Net losses in any period reflect losses recorded in such period on BCI's
books and records.
See the last two paragraphs under "General" above.
38
PRODUCT MIX
The level of BCI's domestic inventory financing has increased over the last
four years. The following table details BCI's annual domestic inventory
financing activity by outstanding aggregate receivables and by volume based on
current product categories. The increase in financing is not across all
industry sectors. BCI has made a deliberate decision to limit its exposure in
the consumer electronics and appliances portfolio (which is included in the
"Other" product category below). 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.
OUTSTANDING RECEIVABLES
JANUARY 31,
OCTOBER 25, OCTOBER 27, ------------------------------------------------------------------------
PRODUCT 1996 1995 1996 1995 1994 1993 1992
------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
(U.S. DOLLARS IN MILLIONS/% OF TOTAL)
Bombardier...... $270.3 (35.0%) $155.8 (27.8%) $291.5 (38.4%) $202.8 (31.1%) $141.4 (26.1%) $ 97.0 (22.4%) $ 70.2 (18.1%)
Marine.......... 258.0 (33.4) 209.4 (37.4) 270.1 (35.6) 228.9 (35.1) 180.1 (33.2) 157.0 (36.3) 147.3 (38.0)
Manufactured
Housing and
Recreational
Vehicles....... 192.8 (24.9) 158.3 (28.3) 164.3 (21.6) 179.9 (27.6) 169.4 (31.2) 127.3 (29.4) 116.2 (29.9)
Other........... 52.0 (6.7) 36.0 (6.4) 33.8 (4.5) 41.1 (6.3) 51.1 (9.4) 51.2 (11.8) 54.3 (14.0)
------------ ------------ ------------ ------------ ------------ ------------ ------------
TOTALS.......... $773.1(100.0%) $ 559.5(100.0%) $759.7(100.0%) $652.8(100.0%) $542.0(100.0%) $432.5(100.0%) $388.0(100.0%)
============ ============ ============ ============ ============ ============ ============
FINANCING VOLUME
NINE MONTHS ENDED YEAR ENDED JANUARY 31,
--------------------------- ------------------------------------------------------------------------
OCTOBER 25, OCTOBER 27,
PRODUCT 1996 1995 1996 1995 1994 1993 1992
------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
(U.S. DOLLARS IN MILLIONS)
Bombardier...... $ 774.9 $ 534.8 $ 837.6 $ 539.5 $ 387.5 $ 253.7 $ 160.1
Marine.......... 374.8 330.6 434.2 383.8 280.1 217.8 191.3
Manufactured
Housing and
Recreational
Vehicles....... 350.8 312.1 404.2 534.9 439.0 317.5 263.0
Other........... 135.3 80.6 106.1 138.1 251.2 264.0 217.0
------------ ------------ ------------ ------------ ------------ ------------ ------------
TOTALS.......... $ 1,635.9 $ 1,258.2 $ 1,782.1 $ 1,596.4 $ 1,357.7 $ 1,053.0 $ 831.4
============ ============ ============ ============ ============ ============ ============
Currently, the above categories consist primarily of the following products
(which categories and products may change over time as types of products are
added or subtracted): (i) the Bombardier category currently consists primarily
of Ski-Doo(R) snowmobiles, Sea-Doo(R) personal watercraft and jetboats and
Celebrity(R) boats and related parts and accessories, (ii) the Marine category
currently consists primarily of boats (less than 25 feet), motors and
trailers, which may also be sold in packages consisting of all three
components, but does not include Bombardier products, (iii) the Manufactured
Housing and Recreational Vehicles category currently consists primarily of
single and double-wide mobile homes and Class A and Class C motor homes and
trailers and towables and (iv) the Other category currently consists primarily
of appliances, televisions, stereos, other electronics equipment and lawn and
garden equipment, motorcycles and horse trailers.
See the last two paragraphs under "General" above.
39
AGING EXPERIENCE
The following table provides the age distribution of product inventory for
all dealers in BCI's portfolio of Domestic Inventory Receivables as a
percentage of total principal outstanding at the date indicated. Because the
Eligible Accounts will comprise only a portion of the entire BCI Domestic
Inventory Portfolio, which also includes accounts that would be ineligible,
actual age distribution with respect to the Eligible Accounts may be
different.
PRODUCT AGE DISTRIBUTION FOR THE DOMESTIC INVENTORY RECEIVABLES
JANUARY 31,
OCTOBER 25, OCTOBER 27, ---------------------------------
DAYS 1996 1995 1996 1995 1994 1993 1992
---- ----------- ----------- ----- ----- ----- ----- -----
1-120......... 55.52% 60.75% 61.44% 64.79% 61.63% 53.40% 48.50%
121-180....... 14.69% 9.51% 13.92% 14.25% 14.55% 15.50% 14.20%
181-270....... 10.59% 9.31% 9.37% 8.95% 9.56% 10.00% 10.70%
Over 270...... 19.20% 20.32% 15.54% 12.01% 14.26% 21.10% 26.70%
See the last two paragraphs under "General" above.
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of dealers on the
basis of the principal amount of receivables outstanding and the number of
dealers generating such receivables with respect to the BCI Domestic Inventory
Portfolio. This table includes dealers who have either month-end outstanding
principal balances as of October 25, 1996 or who had a positive average daily
principal balance for the month ended October 25, 1996. While some of the
receivables included in this table arose under accounts that would not qualify
as Eligible Accounts, the relative geographic distribution of receivables
arising under accounts that would qualify as Eligible Accounts would be
similar to the distribution reflected in this table.
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS REPRESENTED BY DOMESTIC INVENTORY
RECEIVABLES(1)
RECEIVABLES
OUTSTANDING PERCENTAGE OF PERCENTAGE OF
(U.S. DOLLARS RECEIVABLES TOTAL NUMBER NUMBER OF
STATE IN THOUSANDS) OUTSTANDING OF ACCOUNTS ACCOUNTS
----- ------------- ------------- ------------ -------------
Texas................ $69,733 9.0% 192 5.6%
California........... $62,402 8.1% 120 3.5%
Florida.............. $47,206 6.1% 110 3.2%
New York............. $41,686 5.4% 131 3.8%
Michigan............. $41,270 5.3% 100 2.9%
- --------
(1) No other state represents more than 5% of the outstanding Domestic
Inventory Receivables. Eight states (North Carolina, Ohio, Minnesota,
Wisconsin, Vermont, Georgia, Maine and South Carolina) each represent
between approximately 4.2% and 2.5% of the outstanding Domestic Inventory
Receivables and ten states (Pennsylvania, Alabama, Illinois, Tennessee,
Arizona, Louisiana, Washington, Virginia, Montana and Indiana) each
represent between approximately 2.4% and 1.6% of the outstanding Domestic
Inventory Receivables. The remaining states each represent less than 1.6%
of the outstanding Domestic Inventory Receivables.
See the last two paragraphs under "General" above.
40
BOMBARDIER CAPITAL INC.
BCI was incorporated in Massachusetts in 1974 and is a wholly-owned
subsidiary of Bombardier Corporation.
BCI is a financial services company which at the present time primarily
finances, on a secured basis, the purchases of inventory by dealers from
specified manufacturers, distributors and importers of recreational, consumer
and commercial products throughout the continental United States. BCI is also
currently involved in financing and leasing business jets and snow grooming
equipment sold by its affiliates, as well as financing the receivables of its
affiliates through its Commercial and Industrial Finance Division. Recently,
the Commercial and Industrial Finance Division has increased its scope and
offers financing and leasing products tailored for the truck trailer and
industrial equipment industries. BCI may engage in additional types of
financing and other activities in the future.
The principal products for which BCI currently provides inventory financing
(also referred to as wholesale or floorplan financing) include marine products
(boats, motors and trailers) which are not Bombardier products, Bombardier
products (such as Ski-Doo(R) snowmobiles, Sea-Doo(R) personal watercraft and
jetboats and Celebrity(R) boats), recreational vehicles, lawn and garden
equipment, horse trailers, motorcycles, manufactured housing and consumer
electronics and appliances and specialty vehicles. As of October 25, 1996, BCI
was providing inventory financing to approximately 3,475 dealers located
throughout the continental United States and acts as a financing source for
approximately 377 manufacturers and distributors.
Asset-Based Receivables would be expected to involve BCI providing
extensions of credit and advances to dealers to finance their working capital
needs and to manufacturers and distributors to finance such manufacturers' and
distributors' production and inventory of consumer, recreational and
commercial products.
In addition, BCI provides customer financing for Bombardier products that
currently primarily include Learjet and Challenger business jets and ski hill
resort snow grooming equipment, as well as providing financing assistance (in
certain cases) in connection with sales of commercial aircraft manufactured by
affiliates. Receivables and other related extensions of credit by BCI in
connection with such customer financing will not be included as assets in the
Trust. Currently, BCI provides two primary types of business jet financing.
The first type involves offering leasing and financing to customers
(independent third parties) with respect to new aircraft manufactured by a BCI
affiliate or a trade-in aircraft. The second type of activity involves the
purchase by BCI of trade-in aircraft from aircraft customers of BCI
affiliates, which trade-in aircraft purchased by BCI are then leased back to
the BCI affiliate or to the customer while the affiliate attempts to remarket
the aircraft. BCI's Commercial and Industrial Finance Division also provides
loan and lease financings for certain equipment not manufactured by
Bombardier. Receivables and other related extensions of credit by BCI in
connection with such loan and lease financing will not be included as assets
in the Trust.
As of January 31, 1994, January 31, 1995 and January 31, 1996, BCI's assets
(primarily financing assets) were approximately $495.6 million, $601.2 million
and $729.8 million, respectively, and shareholders' equity was approximately
$70.8 million, $72.1 million and $81.0 million, respectively. For the fiscal
years ended 1994, 1995 and 1996, total BCI revenues were approximately $64.3
million, $57.4 million and $82.3 million, respectively.
The mailing address of BCI's executive offices is currently 1600 Mountain
View Drive, Colchester, Vermont 05446. The telephone number of such offices is
currently (802) 654-8393.
As of the Closing Date, BCRC will be a wholly-owned direct subsidiary of
BCI. BCI is a wholly-owned direct subsidiary of Bombardier Corporation.
Bombardier Corporation is an Idaho corporation and a direct wholly-owned
subsidiary of Bombardier Inc.
41
Bombardier Inc. is a Canadian corporation which, directly and through its
subsidiaries, is engaged in design, development, manufacture and marketing in
the transportation equipment, aerospace, defense and motorized consumer
products industries. In addition, five Bombardier subsidiaries are engaged in
financial services and one in real estate. Bombardier Inc. and its
subsidiaries operate plants in Austria, Belgium, Canada, Finland, France,
Germany, Mexico, the United Kingdom and the United States.
Bombardier Inc.'s equity securities are publicly traded on The Montreal
Exchange and The Toronto Stock Exchange and on the Brussels and Antwerp stock
exchanges in Belgium. 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.
The registered office of Bombardier Inc. is at 800 Rene-Levesque Boulevard
West, Montreal, Quebec, Canada H3B 1Y8.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Principal payments with respect to the Certificates will not commence until
the Distribution Date in November 2001, unless an Early Amortization Event has
occurred or unless BCI elects not to extend the Initial Principal Payment
Date. Principal with respect to the Class B Certificates will not be
distributable until all principal with respect to the Class A Certificates has
been distributed (although distribution to the Class B Certificates may occur
on the same day as the final principal payment to the holders of the Class A
Certificates). It is expected that the final principal payment with respect to
the Class A Certificates will be made on the Class A Expected Final Payment
Date and that a single principal payment in respect of the Class B
Certificates will be made on the Class B Expected Payment Date, but the
principal of the Class A or the Class B Certificates may be paid earlier or,
depending on the actual payment rate on the Receivables, later, as described
herein. Because the majority of Domestic Inventory Receivables are payable
upon the retail sale of the related Eligible Product, the timing of such
payments is uncertain. In addition, there is no assurance that BCI will
generate additional Receivables under the Accounts or that any particular
pattern of payments will occur. In the event of a decline in the rate at which
additional Receivables are generated during the Revolving Period, BCRC may be
unable to convey new Receivables to the Trust (under existing Accounts
designated for the Trust) at the level anticipated or may be unable to
contribute Receivables in new Accounts when otherwise required to do so under
the Pooling and Servicing Agreement. (The obligation to designate additional
Accounts under certain circumstances applies to Accounts of the same type or
types as are then included in the Pool; therefore, if the Pool includes only
Accounts containing Domestic Inventory Receivables, only Domestic Inventory
Receivables would be required to be added to the Pool unless BCI and BCRC, at
their options, after the Series 1994-1 Final Payment Date, and subject to
certain conditions, decide to designate accounts containing Asset-Based
Receivables.) Such failure on the part of BCRC would constitute an Early
Amortization Event, causing principal payments on the Certificates to commence
earlier than would otherwise have been the case (and causing principal
payments to the Class A Certificateholders to be made without regard to the
Class A Controlled Distribution Amount). Further, during the Amortization
Period or any Initial Amortization Period or Early Amortization Period, a
decline in the rate at which additional Receivables are generated may have the
effect of reducing the rate of principal distributions on the Certificates,
thus extending the maturity of the Certificates and increasing their exposure
to losses in the Pool. Alternatively, the issuance of other Series may result
in the allocation of Excess Principal Collections from such other Series to
the Certificates during any Initial Amortization Period or Early Amortization
Period, which may shorten the maturity of the Certificates. See "Description
of the Certificates--Interest" and "--Principal" and "The Floorplan and Asset-
Based Financing Business."
Following the exhaustion of coverage provided by the Available Subordinated
Amount, the yield to maturity on the Certificates will be more sensitive to
the rate and timing of Defaulted Receivables. For a description of Investor
Charge-Offs, see "Description of the Certificates--Investor Charge-Offs."
42
The amount of new Receivables generated in any month and monthly payment
rates on the Receivables may vary because of seasonal variations in Eligible
Product sales and inventory levels, retail incentive programs provided by the
manufacturers, importers and distributors of the Eligible Products covered by
Domestic Inventory Receivables, and various economic factors affecting
Eligible Product sales generally. The following table sets forth the highest
and lowest monthly payment rates for the Domestic Inventory Receivables
portfolio during any month in the periods shown and the average of the monthly
payment rates for all months during the periods shown, in each case calculated
as the percentage equivalent of a fraction, the numerator of which is the
aggregate of all collections of principal during the period and the
denominator of which is the average aggregate principal balance for such
period. There can be no assurance that the rate of Principal Collections will
be similar to the historical experience set forth below. Because the Eligible
Accounts will comprise only a portion of the entire BCI Domestic Inventory
Portfolio, actual monthly payment rates with respect to the Eligible Accounts
may be different.
MONTHLY PRINCIPAL PAYMENT RATES FOR THE BCI DOMESTIC INVENTORY PORTFOLIO
NINE MONTHS ENDED YEAR ENDED JANUARY 31,
----------------------- ----------------------------
OCTOBER 25, OCTOBER 27,
1996 1995 1996 1995 1994 1993 1992
----------- ----------- ---- ---- ---- ---- ----
Highest Month........... 32.6% 35.9% 35.9% 37.3% 34.0% 29.5% 25.1%
Lowest Month............ 11.1% 11.1% 11.1% 14.4% 14.5% 15.3% 10.4%
Average of the Months in
the
Period................. 23.1% 24.6% 22.9% 24.4% 24.3% 23.8% 19.5%
See the last paragraph under "The Accounts--General."
Because BCI may cause an Initial Amortization Period to commence on any
Initial Principal Payment Date and because the occurrence of an Early
Amortization Event would initiate an Early Amortization Period, the final
distribution of principal on the Certificates may be made, in the case of the
Class A Certificates, prior to the Class A Expected Final Payment Date and, in
the case of the Class B Certificates, prior to the Class B Expected Payment
Date. See "Description of the Certificates--Early Amortization Events" and "--
Extension of Initial Principal Payment Date."
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement, dated as of January 1, 1994, filed as an exhibit to the
Registration Statement of which this Prospectus is a part, as supplemented by
the respective supplements relating to prior Series of investor certificates
and to the Certificates and the Variable Funding Certificate and as amended by
Amendment Number 1 dated as of January 1, 1997 ("Amendment Number 1") (as so
supplemented and amended and as further supplemented and amended from time to
time, the "Pooling and Servicing Agreement"), among BCRC, as depositor, BCI,
as servicer (in such capacity, the "Servicer") and Bankers Trust Company, as
trustee (the "Trustee"). The Pooling and Servicing Agreement provides that it
is governed by New York law. The following discussion represents a summary of
certain terms of the Pooling and Servicing Agreement and does not purport to
provide a complete description. For further information, owners and
prospective owners of Certificates are advised to examine the Pooling and
Servicing Agreement, including Amendment Number 1, copies of which (without
certain exhibits or schedules) will be made available by the Trustee upon
written request.
The Certificates will evidence undivided beneficial ownership interests in
the Receivables representing the right to receive from the Trust, upon certain
terms as further described herein, funds up to (but not in excess of) the
amounts required to make payments of interest on and principal of the
Certificates pursuant to the Pooling and Servicing Agreement. The initial
principal balance of the Class A Certificates is $400,000,000 and the initial
principal balance of the Class B Certificates is $27,125,000.
43
The Certificates will initially be represented by two or more certificates
registered in the name of the nominee of DTC (together with any successor
depository selected by the Depositor, the "Depository"), except as set forth
below. The Certificates will be available for purchase in minimum
denominations of $1,000 and integral multiples thereof in book-entry form. The
Depositor has been informed by DTC that DTC's nominee will be Cede & Co.
("Cede"). Accordingly, Cede is expected to be the holder of record of the
Certificates. No Certificate Owner will be entitled to receive a certificate
representing such person's beneficial interest in the Certificates, unless and
until Definitive Certificates are issued under the limited circumstances
described herein. All references herein to actions by Certificateholders shall
refer to actions taken by DTC upon instructions from its Participants (as
defined below), and all references herein to distributions, notices, reports
and statements to Certificateholders shall refer to distributions, notices,
reports and statements to Cede, as the registered holder of the Certificates.
See "Book-Entry Registration" and "Definitive Certificates" below.
INTEREST
Interest on the principal balance of the Class A Certificates will accrue at
a per annum rate (the "Class A Certificate Rate") equal to the lesser of (i)
the sum of (A) LIBOR (as defined in the third following paragraph) and (B) %
and (ii) the Net Receivables Rate (as defined in the second following
paragraph) and will be payable to the holders of the Class A Certificates on
each Distribution Date, commencing February 18, 1997. Interest on the
principal balance of the Class B Certificates will accrue at a per annum rate
(the "Class B Certificate Rate") equal to the lesser of (i) the sum of (A)
LIBOR (as defined in the third following paragraph) and (B) % and (ii) the
Net Receivables Rate (as defined in the second following paragraph) and will
be payable to the holders of the Class B Certificates on each Distribution
Date, commencing February 18, 1997. 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 Closing Date) to but
excluding such Distribution Date (each such period, an "Interest Period").
Interest due for any Distribution Date will be calculated on the basis of the
actual number of days elapsed during the related Interest Period and a 360-day
year. Interest due but not paid on any Distribution Date will be due on the
next Distribution Date together with, to the extent lawfully payable, interest
on such amount at the applicable Certificate Rate. Interest payments on the
Certificates will be derived solely from (i) Investor Non-Principal
Collections for a Collection Period, (ii) the amount, if any, then on deposit
in the Reserve Fund, (iii) any Investment Proceeds and (iv) Series 1997-1
Available Retained Collections to the extent of the Required Subordination
Draw Amount. See "Allocation Percentages" and "Distribution from the
Collection Account; Reserve Fund" below. Such amounts available to make
interest payments on the Certificates will be distributed first in respect of
the Class A Certificates and then to the Class B Certificates, in each case up
to the accrued and unpaid interest thereon.
"Adjustment Date" shall mean the second London Business Day preceding the
first day of the related Interest Period.
"Net Receivables Rate" shall mean, for any Adjustment Date, the weighted
average of the interest rates borne by the Receivables included in the Pool
for the preceding Collection Period less, if BCI is the Servicer, 2%, or, if
BCI is not the Servicer, 3%.
"LIBOR" with respect to any Interest Period will be based on the offered
rates for deposits in United States dollars having a maturity of one month
(the "Index Maturity") commencing on the related Adjustment Date which appears
on the Telerate Page 3750 as of 11:00 A.M., London time, on such date of
calculation. If such rate does not appear on Telerate Page 3750, LIBOR with
respect to such Interest Period will be determined at approximately 11:00
A.M., London time, on such Adjustment Date on the basis of the rates at which
deposits in United States dollars are offered by four major banks in the
London interbank market (selected by the Calculation Agent) to prime banks in
the London interbank market for a period equal to the Index Maturity and in a
principal amount equal to an amount of not less than U.S. $1,000,000 and that
is representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each such bank
to provide a quotation of its rate. If at least two such quotations are
provided, LIBOR will be the arithmetic mean
44
(rounded up or down, as the case may be, to the nearest whole multiple of
0.0625% per annum; provided, however, that any amount falling in the middle
shall be rounded up to the nearest whole multiple of 0.0625%) of such
quotations. If fewer than two quotations are provided, LIBOR with respect to
such Interest Period will be the arithmetic mean (rounded upwards or downwards
as aforesaid) of the rates quoted at approximately 11:00 A.M., New York City
time, on such Adjustment Date by three major banks in New York, New York
selected by the Calculation Agent for loans in United States dollars to
leading European banks having the Index Maturity and in a principal amount
equal to an amount of not less than U.S. $1,000,000 and that is representative
for a single transaction in such market at such time; provided, however, that
if the banks selected as aforesaid are not quoting as mentioned in this
sentence, LIBOR in effect for the applicable period will be LIBOR in effect
for the previous period.
"Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"London Business Day" means any day on which dealings in deposits in United
States dollars are transacted in the London interbank market.
"Calculation Agent" means the Trustee or any other Calculation Agent
selected by the Depositor which is reasonably acceptable to the Trustee.
PRINCIPAL
In general, no principal payments will be made on the Certificates until the
Distribution Date in November 2001, unless (i) BCI elects not to extend the
Initial Principal Payment Date or (ii) an Early Amortization Event, as
described herein, occurs. If BCI elects not to extend the Initial Principal
Payment Date, principal distributions on the Certificates will begin on such
Initial Principal Payment Date, the earliest of which would be the February
2000 Distribution Date. If an Early Amortization Event occurs, principal
distributions on the Certificates will begin on the Distribution Date
following the end of the Collection Period in which such event occurs. During
the Revolving Period, Principal Collections allocable to the Certificates,
subject to certain limitations, will either (a) be deposited in the Excess
Funding Account as described herein, (b) be allocated to one or more
outstanding Series which are in amortization, early amortization or
accumulation periods to cover principal payments due to the certificateholders
of any such Series or which provide for excess funding accounts or similar
arrangements or (c) if no such Series is then amortizing or accumulating
principal or otherwise provides for excess funding accounts or similar
arrangements, either be paid (or made available) to the holder of the BCRC
Certificate to maintain at a constant level the interest in the Trust
represented by the Certificates, or held as Unallocated Principal Collections.
See "Allocation Percentages--Principal Collections for all Series" and
"Distributions from the Collection Account; Reserve Fund--Principal
Collections" below.
During the Amortization Period, the Initial Amortization Period or any Early
Amortization Period, Principal Collections allocable to the Certificates plus
certain other amounts comprising Available Investor Principal Collections will
no longer be deposited in the Excess Funding Account or allocated to another
outstanding Series or paid or made available to the holder of the BCRC
Certificate, as described above, but rather 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 1997-1 Termination Date
has occurred.
During the Amortization Period, Principal Collections allocable to the
Certificates will be distributed first to the Class A Certificateholders on
each Class A Amortization Date, in an amount up to the Class A Controlled
Distribution Amount, until the principal balance of the Class A Certificates
has been reduced to zero, and then to the Class B Certificateholders,
commencing on the Class B Expected Payment Date or, if later, the date when
the principal balance of the Class A Certificates has been reduced to zero, up
to an amount equal to the principal
45
balance of the Class B Certificates. During any Initial Amortization Period or
Early Amortization Period, Principal Collections allocable to the Certificates
will be distributed first to the Class A Certificates (without regard to the
Class A Controlled Distribution Amount) 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 the final principal payment with respect to the Class A
Certificates will be made on the Class A Expected Final Payment Date and that
a single principal payment in respect of the entire principal balance of the
Class B Certificates will be made on the Class B Expected Payment Date, but
the principal of the Class A or the Class B Certificates may be paid earlier
or, depending on the actual payment rate on the Receivables, later, as
described under "Maturity and Principal Payment Considerations" herein. If an
interest in the Receivables represented by each outstanding Series is required
to be repurchased as described below under the last paragraph of
"Representations and Warranties," principal payments on the Certificates will
be made on the Distribution Date following such repurchase. See "Allocation
Percentages--Principal Collections for all Series" and "Distributions from the
Collection Account; Reserve Fund--Principal Collections" below.
Distributions on the Certificates will be made on each Distribution Date to
the holder of Certificates in whose names the Certificates were registered
(expected to be Cede, as nominee of DTC) at the close of business on the day
preceding such Distribution Date (or, if Definitive Certificates are issued,
on the last day of the preceding calendar month) (each a "Record Date").
However, the final distribution on the Certificates will be made only upon
presentation and surrender of the Certificates. Distributions will be made to
DTC in immediately available funds.
EXTENSION OF INITIAL PRINCIPAL PAYMENT DATE
Unless an Early Amortization Event occurs, principal with respect to the
Class A Certificates is expected to be paid monthly commencing on the November
2001 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 April 2002 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 February 2000 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; provided further, however, that the Initial Principal Payment Date may
not extend beyond the Class A Expected Final Payment Date. In the event that
BCI elects not to extend the Initial Principal Payment Date, the Revolving
Period or the Amortization Period, as applicable, will end and the Available
Investor Principal Collections for each Distribution Date commencing on the
Initial Principal Payment Date will be paid (i) first, to the Class A
Certificateholders until the earlier of the date on which the outstanding
principal balance of the Class A Certificates has been reduced to zero or the
Series 1997-1 Termination Date and (ii) second to the Class B
Certificateholders until the earlier of the date on which the outstanding
principal balance of the Class B Certificates has been reduced to zero or the
Series 1997-1 Termination Date.
BCI will cause the Trustee to provide a copy of BCI's notice not to extend
the Initial Principal Payment Date to each Certificateholder, BCRC and the
Rating Agencies. The Servicer will cause the Trustee to mail such notice no
later than the fifth business day following the Distribution Date prior to the
effective Initial Principal Payment Date on which principal payments will
commence.
BOOK-ENTRY REGISTRATION
DTC is a limited-purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the UCC and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations ("Participants") and facilitate
the clearance and settlement of securities transactions between Participants
through electronic book-entry changes in their accounts, thereby eliminating
the need for physical movement of certificates. Participants include the
Underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. Indirect
46
access to the DTC system also is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants").
Certificate Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Certificates may do so only through Participants and Indirect
Participants. In addition, Certificate Owners will receive all distributions
of principal of and interest on the Certificates from the Trustee through DTC
and its Participants. Under a book-entry format, Certificate Owners will
receive payments after the related Distribution Date because, while payments
are required to be forwarded to Cede, as nominee for DTC, on each such date,
DTC will forward such payments to its Participants which thereafter will be
required to forward them to Indirect Participants or Certificate Owners. It is
anticipated that the only Certificateholder (as such term is used in the
Pooling and Servicing Agreement) will be Cede, as nominee of DTC, and that
Certificate Owners will not be recognized by the Trustee as Certificateholders
under the Pooling and Servicing Agreement. Certificate Owners will only be
permitted to exercise the rights of Certificateholders under the Pooling and
Servicing Agreement indirectly through DTC and its Participants, who in turn
will exercise their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the Certificates and is
required to receive and transmit distributions of principal of and interest on
the Certificates. Participants and Indirect Participants with which
Certificate Owners have accounts with respect to the Certificates similarly
are required to make book-entry transfers and receive and transmit such
payments on behalf of their respective Certificate Owners.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Certificate Owner to pledge Certificates to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
Certificates, may be limited due to the lack of a physical certificate for
such Certificates.
DTC has advised the Depositor that neither DTC nor Cede will consent or vote
with respect to any action permitted to be taken by the Certificateholders
under the Pooling and Servicing Agreement or any other agreement. Under its
usual procedures, DTC mails an omnibus proxy to the issuer as soon as possible
after the record date. The omnibus proxy assigns Cede's consenting or voting
rights to those Participants to whose accounts the Certificates are credited
on the record date (identified in a listing attached thereto).
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes
in accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or
indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement
of certificates and any risk from
47
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 32 currencies, including United States dollars. Euroclear
includes various other services, including securities lending and borrowing,
and interfaces with domestic markets in several countries generally similar to
the arrangements for cross-market transfers with DTC described above.
Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty Trust
Company of New York (the "Euroclear Operator"), under contract with Euroclear
Clearance Systems S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with
the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries. Indirect access to
Euroclear is also available to other firms that clear through or maintain a
custodial relationship with a Euroclear Participant, either directly or
indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions
govern transfers of securities and cash within Euroclear, withdrawals of
securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Terms and Conditions
only on behalf of Euroclear Participants, and has no record of or relationship
with persons holding through Euroclear Participants.
Distributions with respect to the Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. See "Certain Federal Income Tax Consequences." Cedel 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 Cedel Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to the ability of its Depositary
(as defined below) to effect such actions on its behalf through DTC.
Holders of Certificates may hold their Certificates through DTC (in the
United States) or Cedel or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations which are participants in
such systems.
The Certificates will initially be registered in the name of Cede & Co., the
nominee of DTC. Cedel and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective depositaries which in turn
will hold such positions in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank, N.A. ("Citibank") will act
as depositary for Cedel and Morgan Guaranty Trust Company of New York
("Morgan") will act as depositary for Euroclear (in such capacities,
individually the "Depositary" and collectively the "Depositaries").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
48
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its
rules and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its Depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Cedel Participants
and Euroclear Participants may not deliver instructions directly to the
Depositaries.
Because of time zone differences, credits of securities received in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or Cedel Participants on such business day. Cash received in Cedel
or Euroclear as a result of sales of securities by or through a Cedel
Participant or Euroclear Participant to a Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel
or Euroclear cash account only as of the business day following settlement in
DTC. For information with respect to tax documentation procedures relating to
the Certificates, see "Certain Federal Income Tax Consequences--Foreign
Investors."
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Certificates among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
The Certificates will be issued in fully registered, certificated form to
Certificate Owners or their nominees ("Definitive Certificates"), rather than
to DTC or its nominee, only if (i) the Depositor advises the Trustee that DTC
is no longer willing or able to discharge properly its responsibilities as
Depository with respect to the Certificates and the Depositor is unable to
locate a qualified successor, (ii) the Depositor, at its option, advises the
Trustee that it elects to terminate the book-entry system with respect to the
Certificates through DTC or (iii) after the occurrence of a Servicer Default
under the Pooling and Servicing Agreement, Certificate Owners representing not
less than 50% of the aggregate unpaid principal amount of the Certificates or
of a class of the Certificates advise the Trustee and DTC through Participants
in writing that the continuation of a book-entry system through DTC (or a
successor thereto) is no longer in the best interests of such Certificate
Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee is required through DTC to notify all
Certificate Owners of the availability through DTC of Definitive Certificates
for the Certificates. Upon surrender by DTC of the certificate or certificates
held by it or its nominee representing such Certificates and instructions for
registration, the Trustee will issue the Certificates in the form of
Definitive Certificates, and thereafter the Trustee will recognize the holders
of such Definitive Certificates ("Holders") as Certificateholders under the
Pooling and Servicing Agreement.
Distributions of principal of and interest on the Certificates will be made
by the Trustee directly to holders in accordance with the procedures set forth
herein and in the Pooling and Servicing Agreement. Distributions on each
Distribution Date will be made to holders in whose names the Definitive
Certificates were registered at the close of business on the preceding Record
Date. Distributions will be made by wire transfer to the address of each
holder as it appears on the register maintained by the Trustee. The final
distribution on any Certificate (whether Definitive Certificates or the
certificate or certificates registered in the name of Cede representing the
Certificates), however, will be made only upon presentation and surrender of
such Certificate on the final payment date at such office or agency as is
specified in the notice of final distribution to Certificateholders. The
Trustee will provide such notice to registered Certificateholders not later
than the fifth day of the month of the final distribution.
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Definitive Certificates will be transferable or exchangeable at the offices
of the Trustee, which shall initially be Bankers Trust Company. Unless
otherwise provided in the related Supplement, no service charge will be
imposed for any registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
RETAINED INTEREST AND VARIABLE FUNDING CERTIFICATE
The Trust's assets will be allocated in part to the Certificates and any
other Series of investor certificates that may be outstanding from time to
time, with the remainder being allocated to BCRC as holder of the "BCRC
Certificate" (evidencing the "Retained Interest") and to the holder (currently
BCRC) of the "Variable Funding Certificate" (evidencing the "Variable Funding
Interest"). The Retained Interest will consist of (x) the portion thereof that
will be in part subordinated from time to time to the Certificates and, in
part, to the investor certificates in respect of each prior Series and to any
additional Series (i.e., the Pool Available Subordinated Amount on such date
(after giving effect to the allocations, distributions, withdrawals and
deposits to be made on such date)) and (y) with respect to each Series on any
date of determination, a percentage (which in the case of the Certificates
will initially be 4%) of the related adjusted invested amount (including the
Adjusted Invested Amount) of each such Series, which will not be subordinated
to the Certificates. The sum of (x) and (y) is referred to as the "Retained
Participation Amount." As of the Closing Date, the amount under the foregoing
clause (x) allocable to the Certificates will be no less than $24,859,127 and
the amount under the foregoing clause (y) allocable to the Certificates will
be $17,085,000.
The Variable Funding Interest will consist of the Variable Funding Amount
(i.e., 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 Funding Certificate as of the date of such
Liquidation Event will be fixed relative to the interests represented by the
Certificates and the investor certificates of other Series for purposes of
further allocations of Principal Collections from the Pool and the relative
interest of the Variable Funding Certificate in further allocations of Non-
Principal Collections will not be less than the relative interest thereof as
of the Liquidation Event. See "Allocation of Collections; Deposits in
Collection Account; Limited Subordination of the Retained Interest" below. On
each business day on which Non-Principal Collections and Principal Collections
are received by the Servicer, the holder of the Variable Funding Certificate
will be entitled to receive a distribution equal to the product of (x) the
Variable Funding Percentage and (y) all Non-Principal Collections and
Principal Collections.
Pursuant to the Pooling and Servicing Agreement, the BCRC Certificate and
the Variable Funding Certificate have been issued to BCRC. BCRC holds the BCRC
Certificate and has pledged its interest in the Variable Funding Certificate
to BCI as security for the Note issued by BCRC to BCI as part of the
consideration for the sale of the Receivables by BCI to BCRC. Amounts
allocated to BCRC with respect to the Variable Funding Certificate or the BCRC
Certificate may be available to BCRC to pay principal and interest on such
Note. See "Description of the Receivables Purchase Agreement--Sale and
Transfer of Receivables." Except after the occurrence of a Liquidation Event
as described herein, the outstanding principal balance of the Variable Funding
Certificate will fluctuate to reflect increases or decreases in the aggregate
outstanding principal balance of the Receivables, including any increases due
to the transfer of additional Receivables to the Trust. The holder of the
Variable Funding Certificate will own an undivided interest in the Trust that
will rank pari passu with the interest of all Series in the aggregate and the
portion of the Retained Interest that is not subordinated to the Certificates
or to the investor certificates of any other Series.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that, pursuant to one or more
supplements thereto (each, a "Supplement"), BCRC may cause the Trustee to
issue one or more new Series. Under the Supplement, BCRC may specify, among
other things, with respect to any Series: (a) its name or designation, (b) its
initial principal
50
amount (or method for calculating such amount) and the currency in which it is
denominated, (c) its certificate rate (or the method for determining its
certificate rate), (d) the payment date or dates and the date or dates from
which interest shall accrue; (e) the method for allocating collections to
certificateholders, (f) the issuer and terms of any form of Enhancement with
respect thereto, (g) the terms on which the investor certificates of such
Series may be exchanged for investor certificates of another Series,
repurchased by the Depositor or remarketed to other investors, (h) the Series
termination date (i) the designation of any Series Accounts and the terms
governing the operation of any such Series Accounts, (j) the monthly servicing
fee and the investors' servicing fee, (k) the number of classes of investor
certificates of such Series and, if more than one class, the rights and
priorities of each such class, (l) the extent to which the investor
certificates of such Series will be issuable in temporary or permanent global
form, (m) whether the investor certificates of such Series may be issued in
bearer form and any limitations imposed thereon, (n) the priority of such
Series with respect to any other Series, (o) whether such Series will be part
of a group and (p) any other terms permitted by the related Supplement (all
such terms, the "Principal Terms" of such Series). The Depositor may offer any
Series under a prospectus or other disclosure document in transactions either
registered under the Securities Act or exempt from registration thereunder,
directly or through the Underwriters or one or more other underwriters or
placement agents. There is no limit to the number of investor certificates
that may be issued under the Pooling and Servicing Agreement.
As stated above, the Pooling and Servicing Agreement provides that BCRC may
specify the terms of a new Series such that each Series has an amortization
period, controlled amortization period or accumulation period which may have a
different length and begin on a different date than the amortization period or
accumulation period for any other Series. Further, one or more Series may be
in their early amortization periods, controlled amortization period or
accumulation periods while other Series are not. Thus, certain Series may be
amortizing or accumulating principal, while other Series are not amortizing or
accumulating principal. Moreover, different Series may have the benefits of
different forms of Enhancement issued by different entities. Under the Pooling
and Servicing Agreement, the Trustee will hold each form of Enhancement only
on behalf of the Series (or a particular class within a Series) to which it
relates. The Pooling and Servicing Agreement also provides that the Depositor
may specify different certificate rates and monthly servicing fees with
respect to each Series (or a particular class within a Series). In addition,
the Depositor has the option under the Pooling and Servicing Agreement to vary
between Series (or classes within a Series) the terms upon which a Series (or
classes within a Series) may be repurchased by the Depositor.
Under the Pooling and Servicing Agreement and pursuant to a Supplement, a
new Series may be issued only upon the satisfaction of certain specified
conditions. BCRC may cause the issuance of a new Series by notifying the
Trustee at least five business days in advance of the applicable issuance date
(each, a "Series Issuance Date"). The notice shall state the designation of
any Series and with respect to such Series: (a) its initial principal amount,
(b) its currency and certificate rate, (c) the issuer of any Enhancement with
respect to such Series and (d) the related Series Issuance Date. The Pooling
and Servicing Agreement provides that the Trust will issue any Series only
upon delivery to it of the following: (i) a Supplement in form satisfactory to
the Trustee signed by BCRC and the Servicer and specifying the Principal Terms
of such Series; (ii) any related Enhancement agreement executed by each of the
parties thereto other than the Trustee; and (iii) an opinion of counsel to the
effect that, for federal income and Vermont state income tax purposes, (x)
such issuance will not adversely affect the characterization of the investor
certificates of any outstanding Series or class as debt of BCRC, (y) such
issuance will not cause or constitute a taxable event with respect to any
certificateholder or the Trust and (z) the investor certificates of such new
Series will be characterized as debt of BCRC (an opinion of counsel to the
effect referred to in clauses (x) and (y) with respect to any action is
referred to herein as a "Tax Opinion"). Such issuance is also subject to the
conditions that (a) the Depositor shall have delivered to the Trustee and any
Enhancement Provider a certificate of a vice president or more senior officer,
dated the related Series Issuance Date, to the effect that the Depositor
reasonably believes that such issuance will not cause an Early Amortization
Event to occur, (b) after giving effect to such issuance, BCRC shall have an
interest in the Pool represented by the BCRC Certificate and the Variable
Funding Certificate equal in the aggregate to at least 2% of the aggregate
amount of Receivables included in the Pool, in each case as of the Series
Issuance Date and after giving effect to such issuance and (c) written notice
of the proposed New Issuance shall have been given to
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each Rating Agency at least five Business Days before the Series Issuance Date
and no Rating Agency shall have notified BCRC, BCI or the Trustee that such
issuance will result in a reduction or withdrawal of the ratings of any
outstanding Series or class of investor certificates. Upon satisfaction of all
such conditions, the Trust will issue such Series.
SUPPLEMENTAL CERTIFICATE
The Pooling and Servicing Agreement provides that the BCRC Certificate
shall, at all times, be beneficially owned by BCRC; however, under certain
conditions, BCRC may surrender the BCRC Certificate to the Trustee in exchange
for a newly issued BCRC Certificate and a second certificate (the
"Supplemental Certificate"). The Supplemental Certificate is not required to
be beneficially owned by BCRC and may be delivered to or at the direction of
BCRC to any entity. The Pooling and Servicing Agreement requires that any
Supplemental Certificate be created pursuant to a Supplement setting forth the
terms of the Supplemental Certificate. It is a condition to delivery of the
Supplemental Certificate that, following delivery of the Supplemental
Certificate to another entity, BCRC shall, nevertheless, have an interest in
the Pool (represented by the remaining BCRC Certificate and the Variable
Funding Certificate) equal to at least 2% of the aggregate amount of
Receivables included in the Pool. Additional conditions to the delivery of a
Supplemental Certificate are (i) BCRC shall have given the Rating Agencies 10
days' prior notice and the Rating Agency Condition shall have been satisfied
with respect to such exchange and (ii) a Tax Opinion shall be delivered to the
Trustee. In addition, if the Supplement pursuant to which the Supplemental
Certificate is issued amends any of the terms of the Pooling and Servicing
Agreement, the Supplement shall be subject to the conditions described under
the caption "Amendments" below.
If any Supplemental Certificate is to be transferred or exchanged, it shall
be transferred or exchanged only upon satisfaction of the conditions set forth
in clauses (i) and (ii) of the preceding paragraph.
If a Supplemental Certificate is issued, all references herein to the BCRC
Certificate and distributions made with respect to the BCRC Certificate shall
include the Supplemental Certificate and distributions to be made with respect
to the Supplemental Certificate and references to the holder of the BCRC
Certificate or to BCRC as holder of the BCRC Certificate shall include BCRC
and the holder of the Supplemental Certificate.
CONVEYANCE OF RECEIVABLES AND COLLATERAL SECURITY
On the date of the issuance of the Series 1994-1 Certificates (the "Initial
Closing Date"), BCRC sold and assigned to the Trust all of BCRC's right, title
and interest in and to the Receivables under the Eligible Accounts purchased
from BCI and the related Collateral Security as of the Initial Cut-Off Date,
all Receivables thereafter created in such Accounts and BCRC's interest in the
related Collateral Security and the Receivables Purchase Agreement (other than
repurchase agreements and other agreements with manufacturers, importers or
distributors), and the proceeds of all of the foregoing. Since the Initial
Closing Date, BCRC has twice added Additional Accounts to the Trust as shown
in Annex II hereto.
In connection with the sale of the Receivables then existing or thereafter
arising under the Eligible Accounts sold or contributed to BCRC by BCI and the
transfer of such Receivables by BCRC to the Trust, BCI has indicated in its
computer records that such Receivables and the related Collateral Security
have been transferred to BCRC and that BCRC has transferred its interest
therein to the Trust. In addition, BCI provided to BCRC, and BCRC has provided
to the Trustee, a computer file or microfiche or written list containing a
true and complete list of all the Eligible Accounts and the outstanding
balances of the Receivables therein as of the Initial Cut-Off Date and as of
the Additional Cut-Off Dates, as applicable. BCI has retained and will not
deliver to BCRC or to the Trustee any other records or agreements relating to
such Receivables. Except as set forth above, the records and agreements
relating to the Receivables in such Eligible Accounts have not and will not be
segregated from those relating to other accounts and receivables of BCI, and
the physical documentation relating to such Receivables will not be stamped or
marked to reflect the transfer of such Receivables to the Trust. BCRC has
filed one or more financing statements in accordance with Vermont state law to
perfect the Trust's interest in such Receivables, the Collateral Security, the
Receivables Purchase Agreement and the proceeds thereof. See "Risk Factors--
Certain Legal Aspects" and "Certain Legal Aspects of the Receivables."
52
As described below under "Addition of Accounts," BCRC has the right (subject
to certain limitations and conditions), and in some circumstances is
obligated, to designate from time to time additional accounts to be included
as Additional Accounts, to acquire from BCI under the Receivables Purchase
Agreement the Receivables then existing or thereafter created in such
Additional Accounts and to convey to the Trust the Receivables then existing
or subsequently arising thereunder. Each such Additional Account must be an
Eligible Account. In respect of any conveyance of Receivables in Additional
Accounts, BCRC will follow the procedures set forth in the preceding
paragraph, except that the computer file or microfiche or written list will
show information for such Additional Accounts as of the date such Additional
Accounts are identified and selected (the "Additional Cut-Off Date").
REPRESENTATIONS AND WARRANTIES
In certain situations, BCRC is required from time to time to add or remove
or repurchase Receivables in certain designated Accounts to or from the Trust.
In addition, under certain conditions BCRC has the right at its option to add
or remove Receivables in certain designated Accounts to or from the Trust. The
following paragraphs as well as those set forth under the captions "Addition
of Accounts" and "Removal of Accounts and Assignment of Receivables" below
summarize the circumstances under which such actions must or may be taken and
the respective repurchase obligations of BCRC and BCI with respect to the
Accounts and the Receivables.
BCRC has made representations and warranties to the Trustee and will make
such representations and warranties on the Closing Date relating to the
Accounts, the Receivables and the Collateral Security to the effect, among
other things, that (a) as of the Initial Cut-Off Date, the Initial Closing
Date, the Closing Date and any future Series Issuance Date, each Account is an
Eligible Account and, in the case of Additional Accounts, as of the Additional
Cut-Off Date and the date the related Accounts are included as Accounts (an
"Addition Date") and on each Transfer Date, each Additional Account is an
Eligible Account, (b) each Receivable and all Collateral Security conveyed to
the Trust on the Initial Closing Date or, in the case of Additional Accounts,
on the Addition Date, and on each Transfer Date have been conveyed to the
Trust free and clear of any liens, except for liens created or permitted under
the Pooling and Servicing Agreement and (c) with respect to each Receivable
and all Collateral Security transferred to the Trust on the Initial Closing
Date or, in the case of Additional Accounts, the Addition Date, and on each
Transfer Date, all appropriate consents and governmental authorizations
required to be obtained by BCRC in connection with the conveyance of each such
Receivable or Collateral Security to the Trust have been duly obtained. If
BCRC breaches any representation and warranty described in this paragraph and
such breach remains uncured for 30 days or such longer period as may be agreed
to by the Trustee, after the earlier to occur of the discovery of such breach
or receipt of written notice of such breach by BCRC, and such breach has a
materially adverse effect on the Certificateholders and the holders of
investor certificates of each other outstanding Series or the interest
represented by the Variable Funding Certificate, such Receivable or, in the
case of a breach relating to an Account, all Receivables in the related
Account will be retransferred from the Trust to BCRC on the terms and
conditions set forth below (and in the case of an Account, such Account shall
no longer be designated for inclusion in the Trust).
"Transfer Date" means each business day on which Receivables are created in
the Eligible Accounts provided that such date is prior to the earlier of the
Appointment Date and the Termination Date. An "Appointment Date" occurs if a
Liquidation Event occurs or if BCRC violates its covenant not to create or
permit to exist any liens on the Receivables or the Collateral Security except
to the extent permitted by the Pooling and Servicing Agreement and such
violation becomes an Early Amortization Event.
Each such Receivable shall be retransferred from the Trust to BCRC on or
before the end of the Collection Period in which such retransfer obligation
arises, with a corresponding reduction in the principal balance of such
Receivable from the Pool Balance. Unless a Liquidation Event has occurred, in
the event that such deduction would cause the Pool Balance to be less than the
Required Pool Balance on the preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
related
53
Distribution Date), on the date on which such retransfer to BCRC is to occur,
BCRC will be obligated to make a deposit into the Collection Account in
immediately available funds in an amount equal to the amount by which the Pool
Balance would be less than the Required Pool Balance as a result of such
deduction (the amount of any such deposit being referred to herein as a
"Transfer Deposit Amount"), provided that if the Transfer Deposit Amount is
not so deposited, the related Receivables will not be reassigned to BCRC and
will remain part of the Trust. The reassignment of any such Receivable to BCRC
and the payment of any related Transfer Deposit Amount will be the sole remedy
respecting any breach of the representations and warranties described in the
preceding paragraph with respect to such Receivable available to the
Certificateholders or the Trustee on behalf of the Certificateholders.
In the Pooling and Servicing Agreement, BCRC also makes representations and
warranties to the Trustee to the effect, among other things, that as of the
Initial Closing Date and each Series Issuance Date (including the Closing Date
for the Certificates) (a) it is duly incorporated and in good standing and has
the authority to consummate the transactions contemplated by the Pooling and
Servicing Agreement and the Pooling and Servicing Agreement (or in the case of
Additional Accounts, the related assignment) constitutes a valid, binding and
enforceable agreement of BCRC and (b) the Pooling and Servicing Agreement
constitutes a valid sale, transfer and assignment to the Trust of all right,
title and interest of BCRC in the Receivables and the Collateral Security,
whether then existing or thereafter created, and the proceeds thereof, under
the UCC as then in effect in the State of Vermont, which is effective on the
Closing Date (or as of the Addition Date, if applicable). In the event that
(i) any of the representations and warranties described in clause (a) of this
paragraph has been breached, (ii) the representation and warranty with respect
to the Pooling and Servicing Agreement in clause (b) of this paragraph has
been breached and the Pooling and Servicing Agreement does not constitute the
grant of a perfected security interest in the Receivables and the Collateral
Security (and the proceeds thereof) under the UCC as then in effect in the
State of Vermont or (iii) certain other representations and warranties set
forth in the Pooling and Servicing Agreement are breached, and, in the case of
clause (i), (ii) or (iii), such breach has a material adverse effect on the
interests of the Certificateholders and the holders of investor certificates
of each other outstanding Series or the holder of the Variable Funding
Certificate, either the Trustee, the holder of the Variable Funding
Certificate, or the holders of investor certificates of all outstanding Series
(including the Certificates) evidencing not less than a majority of the
aggregate unpaid principal amount of all outstanding Series of investor
certificates, by written notice to BCRC and the Servicer (and to the Trustee
and the issuer or provider of any Enhancement (an "Enhancement Provider") if
given by certificateholders), may, unless a Liquidation Event has occurred,
direct the Depositor to repurchase the interest in the Receivables represented
by each outstanding Series or the Variable Funding Certificate (or both)
within 60 days of such notice, or within such longer period specified in such
notice. Such repurchase will not be required to be made, however, if at the
end of such applicable period, (x) each such representation and warranty shall
be satisfied in all material respects or (y) in the case of clause (b) of this
paragraph, the Pooling and Servicing Agreement then constitutes the grant of a
security interest in the Receivables and the Collateral Security (and proceeds
thereof) under the UCC as then in effect in the State of Vermont, and any
material adverse effect on the interest in the Receivables represented by each
outstanding Series or the Variable Funding Certificate (or both), as
applicable caused thereby shall have been cured. The portion of the price for
such repurchase in respect of the Certificates will be equal to the sum of (i)
the aggregate principal balance of the Certificates on the Distribution Date
on which the purchase is scheduled to be made and (ii) accrued and unpaid
interest on the unpaid principal balance of the Certificates at the applicable
Certificate Rate plus any Class A Carry-Over Amount or Class B Carry-Over
Amount (together with interest on overdue Monthly Interest, to the extent
lawfully payable). The deposit by or on behalf of BCRC with the Trustee of the
repurchase price for all outstanding Series or the Variable Funding
Certificate (or both), in immediately available funds, will be considered a
payment in full of such Series or the Variable Funding Certificate (or both).
If notice is given as provided above, the obligation of BCRC to make any such
deposit will constitute the sole remedy respecting a breach of the
representations and warranties available to the investor certificateholders or
the holder of the Variable Funding Certificate or the Trustee on behalf of
such certificateholders.
"Determination Date" means, with respect to any Distribution Date, the day
that is two Business Days prior to such Distribution Date.
54
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
An "Eligible Account" is defined to mean (i) each individual financing
account established by BCI or, after the Series 1994-1 Final Payment Date,
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 or, after the Series 1994-1 Final Payment Date,
pursuant to a floorplan financing agreement other than an inventory security
agreement, in the ordinary course of business, and (ii) after the Series 1994-
1 Final Payment Date, each individual line of credit or financing agreement
extended by BCI (or an affiliate of BCI) or by a third party (but which
satisfies BCI's customary underwriting standards) and acquired by BCI or an
affiliate of BCI to an Obligor for the purpose of financing working capital,
manufacturing, production or inventories and secured by assets of such
Obligor, which, in each case, as of the date of determination thereof (a)
relates to an Obligor that is an "Eligible Obligor" and (b) is in existence
and, after its establishment or acquisition by BCI or an affiliate of BCI, is
maintained and serviced by BCI. Prior to the Series 1994-1 Final Payment Date,
an Account shall not be an Eligible Account if BCI has assigned (or granted
any participation rights in) such Account or any Receivable therein to any
person (other than BCRC or the Trust). After the Series 1994-1 Final Payment
Date, BCI (or its affiliates) may assign (or grant participation rights in)
such Account or any Receivable therein to any person without affecting such
Account's status as an Eligible Account. See "Removal of Accounts and
Assignment of Receivables" below and "The Floorplan and Asset-Based Financing
Business--Participation Arrangements." Payments received on account of
Receivables arising in Accounts in which a third-party has a Participation
Interest are allocated to the Trust only to the extent of BCI's undivided
interest in the related advance and the amount of such payments allocated to
the undivided interest of the third party will not be included in the Trust.
In addition, Receivables arising under Accounts included in the Pool shall,
upon removal for assignment to a third party or removal for any other purpose,
no longer be included in the Trust's assets. The definition of Eligible
Account may be changed by amendment to the Pooling and Servicing Agreement
without the consent of the Certificateholders if the Rating Agency Condition
is satisfied.
An "Eligible Obligor" is defined to mean (a) in the case of Domestic
Inventory Receivables, a dealer that is located in the United States of
America (including its territories and possessions), (b) in the case of Asset-
Based Receivables, a dealer, distributor or manufacturer that is located in
the United States of America (including its territories and possessions) and
(c) which Obligor, in the case of Domestic Inventory Receivables and Asset-
Based Receivables, has not been identified by the Servicer as being the
subject of any voluntary or involuntary bankruptcy, insolvency, liquidation or
receivership proceedings.
An "Eligible Receivable" is defined to mean each Receivable: (a) which was
originated by BCI or, after the Series 1994-1 Final Payment Date, by an
affiliate of BCI or acquired by BCI (or an affiliate of BCI) (with respect to
Domestic Inventory Receivables and, after the Series 1994-1 Final Payment
Date, Asset-Based Receivables) in each case in the ordinary course of
business, (b) which arose under an Account that at the time such Receivable
was transferred to the Trust was an Eligible Account, (c) which is owned by
BCI at the time of sale or contribution by BCI to BCRC, (d) which represents
the obligation of an Obligor to repay an advance made to or on behalf of such
Obligor (or credit extended for such Obligor), in the case of Domestic
Inventory Receivables, to finance an Eligible Product and, in the case of
Asset-Based Receivables, to finance working capital or the production,
manufacturing or inventory of Eligible Products, (e) which in the case of (i)
Domestic Inventory Receivables, at the time of creation and (except with
respect to Receivables that are payable in accordance with a repayment
schedule regardless of whether the related Eligible Products have been sold
and with respect to which the related Eligible Products have then been sold)
at the time of transfer to the Trust, is secured by a first priority perfected
security interest in the Eligible Product relating thereto and, (ii) Asset-
Based Receivables included in the Trust, the obligations with respect thereto
at the time of transfer to the Trust are secured by a first priority perfected
security interest in goods, accounts, work in process, raw materials,
component parts or other rights or assets of the Obligor; (f) which is not
unenforceable as a result of any violation of requirements of law applicable
thereto and the related inventory security agreement or, after the Series
1994-1 Final Payment Date, the other floorplan financing agreement in the case
of Domestic Inventory Receivables or the related loan agreement in the case of
Asset-Based Receivables is not unenforceable as a result of any violation of
requirements of law applicable to any party thereto, (g) with respect to which
all consents and
55
governmental authorizations required to be obtained by BCI (or an affiliate of
BCI) or BCRC in connection with the creation of such Receivable or the
transfer thereof to BCRC and the Trust or the performance by BCI (or an
affiliate of BCI) of the inventory security agreement or, after the Series
1994-1 Final Payment Date, the other floorplan financing agreement in the case
of Domestic Inventory Receivables or the related loan agreement in the case of
Asset-Based Receivables pursuant to which such Receivable was created, have
been duly obtained, effected or given and are in full force and effect, (h) as
to which at all times following the transfer of such Receivable to the Trust,
the Trust will have good and marketable title thereto free and clear of all
liens arising prior to the transfer or arising at any time, other than liens
permitted pursuant to the Pooling and Servicing Agreement and other than tax
and certain other statutory liens (including liens in favor of the Pension
Benefit Guaranty Corporation) which may arise thereafter and which relate to
affiliates of BCRC, (i) which has been the subject of a valid transfer and
assignment from the Depositor to the Trust of all the Depositor's right, title
and interest therein (including, with certain exceptions, any proceeds
thereof), (j) which will at all times be the legal and assignable payment
obligation of the Obligor relating thereto, enforceable against such Obligor
in accordance with its terms (as such terms may be modified or revised from
time to time with the consent of the Servicer), except as such enforceability
may be limited by the Bankruptcy Code or other applicable Insolvency Laws,
(k) which at the time of transfer to the Trust is enforceable against the
Obligor to the extent of the full principal amount of such Receivable, except
as such enforceability may be limited by the Bankruptcy Code or other
applicable Insolvency Laws, (l) as to which, at the time of transfer of such
Receivable to the Trust, BCI (or an affiliate of BCI) and BCRC have satisfied
all their respective obligations under the Pooling and Servicing Agreement
with respect to such Receivable required to be satisfied at such time, (m) as
to which, at the time of transfer of such Receivable to the Trust, neither BCI
(or any affiliate of BCI) nor BCRC has taken any action (or failed to take any
action required of it under the Receivables Purchase Agreement or the Pooling
and Servicing Agreement) which would impair the rights of the Trust or the
certificateholders therein and (n) which constitutes either an "account" or
"chattel paper" as defined in Article 9 of the UCC as then in effect in the
State of Vermont; provided, however, that "Eligible Receivables" do not
include any Domestic Inventory Receivables that have not been paid in full
within 491 days following the origination thereof subject, for the period from
the Closing Date through May 31, 1998, to the limitation that with respect to
Domestic Inventory Receivables included in the Pool Balance on the Closing
Date, no more than 10% of the aggregate principal balance of such Domestic
Inventory Receivables (which percentage is expected to equal approximately
$79,000,000) will be excluded from Eligible Receivables pursuant to this
proviso, and subject further, commencing June 1, 1998, to the limitation that
with respect to each four month period commencing June 1, October 1, and
February 1, of each year (each, an "Origination Period"), no more than 10% of
the aggregate principal balance of Domestic Inventory Receivables originated
and transferred to the Trust during the four month period commencing 16 months
prior to each Origination Period will be excluded from Eligible Receivables
pursuant to this proviso; in addition, prior to and including the Series 1994-
1 Final Payment Date, but not thereafter, Domestic Inventory Receivables in
the following categories shall also be excluded from Eligible Receivables:
(1) in the case of a Domestic Inventory Receivable which is to be repaid upon
sale of the related Eligible Product and not pursuant to a scheduled payment
program, and such related Eligible Product has been sold by the Obligor and
the principal of which Receivable has not been paid in full within 21 days,
(2) in the case of a Domestic Inventory Receivable which is to be repaid
pursuant to a scheduled payment program, any principal payment of such
Receivable has not been paid in full within 21 days and (3) in the case of
Domestic Inventory Receivables with respect to which interest payments
(aggregating at least $150 with respect to Receivables under the same Account)
are more than 120 days delinquent. The foregoing definition of "Eligible
Receivables" may be changed by amendment to the Pooling and Servicing
Agreement without the consent of the Certificateholders if the Rating Agency
Condition for such amendment is satisfied.
It is not required or anticipated that BCRC or the Trustee will make any
initial or periodic general examination of the Receivables or any records
relating to the Receivables for the purpose of establishing the presence or
absence of defects, compliance with representations and warranties of BCI or
for any other purpose. In addition, it is not anticipated or required that
BCRC or the Trustee will make any initial or periodic general examination of
the Servicer for the purpose of establishing the compliance by the Servicer
with its representations or warranties, the observation of its obligations
under the Pooling and Servicing Agreement or for any other purpose.
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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 below, BCRC has the right to designate
from time to time additional Eligible Accounts (the Receivables in which
Accounts would be transferred to BCRC by BCI under the Receivables Purchase
Agreement) to be included in the Pool as Accounts. In addition, unless a
Liquidation Event has occurred, BCRC is required to designate and to add to
the Pool the Receivables of additional Eligible Accounts if, as of the date
for which such calculation is made, either (i) the Pool Balance is less than
the Required Pool Balance (as defined below) or (ii) the aggregate interest in
the Pool represented by the BCRC Certificate and the Variable Funding
Certificate held by BCRC is less than 2% of the aggregate amount of
Receivables included in the Pool. In either case referred to in the preceding
sentence, unless a Liquidation Event has occurred with respect to BCI or BCRC,
BCRC under the Receivables Purchase Agreement will be required to purchase or
acquire from BCI (but BCI will have no obligation to sell to BCRC), within 10
business days after the event described in (i) or (ii) has occurred, the
Receivables arising in such Additional Accounts to the extent necessary to
cure the above deficiency. Any provision under the Pooling and Servicing
Agreement (and the Receivables Purchase Agreement) requiring BCRC to designate
Additional Accounts to the Pool means accounts of the same type, i.e.,
Accounts giving rise to Domestic Inventory Receivables or if, after the Series
1994-1 Final Payment Date, Asset-Based Receivables have already been added to
the Pool, then Accounts giving rise to either Domestic Inventory Receivables
or Asset-Based Receivables. However, at the options of BCRC and BCI and
subject to certain conditions (including satisfaction of the Rating Agency
Condition referred to below), after the Series 1994-1 Final Payment Date,
Asset-Based Receivables may be added in satisfaction of such a requirement
even if the only Accounts then in the Trust are Accounts containing Domestic
Inventory Receivables. Additional accounts referred to in this paragraph are
"Additional Accounts" and the term "Accounts" as used herein shall include
Additional Accounts.
Any designation of Additional Accounts referred to in the preceding
paragraph is subject to the following conditions, among others: (i) each such
Additional Account must be an Eligible Account and with respect to Additional
Accounts designated at the option of BCRC, the Rating Agency Condition shall
have been satisfied; provided, that after the Series 1994-1 Final Payment
Date, the Rating Agency Condition need not be satisfied if the Automatic
Addition Condition (described below) has been satisfied; (ii) the addition of
the Receivables arising in such Additional Accounts shall not, in the
reasonable belief of BCRC, cause an Early Amortization Event to occur; (iii)
BCRC shall not select such Additional Accounts in a manner that it believes is
adverse to the interests of the certificateholders or any Enhancement
Provider; and (iv) unless the Accounts are being added pursuant to the
Automatic Addition Condition, BCRC shall deliver certain legal opinions to the
Trustee and any Enhancement Providers.
Each Additional Account must be an Eligible Account at the time of its
addition and, unless all necessary conditions (including, without limitation,
if not already included in the Pool, satisfaction of the Rating Agency
Condition with respect to the inclusion of Asset-Based Receivables) have been
met, such Additional Accounts may not include Asset-Based Receivables.
However, since Additional Accounts (as well as Receivables in general arising
under Accounts subsequent to the Series Cut-Off Date or arising under
Additional Accounts) may have been originated or, after the Series 1994-1
Final Payment Date, acquired by BCI or its affiliates at a later date using
credit criteria, or having other characteristics, different from those which
were applicable to the Accounts and the Receivables therein transferred to the
Trust prior to the Closing Date, they may not be of the same credit quality as
such Accounts and such Receivables.
The "Automatic Addition Condition" means, with respect to the designation of
Additional Accounts after the Series 1994-1 Final Payment Date, that (i) such
Accounts do not contain Asset-Based Receivables unless
57
Asset-Based Receivables have been previously added to the Trust after having
met the Rating Agency Condition, (ii) during the calendar quarter in which
such addition occurs, the number of new Accounts which have been added (after
taking into account such addition) will not exceed 5% of the number of all
Accounts at the end of the preceding calendar quarter and the aggregate dollar
amount of Principal Receivables in such new Accounts added pursuant to the
Automatic Addition Condition during such calendar quarter shall not exceed 5%
of the Pool Balance at the end of the preceding calendar quarter, and (iii)
during the 12 consecutive calendar months ending with the calendar month in
which the addition is made and including such addition, the number of such new
Accounts does not exceed 20% of the number of all Accounts at the beginning of
such 12-month period and the aggregate dollar amount of Principal Receivables
in such new Accounts added pursuant to the Automatic Addition Condition during
such 12-month period shall not exceed 20% of the Pool Balance at the beginning
of such 12-month period. When determining the amount of Accounts and Principal
Receivables which have been added to the Trust for purposes of the tests set
forth in (ii) and (iii) of this paragraph, only those Accounts which have been
added pursuant to the Automatic Addition Condition will be taken into
consideration. Additions made under other provisions of the Pooling and
Servicing Agreement will not be included. If Accounts have been added pursuant
to the Automatic Addition Condition certain legal opinions related to such
Accounts are to be delivered to the Trustee every six months to the extent
that the addition of such Accounts have not been covered by legal opinions
previously delivered to the Trustee.
"Rating Agency Condition" means, with respect to any action, if the terms of
the Pooling and Servicing Agreement or the Series 1997-1 Supplement set forth
a specific time in advance of the effectiveness of the action that notice must
be given to the Rating Agencies, notice shall have been given in accordance
with such requirement or if no advance notice is required or no specific time
is stated for such notice, the Rating Agencies have received written notice of
the proposed action at least 10 days prior to the proposed effective date of
such action and either (i) as of the proposed effective date of the action, no
Rating Agency shall have notified the Depositor, the Servicer or the Trustee
in writing that such action will result in a reduction or withdrawal of any
rating of any outstanding Series or class with respect to which it is a Rating
Agency, or (ii) each such Rating Agency shall have confirmed in writing to the
Depositor, the Servicer or the Trustee that such action will not result in a
reduction or withdrawal of the rating of any outstanding Series or class with
respect to which it is a Rating Agency.
"Required Pool Balance" for any date means an amount equal to (x) the sum of
the amounts for each Series obtained by multiplying the required investor
percentages (including the Required Investor Percentage) by the respective
adjusted invested amounts (including the Adjusted Invested Amount), before
giving effect to any withdrawals or additions to any excess funding accounts
(including the Excess Funding Account) or similar arrangements for any Series
on the Distribution Date for which the Required Pool Balance is calculated,
plus (y) the Pool Available Subordinated Amount for the most recent preceding
Distribution Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such preceding Distribution Date) minus
(z) any amount on deposit in any reserve fund on such date, except that, for
Series 1997-1, the amount for this clause (z) will be equal to the positive
difference, if any, between the amount on deposit in the Reserve Fund and the
Reserve Fund Required Amount; provided that, after the Series 1994-1 Final
Payment Date, the Required Pool Balance will mean the amount calculated as of
the end of any business day equal to (x) the sum of the amounts for each
Series obtained by multiplying the required investor percentages (including
the Required Investor Percentage) by the respective adjusted invested amounts
(including the Adjusted Invested Amount) plus (y) the Pool Available
Subordinated Amount as of the end of such Business Day; minus (z) any amount
on deposit in any reserve fund on such date, except that, for Series 1997-1,
the amount for this clause (z) will be equal to the positive difference, if
any, between the amount on deposit in the Reserve Fund and the Reserve Fund
Required Amount; provided, further, that with respect to Series 1997-1, for
the purpose of calculating the Required Pool Balance, the Pre-Allocated
Invested Amount will be subtracted from the product of the Required Investor
Percentage and the Adjusted Invested Amount.
The "Series 1997-1 Required Balance" with respect to any date is the sum of
(x) (i) the Required Investor Percentage of the Adjusted Invested Amount minus
(ii) the Pre-Allocated Invested Amount and (y) the Available Subordinated
Amount.
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"Required Investor Percentage" will mean, with respect to the Certificates,
104%; provided, however, that BCRC may, reduce or otherwise adjust the
Required Investor Percentage without the consent of the Certificateholders so
long as the Rating Agency Condition has been satisfied.
REMOVAL OF ACCOUNTS AND ASSIGNMENT OF RECEIVABLES
BCRC shall have the right at any time to cease transferring newly originated
Receivables in certain designated Accounts (the "Removed Accounts") to the
Trust. To cease transferring any newly originated Receivables in such Removed
Account, BCRC (or the Servicer on its behalf) shall, among other things, (a)
on or before the fifth business day prior to the date on which the transfer of
such Receivables will cease (the "Removal Commencement Date"), furnish to the
Trustee, any Enhancement Provider and each Rating Agency a written notice (the
"Removal Notice") specifying the Removal Commencement Date; (b) on or before
the fifth business day after the Removal Commencement Date, BCRC shall have
furnished to the Trustee a computer file, microfiche list or other list of the
Removed Accounts, specifying for each Removed Account as of the date of the
Removal Notice its number, the aggregate amount outstanding in such Removed
Account and the aggregate amount of Receivables therein as of the Removal
Commencement Date; (c) represent and warrant that the removal of such Removed
Accounts will not, in the reasonable belief of BCRC, cause an Early
Amortization Event to occur or cause the Pool Balance to be less than the
Required Pool Balance; (d) represent and warrant that no selection procedures
believed by BCRC to be adverse to the holders of certificates of any Series
were utilized in selecting the Removed Accounts; (e) represent and warrant
that the removal of such Removed Accounts will not result in a reduction or
withdrawal of the ratings of the Certificates or any other outstanding Series
or class of investor certificates by any Rating Agency; and (f) on or before
the related Removal Commencement Date, deliver to the Trustee and any
Enhancement Provider an officers' certificate confirming the items set forth
in clauses (c), (d) and (e) above. Under certain conditions, the Pooling and
Servicing Agreement may be amended without the consent of the
Certificateholders or any Rating Agency to permit BCRC to also remove existing
Receivables in Removed Accounts (including all amounts then held or thereafter
received in respect of such Receivables). See "Amendments."
On the fifth business day after any date on which an Account becomes an
Ineligible Account (the "Removal Commencement Date"), BCRC will commence the
removal of the Receivables of such Ineligible Account from the Trust by (a)
furnishing to the Trustee, any Enhancement Provider and the Rating Agencies a
Removal Notice specifying the Removal Commencement Date and the Ineligible
Accounts to be removed; (b) on or before the fifth business day after the
Removal Commencement Date, furnishing to the Trustee a computer file,
microfiche list or other list of the Ineligible Accounts, specifying for each
Ineligible Account as of the date of the Removal Notice, its number, the
Receivables therein as of the date immediately preceding the Removal
Commencement Date and the aggregate amount and outstanding principal balance
of such Receivables and (c) from and after such Removal Commencement Date,
ceasing to transfer to the Trust any Receivables arising in the Ineligible
Accounts.
With respect to the removal of Accounts pursuant to either of the two
immediately preceding paragraphs, whether such removal occurs at the option of
BCRC prior to the time that BCRC is permitted to remove existing Receivables
in Removed Accounts or upon a required removal of an Ineligible Account, (a)
from and after the applicable Removal Commencement Date, all Principal
Collections in respect of each Removed Account or Ineligible Account will be
allocated first to the oldest outstanding principal balance of such Account,
until the Determination Date on which the outstanding principal balance of
Receivables (the "Designated Balance") in such Account is reduced to zero
(with respect to any such Account, the "Removal Termination Date"); and (b) on
each business day from and after such Removal Commencement Date until the
related Removal Termination Date, BCRC will allocate (x) to the Trust (to be
further allocated pursuant to the Pooling and Servicing Agreement), Non-
Principal Collections in respect of such Accounts based on the ratio of (1)
the amount of Principal Receivables in such Accounts on such business day that
were previously sold to the Trust to (2) the total amount of Principal
Receivables in such Account on such business day and (y) to the Depositor the
remainder of the Non-Principal Collections in respect of such Accounts on such
business day.
Upon satisfaction of the above conditions on the related Removal Termination
Date, such Removed Accounts or Ineligible Accounts shall be deemed to have
been removed from the Trust and BCRC shall be permitted to sell, transfer,
assign, set over and otherwise convey, without recourse, representation or
warranty,
59
all the right, title and interest in and to the Receivables remaining and
thereafter arising in the Removed Accounts or Ineligible Accounts, all amounts
received or to be received with respect thereto and all proceeds thereof.
After the Series 1994-1 Final Payment Date, BCRC shall have the right at any
time to remove specific Receivables from the Trust, including all amounts then
held or thereafter received in respect of such Receivables, without removing
any other Receivables in the related Account then existing or thereafter
arising, and shall have the right to remove the related Collateral Security
and other rights associated with such Receivables, provided the Receivables
are removed from the Trust in connection with an assignment of such
Receivables to a third party in return for payment for such Receivables. As a
condition to the assignment and removal of such Receivables, the payment
therefor shall be in an amount at least equal to the principal amount of such
Receivables plus accrued interest to the removal date. All of such payments
shall be included as collections. BCRC has agreed pursuant to the Pooling and
Servicing Agreement that any such removal will take place only if, in the
reasonable belief of BCRC, no Early Amortization Event will occur as a result
of such removal.
During any Collection Period after the Series 1994-1 Final Payment Date,
BCRC shall have the right to cause the Trustee to remove from the Trust and
reassign to BCRC (i) at any time during the period from the Closing Date
through May 31, 1998, Domestic Inventory Receivables included in the Pool
Balance on the Closing Date that continue to be unpaid in full 450 or more
days following the origination thereof, provided that the aggregate amount of
such Domestic Inventory Receivables that may be so removed and reassigned
shall not exceed 10% of the aggregate principal balance of Domestic Inventory
Receivables included in the Pool Balance on the Closing Date (which percentage
is expected to equal approximately $79,000,000), and (ii) at any time during
any Origination Period commencing after May 31, 1998, Domestic Inventory
Receivables originated and transferred to the Trust during the four month
period commencing 16 months prior to such Origination Period that continue to
be unpaid in full 450 or more days following the origination thereof, provided
that the aggregate amount of such Domestic Inventory Receivables that may be
so removed and reassigned shall not exceed 10% of the aggregate principal
balance of Domestic Inventory Receivables originated and transferred to the
Trust during such four month period commencing 16 months prior to such
Origination Period. BCRC shall effect such removal and reassignment by
depositing in the Collection Account for application as collections on the
Receivables an amount equal to the principal amount of such Receivables plus
accrued interest to the date of such reassignment. The Trust will be under no
obligation to hold any such Receivables for the purpose of allowing BCRC to
cause a reassignment of such Receivables.
In addition to the provisions described above, the Pooling and Servicing
Agreement provides that, after the Series 1994-1 Final Payment Date, in
connection with the granting of Participation Interests in Receivables in the
Trust, BCRC shall have the right to remove from the Trust the undivided
interest which is to be granted to a third party. If an interest in a
Receivable is removed, the Collateral Security or interest in the Collateral
Security attributable to such interest may also be removed. The requirements
for removing an undivided interest include the requirement that BCRC or the
Servicer on BCRC's behalf, represent and warrant that such removal will not,
in the reasonable belief of BCRC, cause an Early Amortization Event to occur
or cause the Pool Balance to be less than the Required Pool Balance. See "The
Floorplan and Asset-Based Financing Business--Participation Arrangements."
CREDIT SUPPORT FOR THE CERTIFICATES
The following sections summarize the structure for allocating collections
made on the Receivables and certain other amounts among the Classes of
Certificates, the other Series, the Variable Funding Certificate and the BCRC
Certificate.
COLLECTION ACCOUNT
The Servicer has established and is required to maintain, or cause to be
established and maintained, an Eligible Deposit Account for the benefit of
certificateholders in the name of the Trustee (the "Collection Account").
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution or trust company organized under
the laws of the United States or any one of the states thereof (or any
domestic branch of a foreign bank), having corporate trust powers and acting
as trustee for funds deposited in such account, so long as any of the
securities of such depository institution or trust company has a credit rating
from each Rating
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Agency in one of its generic rating categories which signifies investment
grade. "Eligible Institution" means (a) the corporate trust department of the
Trustee or (b) a depository institution or trust company organized under the
laws of the United States or any one of the states thereof (or a domestic
branch of a foreign bank) which at all times (i) has either (x) a long-term
unsecured debt rating acceptable to each such Rating Agency or (y) a
certificate of deposit rating acceptable to each such Rating Agency and (ii)
is a member of the FDIC. Funds in the Collection Account generally will be
invested in (i) obligations of or fully guaranteed by the United States, (ii)
demand deposits, time deposits or certificates of deposit of depository
institutions or trust companies incorporated under the laws of the United
States or any state thereof (or any domestic branch of a foreign bank) and
subject to supervision and examination by Federal or state banking or
depository institution authorities, the commercial paper or other short-term
unsecured debt obligations (other than such obligations the rating of which is
based on the credit of a person or entity other than such depository
institution or trust company) of which at the time of the Trust's investment
or contractual commitment to invest therein has a credit rating from any
individual Rating Agency in the highest investment category granted thereby,
(iii) commercial paper at the time of the Trust's investment of contractual
commitment to invest therein having a credit rating from any individual Rating
Agency in the highest investment category granted thereby, (iv) demand
deposits, time deposits and certificates of deposit which are fully insured by
the FDIC, (v) bankers' acceptances issued by any depository institution or
trust company described in (ii) above, (vi) investments in money market funds
which have the highest rating from, or have otherwise been approved in writing
by, any individual Rating Agency, (vii) certain repurchase obligations entered
into with depositor institutions or trust companies with respect to securities
which are direct obligations of or obligations guaranteed by the United States
or any agency or instrumentality thereof which is backed by the full faith and
credit of the United States, and (viii) other investments acceptable to any
individual Rating Agency as being consistent with the then-current rating of
the Certificates (collectively, "Eligible Investments"). Any earnings (net of
losses and investment expenses) on funds in the Collection Account will be
credited to the Collection Account. The Servicer will have the revocable power
to instruct the Trustee to make withdrawals and payments from the Collection
Account for the purpose of carrying out the Trustee's or the Servicer's duties
under the Pooling and Servicing Agreement.
EXCESS FUNDING ACCOUNT
The Excess Funding Account is intended to preserve for the benefit of the
Certificateholders certain Principal Collections otherwise payable in respect
of other Series or the BCRC Certificate during the Revolving Period and the
Amortization Period. The Excess Funding Account is held for the benefit of the
Certificateholders in the name of the Trustee.
The following is a discussion of how deposits to and withdrawals from the
Excess Funding Account will be made prior to the Series 1994-1 Final Payment
Date. The succeeding paragraph specifies how such withdrawals and deposits
will be made pursuant to the Delayed Amendments after the Series 1994-1 Final
Payment Date. On each Distribution Date during the Revolving Period, if the
Pool Balance at the end of the preceding Collection Period is less than the
Required Pool Balance for such Distribution Date, the Servicer will cause
Available Investor Principal Collections to be deposited by the Servicer in
the Excess Funding Account in an amount equal to the Excess Funded Amount as
of such Distribution Date, minus the amount then held in the Excess Funding
Account. The "Excess Funded Amount" as of a Distribution Date is equal to the
product of (a) the excess, if any, of (i) the Required Pool Balance on the day
immediately prior to such Distribution Date over (ii) the Pool Balance at the
end of the preceding Collection Period and (b) a fraction the numerator of
which is the Series 1997-1 Required Balance and the denominator of which is
the aggregate of the required balances for all Series (including the Series
1997-1 Required Balance) providing for excess funding accounts or similar
arrangements. On each Distribution Date during the Revolving 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 if the excess
referred to in the preceding sentence (i.e., the excess of the amount under
clause (i) over the amount under clause (ii)) has been reduced or no longer
exists, which would generally occur as a result of the addition of Receivables
to the Trust.
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Following the Series 1994-1 Final Payment Date, on each Business Day during
the Revolving Period and the Amortization Period, if the Pool Balance at the
end of the preceding Business Day was less than the Required Pool Balance also
calculated as of the end of such preceding Business Day, the Servicer will
cause Principal Collections allocable to the Certificates (during an
Amortization Period, after depositing into the Collection Account an amount
equal to the Monthly Principal for the related Distribution Date) to be
deposited by the Servicer in the Excess Funding Account in an amount equal to
the Excess Funded Amount (such amount having been also calculated as of the
end of the preceding Business Day), minus the amount then held in the Excess
Funding Account. The "Excess Funded Amount" shall, following the Series 1994-1
Final Payment Date, be calculated for each Business Day and shall be an amount
equal to the product of (a) the excess, if any, of (i) the Required Pool
Balance as of the end of the preceding day over (ii) the Pool Balance as of
the end of such preceding day and (b) a fraction the numerator of which is the
Series 1997-1 Required Balance and the denominator of which is the aggregate
of the required balances for all Series (including the Series 1997-1 Required
Balance) providing for excess funding accounts or similar arrangements.
Following the Series 1994-1 Final Payment Date, on each Business Day during
the Revolving Period or the Amortization Period, funds on deposit in the
Excess Funding Account (including without limitation the Excess Funded Amount)
will be withdrawn and paid (or made available) to the holder of the BCRC
Certificate or allocated to one or more Series which are in amortization,
early amortization or accumulation periods to the extent that as of the end of
the preceding day, the excess referred to the preceding sentence (i.e., the
amount under clause (a) (i) over the amount under clause (a) (ii)) has been
reduced or no longer exists.
Funds on deposit in the Excess Funding Account will be invested at the
direction of the Servicer in Eligible Investments. On each Distribution Date,
all net investment income earned on amounts in the Excess Funding Account
since the preceding Distribution Date will be withdrawn from the Excess
Funding Account and applied as described herein.
ALLOCATION PERCENTAGES
This section sets forth the procedure for calculating the Certificates'
allocable share of certain distributions and other payments made with respect
to the Receivables. Amounts not allocated to the Certificates as described
below will be allocated to other Series, the Variable Funding Certificate or
the BCRC Certificate.
Allocation to the Certificates. The Servicer will allocate amounts to the
Certificates for each Collection Period as follows:
(i) Non-Principal Collections and the Defaulted Amount will be allocated
to the Certificates based on the Floating Allocation Percentage;
(ii) during the Revolving Period, Principal Collections will be allocated
to the Certificates based on the Floating Allocation Percentage;
(iii) during the Amortization Period, any Initial Amortization Period and
any Early Amortization Period, Principal Collections will be allocated to
the Certificates based on the Principal Allocation Percentage; and
(iv) Miscellaneous Payments will be allocated to the Certificates on the
basis of the Series 1997-1 Investor Allocation Percentage;
provided, however, that with respect to the allocation of Principal
Collections among Series and the Variable Funding Certificate for any
Collection Period, if the sum of (i) the sum of the floating allocation
percentages (including the Floating Allocation Percentage, if applicable) for
each Series in its revolving period, (ii) the principal allocation percentage
(including the Principal Allocation Percentage, if applicable) for each Series
in its amortization, accumulation or early amortization period and (iii) the
Variable Funding Percentage exceeds 100%, then Principal Collections for such
Collection Period will be allocated among the Series and the Variable Funding
Certificate pro rata on the basis of such allocation percentages after the pro
rata reduction of such percentages so that the sum thereof equals 100% for
such period; provided further, that with respect to the allocation of Non-
Principal Collections among Series and the Variable Funding Certificate for
any Collection
62
Period, if the sum of (i) the sum of the floating allocation percentages
(including the Floating Allocation Percentage) for each Series and (ii) the
Variable Funding Percentage exceeds 100%, then Non-Principal Collections for
such Collection Period will be allocated among the Series and the Variable
Funding Certificate on the basis of such allocation percentages after the pro
rata reduction of such percentages so that the sum thereof equals 100% for
such period.
"Floating Allocation Percentage" means the percentage (which shall never
exceed 100%) obtained (x) prior to and including the Series 1994-1 Final
Payment Date, for any Collection Period, by dividing the Invested Amount as of
the last day of the immediately preceding Collection Period by the Pool
Balance as of such last day and (y) after the Series 1994-1 Final Payment
Date, 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 such preceding day; provided, however, that, with respect
to the Collection Period in which the Certificates are issued, the Floating
Allocation Percentage shall mean the percentage obtained by dividing the
Invested Amount of the Certificates by the Pool Balance on the Series Cut-Off
Date (giving pro forma effect as of the Series Cut-Off Date to the issuance of
the Certificates); provided further, that for purposes of allocating Principal
Collections, when calculating the Floating Allocation Percentage, the Invested
Amount shall be reduced by the Pre-Allocated Invested Amount.
"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 less the Pre-Allocated Invested Amount by the Pool
Balance (x) prior to and including the Series 1994-1 Final Payment Date, for
any Collection Period, as of the last day of the immediately preceding
Collection Period and (y) after the Series 1994-1 Final Payment Date, as of
each day in such Collection Period.
"Invested Amount" means for any date an amount equal to (a) the Adjusted
Invested Amount of the Certificates, minus (b) the amount, without
duplication, of principal payments (except principal payments made from the
Excess Funding Account and any transfers from the Excess Funding Account to
the Collection Account) made on the Certificates prior to such date minus (c)
the excess, if any, of the aggregate amount of Investor Charge-Offs for all
Distribution Dates preceding such date over the aggregate amount of any
reimbursements of Investor Charge-Offs for all Distribution Dates preceding
such date.
"Adjusted Invested Amount" means the Initial Principal Amount of the
Certificates plus (x) the amount of any withdrawals from the Excess Funding
Account in connection with an increase in Receivables in the Trust since the
Closing Date minus (y) the amount of any additions to the Excess Funding
Account in connection with a reduction in the Receivables in the Trust since
the Closing Date.
"Pre-Allocated Invested Amount" (i) until the Series 1994-1 Final Payment
Date, means $251,000,000 plus the aggregate amount of all principal payments
made with respect to the Series 1994-1 Certificates since the Closing Date,
and (ii) after the Series 1994-1 Final Payment Date, means zero.
"Miscellaneous Payments" for any Collection Period means the sum of (a)
Adjustment Payments and Transfer Deposit Amounts on deposit in the Collection
Account on the related Distribution Date received with respect to such
Collection Period and (b) Unallocated Principal Collections available to be
treated as Miscellaneous Payments as of the Distribution Date following such
Collection Period as described below under "Principal Collections for all
Series."
"Pool Available Subordinated Amount" means for any date the sum of the
Available Subordinated Amount and the aggregate available subordinated amounts
for all other outstanding Series.
"Pool Invested Amount" means for any date the sum of the Invested Amount and
the invested amounts for all other outstanding Series.
"Series 1997-1 Investor Allocation Percentage" means, for any Collection
Period, the percentage obtained by dividing the Invested Amount as of the last
business day preceding such Collection Period by the Pool Invested Amount on
such day.
63
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 Amortization
Period, 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 Amortization Period
remaining after the allocation to provide for the payment of the Monthly
Principal on the Certificates will then be allocated to the Excess Funding
Account to the extent described above under "Excess Funding Account."
Thereafter, the Servicer will determine the amount of Available Investor
Principal Collections remaining after such required payments are made and the
amount of any similar excess for any other Series (collectively, "Excess
Principal Collections"). The Servicer will allocate Excess Principal
Collections to cover any principal distributions on any Series which are
either scheduled or permitted and which have not been covered out of Principal
Collections and certain other amounts allocated to such Series ("Principal
Shortfalls"). Excess Principal Collections will generally not be used to cover
investor charge-offs for any Series. If Principal Shortfalls exceed Excess
Principal Collections for any Collection Period, Excess Principal Collections
will be allocated pro rata among the applicable Series entitled to receive
monthly principal (and giving effect to any requirements to apply such
distributions sequentially among classes of the same Series) based on the
relative amounts of Principal Shortfalls. To the extent that Excess Principal
Collections exceed Principal Shortfalls, the balance will be paid (or made
available) to the holder of the BCRC Certificate only if the Pool Balance for
the related Distribution Date (determined after giving effect to any
Receivables transferred to the Trust on such date) exceeds the Required Pool
Balance for the immediately preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on such
Distribution Date). Any amount not paid to the holder of the BCRC Certificate
because the Pool Balance does not exceed the Required Pool Balance will be
held unallocated ("Unallocated Principal Collections") in the Collection
Account until the Pool Balance exceeds the Required Pool Balance, at whichtime
such amount will be paid to the holder of the BCRC Certificate, or until an
early amortization event occurs or an accumulation or amortization period
commences for any Series, after which event or commencement such amount will
be treated as a Miscellaneous Payment.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT; LIMITED
SUBORDINATION OF THE RETAINED INTEREST
Except as otherwise provided in the following paragraphs, the Servicer, no
later than two business days after the date of receipt of any collections on
the Receivables, will deposit such collections (net of the Variable Funding
Percentage of such collections and the Excess Retained Percentage of such
collections) into the Collection Account.
Notwithstanding the foregoing, for so long as (i) BCI remains the Servicer
under the Pooling and Servicing Agreement, (ii) no Servicer Default has
occurred and is continuing and (iii) (x) BCI is a subsidiary of Bombardier
Corporation (which shall own at least 80% of the voting common stock of BCI)
and BCI has and maintains a short-term debt rating of at least A-1 by Standard
& Poor's and P-1 by Moody's, (y) BCI arranges for and maintains a letter of
credit or other form of Enhancement in respect of the Servicer's obligation to
make deposits of collections on the Receivables in the Collection Account that
is acceptable in form and substance to each Rating Agency or (z) BCI otherwise
obtains the Rating Agency confirmations described below, then, subject to any
limitations in the confirmations referred to below, BCI need not deposit
collections into the Collection Account on the days indicated in the preceding
paragraph but may use for its own benefit all such collections until the
business day immediately preceding the related Distribution Date, at which
time BCI will make such deposits in a single deposit into the Collection
Account in an amount equal to the net amount of such deposits and withdrawals
which would have been made had the conditions described in this paragraph not
applied; provided, however, that prior to ceasing daily deposits as described
above, BCI shall have delivered to the Trustee written confirmation from each
of the Rating Agencies that the failure by BCI to make daily deposits will not
result in a reduction or withdrawal of the ratings of the Certificates or any
other outstanding Series or class of investor certificates.
64
In addition to and notwithstanding the foregoing, with respect to any
Collection Period, the Servicer will only be required to deposit collections
into the Collection Account up to the aggregate amount of collections required
to be deposited into all Series Accounts or, without duplication, distributed
on the related Distribution Date to all investor certificateholders and to
each Enhancement Provider pursuant to the terms of any Supplement or
Enhancement agreement, and if, at any time prior to such Distribution Date,
the amount of collections deposited in the Collection Account exceeds the
amount required to be deposited, the Servicer will be permitted to withdraw
such excess from the Collection Account.
The requirements of the preceding paragraphs are subject to the following
exceptions. On any date on which collections are received, the Servicer may
distribute (or make available) directly (a) to the holder of the Variable
Funding Certificate, an amount equal to the Variable Funding Percentage of
such collections and (b) to the holder of BCRC Certificate, the Excess
Retained Percentage of such collections. In addition, prior to the Series
1994-1 Final Payment Date and subject to certain limitations, the Servicer may
instruct the Trustee to distribute (or make available) directly to the holder
of the BCRC Certificate on each such date of receipt during a Collection
Period an amount equal to the Available Retained Collections if the Pool
Balance (determined after giving effect to any Principal Receivables
transferred to the Trust on such date) exceeds the Required Pool Balance for
the Related Distribution Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such Distribution Date);
provided, however, that Available Retained Collections will be paid to the
holder of the BCRC Certificate with respect to any Collection Period only
after an amount equal to the sum of (i) the Deficiency Amount, if any,
relating to the immediately preceding Collection Period and (ii) the excess,
if any, of the Reserve Fund Required Amount over the amount in the Reserve
Fund on the immediately preceding Distribution Date (after giving effect to
the allocations of, distributions from, and deposits in, the Reserve Fund on
such Distribution Date), has been deposited in the Collection Account from
such Available Retained Collections. After the Series 1994-1 Final Payment
Date, on any date on which collections are received during the Revolving
Period, the Amortization Period or any Initial Amortization Period, the
Servicer will allocate to Series 1997-1 an amount equal to the sum of (1) the
product of (x) the Floating Allocation Percentage for such date and (y) the
aggregate amount of Non-Principal Collections on such date and (2) the Series
1997-1 Available Retained Collections for such date (such amount for any such
date, the "Daily Allocation"), and of that allocation, the Servicer will
deposit and retain in the Collection Account an amount equal to the lesser of
(a) the Daily Allocation on such date and (b) the difference between (I) the
sum of the amounts required to be distributed on the related Distribution Date
pursuant to clauses (i) through (viii) under "Distributions from the
Collection Account; Reserve Fund--Non-Principal Collections" below (provided
that if BCI is the Servicer, such amounts shall not include the Monthly
Servicing Fee) and (II) the sum of the Daily Allocations previously deposited
in the Collection Account for the current Collection Period, and the remainder
of such Daily Allocation will be retained by the Servicer for application as
described herein. During the Early Amortization Period, the entire Daily
Allocation for each date will be deposited and retained in the Collection
Account. On each Determination Date with respect to the Revolving Period, the
Amortization Period or any Initial Amortization Period, the Servicer will
deposit in the Collection Account an amount equal to the excess, if any, of
any Daily Allocation retained by the Servicer and not deposited in the
Collection Account during the related Collection Period over the amounts
required to be distributed on the related Distribution Date pursuant to
clauses (i) through (viii) under "Distributions from the Collection Account;
Reserve Fund--Non-Principal Collections" below, provided that if BCI is the
Servicer, BCI may make such deposit net of the Monthly Servicing Fee and the
amounts payable from Series 1997-1 Available Retained Collections on the
related Distribution Date as described under "Distributions from the
Collection Account; Reserve Fund" below.
"Available Retained Collections" for any date on which the Servicer
receives collections (each, a "Deposit Date") means the sum of (a) the
Available Retained Non-Principal Collections for such date and (b) the
Available Retained Principal Collections for such date; provided, however,
that the Available Retained Collections will be zero for any Collection
Period with respect to which the Available Subordinated Amount is zero for
the Distribution Date occurring in such Collection Period.
"Available Retained Non-Principal Collections" for any Deposit Date means
an amount equal to the product of (a) the excess of (i) the Retained
Percentage for the related Collection Period (or, after the Series
65
1994-1 Final Payment Date for such Deposit Date) over (ii) the Excess
Retained Percentage for such Collection Period (or, after the Series 1994-1
Final Payment Date for such Deposit Date) multiplied by (b) Non-Principal
Collections for such date.
"Available Retained Principal Collections" for any Deposit Date means an
amount equal to the product of (a) the excess of (i) the Retained
Percentage for the related Collection Period (or, after the Series 1994-1
Final Payment Date for such Deposit Date) over (ii) the Excess Retained
Percentage for such Collection Period (or, after the Series 1994-1 Final
Payment Date, for such Deposit Date) and (b) Principal Collections for such
date.
"Series 1997-1 Available Retained Collections" means, for any Deposit
Date, an amount equal to the product of (a) the Available Retained
Collections for such day and (b) a fraction, the numerator of which is the
Available Subordinated Amount and the denomninator of which is the Pool
Available Subordinated Amount, in each case on such day.
"Excess Retained Percentage" prior to and including the Series 1994-1
Final Payment Date, for any Collection Period means (x) the Retained
Percentage for such Collection Period minus (y) the percentage equivalent
of a fraction the numerator of which is equal to the Pool Available
Subordinated Amount for the Distribution Date preceding such Collection
Period (or the Pool Available Subordinated Amount as of the Closing Date
with respect to the first two Collection Periods) and the denominator of
which is the Pool Balance at the end of the preceding Collection Period (or
as of the Series Cut-Off Date with respect to the first Collection Period);
and after the Series 1994-1 Final Payment Date means, for any date of
determination, (x) the Retained Percentage for such date minus (y) the
percentage equivalent of a fraction, the numerator of which is equal to the
Pool Available Subordinated Amount as of the end of the immediately
preceding day and the denominator of which is the Pool Balance as of the
end of the immediately preceding day.
"Retained Percentage" prior to and including the Series 1994-1 Final
Payment Date, for any Collection Period and after the Series 1994-1 Final
Payment Date, for any date of determination, means 100% minus (a) when used
with respect to Non-Principal Collections, the sum of (i) the aggregate of
the floating allocation percentages for each outstanding Series (including
the Certificates) and (ii) prior to and including the Series 1994-1 Final
Payment Date, the Variable Funding Percentage for the related Collection
Period, and after the Series 1994-1 Final Payment Date, the Variable
Funding Percentage for such date of determination and (b) when used with
respect to Principal Collections, the sum of (i) the aggregate of the
floating allocation percentages for each outstanding Series (including the
Certificates, if applicable) in its revolving period, (ii) the aggregate of
the principal allocation percentages for each outstanding Series (including
the Certificates, if applicable) in its amortization, accumulation or early
amortization period and (iii) prior to and including the Series 1994-1
Final Payment Date, the Variable Funding Percentage for the related
Collection Period and after the Series 1994-1 Final Payment Date, the
Variable Funding Percentage for such date of determination, but in each
case the Retained Percentage shall not be less than 0%.
"Variable Funding Percentage" prior to and including the Series 1994-1
Final Payment Date, for any Collection Period and after the Series 1994-1
Final Payment Date, for any date of determination, means a percentage
(which percentage shall never be less than 0% nor more than 100%) equal to
(x) prior to and including the Series 1994-1 Final Payment Date, the
Variable Funding Amount as of the last day of the immediately preceding
Collection Period divided by the Pool Balance as of such last day and (y)
after the Series 1994-1 Final Payment Date, the Variable Funding Amount as
of such day divided by the Pool Balance as of the close of business on the
day preceeding such day; provided, however, that for purposes of allocating
Principal Collections following the occurrence of a Liquidation Event, the
Variable Funding Percentage will be calculated on the basis of the Variable
Funding Amount as of the last day immediately preceding the date of such
Liquidation Event; provided, further, that following a Liquidation Event,
the relative interest of the Variable Funding Certificate in further
allocations of Non-Principal Collections will not be less than the relative
interest thereof as of the Liquidation Event.
Limited Subordination of Retained Interest. A portion of the Retained
Participation Amount up to the Available Subordinated Amount will be available
to fund payment of principal and interest on the Certificates in
66
the event that the proportionate interests of the Certificates in collections
received with respect to the Receivables during any particular Collection
Period are less than the required distributions thereon. The following
paragraphs describe the extent to which collections otherwise allocable to the
BCRC Certificate will be available to satisfy shortfalls with respect to the
payment of principal and interest on the Certificates.
Deficiency Amount. For each Distribution Date, the Servicer will determine
for the Certificates the amount (the "Deficiency Amount"), if any, by which
(a) the sum of (i) Monthly Interest for such Distribution Date, (ii) Monthly
Interest accrued but not paid with respect to prior Distribution Dates (and
interest thereon), (iii) the Net Servicing Fee for such Distribution Date,
(iv) the Investor Default Amount for such Distribution Date, and (v) the
Series 1997-1 Investor Allocation Percentage of any Adjustment Payment for
such Distribution Date that has not been deposited in the Collection Account
as required under the Pooling and Servicing Agreement, exceeds (b) the sum of
(i) Investor Non-Principal Collections and Investment Proceeds for such
Distribution Date and (ii) the amount of funds in the Reserve Fund on such
Distribution Date available to fund the amount by which the amount in clause
(a) exceeds the amount in clause (b) (i) as described below under
"Distributions from the Collection Account; Reserve Fund--Non-Principal
Collections." The lesser of the Deficiency Amount and the Available
Subordinated Amount is the "Required Subordination Draw Amount."
"Class A Monthly Interest" for any Distribution Date means an amount
equal to the product of (x) the actual number of days elapsed in the
related Interest Period divided by 360 days and (y) the product of (i) the
Class A Certificate Rate and (ii) the outstanding principal balance of the
Class A Certificates as of the close of business on the preceding
Distribution Date (or for the first Distribution Date, the Closing Date)
after giving effect to any payments of principal on the Class A
Certificates on such preceding Distribution Date.
"Class B Monthly Interest" for any Distribution Date means an amount
equal to the product of (x) the actual number of days elapsed in the
related Interest Period divided by 360 days and (y) the product of (i) the
Class B Certificate Rate and (ii) the outstanding principal balance of
Class B Certificates as of the close of business on the preceding
Distribution Date (or for the first Distribution Date, the Closing Date)
after giving effect to any payments of principal on the Class B
Certificates on such preceding Distribution Date.
"Monthly Interest" for any Distribution Date means the sum of the Class A
Monthly Interest and the Class B Monthly Interest with respect to such
Distribution Date.
Required Subordinated Amount. The "Required Subordinated Amount" means, as
of any date of determination, the sum of (i) the product of (A) the
Subordinated Percentage and (B) the Invested Amount and (ii) the Incremental
Subordinated Amount for the immediately preceding Distribution Date or, if
such date of determination is a Distribution Date, for such date; provided,
however, that for any date prior to the end of the Revolving Period, the
Required Subordinated Amount shall in no event be less than an amount equal to
the sum of (x) 3.75% of the Initial Principal Amount of the Certificates and
(y) the Incremental Subordinated Amount for the immediately preceding
Distribution Date or, if such date of determination is a Distribution Date,
for such date; provided further, that upon the commencement of the Initial
Amortization Period or the Amortization Period or if an Early Amortization
Event occurs, the Required Subordinated Amount for each date of determination
thereafter will equal the Required Subordinated Amount as of the close of
business on the day preceding the first day of the Initial Amortization Period
or the Amortization Period or the day on which such Early Amortization Event
occurs.
Available Subordinated Amount. The "Available Subordinated Amount" for any
date of determination after the first Distribution Date means an amount equal
to the sum of:
(i) the lesser of:
(a) the Available Subordinated Amount for the preceding Distribution
Date, minus, with certain limitations, the Required Subordination Draw
Amount for the preceding Distribution Date, minus the amount of any
deposits in the Reserve Fund from Series 1997-1 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, minus an amount equal to the
Defaulted Amount for the immediately preceding Collection Period
multiplied by a fraction, the numerator of
67
which is the Available Subordinated Amount as of the last day of the
preceding Collection Period (or in the case of the first Distribution
Date, the Required Subordinated Amount as of the Closing Date) and the
denominator of which is the Pool Balance as of the last day of the
preceding Collection Period (or in the case of the first Distribution
Date, the Pool Balance as of the Closing Date), plus the aggregate
amount of Excess Servicing paid to the holder of the BCRC Certificate
on the previous Distribution Date as described below under
"Distributions from the Collection Account; Reserve Fund--Excess
Servicing," minus the Incremental Subordinated Amount for the second
preceding Distribution Date or if such date of determination is a
Distribution Date, the preceding Distribution Date, plus the
Incremental Subordinated Amount for the immediately preceding
Distribution Date, or if such date of determination is a Distribution
Date, such Distribution Date plus the Subordinated Percentage
multiplied by the aggregate amount of any increases in the Invested
Amount resulting from any withdrawals from the Excess Funding Account
since the preceding Distribution Date; and
(b) the Required Subordinated Amount for such date of determination;
and
(ii) the amount of any optional increase in the Available Subordinated
Amount exercised by BCRC as described below in the final paragraph of this
section "Allocation of Collections; Deposits in Collection Account; Limited
Subordination of the Retained Interest--Available Subordinated Amount." The
Available Subordinated Amount for any date of determination during the
period from the Closing Date through the first Distribution Date is equal
to the Required Subordinated Amount as of such date of determination, which
will equal at least $24,859,127 on the Closing Date.
The "Subordinated Percentage" will equal the percentage equivalent of a
fraction, the numerator of which is 5.5% and the denominator of which will
be the excess of 100% over 5.5%.
The "Incremental Subordinated Amount" on any Distribution Date will equal
the product of (a) a fraction, the numerator of which is the sum of the
Invested Amount on the last day of the immediately preceding Collection
Period (or with respect to the first Distribution Date, the Invested Amount
on the Closing Date) and the Available Subordinated Amount for such
Distribution Date (calculated without subtracting or adding the Incremental
Subordinated Amount for such Distribution Date as described in clause (a)
of the definition of Available Subordinated Amount or clause (ii) of the
definition of Required Subordinated Amount), and the denominator of which
is the Pool Balance on such last day and (b) the Overconcentration Amount
on such Distribution Date.
"Obligor Overconcentrations" on any Distribution Date means, with respect
to any Account, the excess of (x) the aggregate principal amount of
Eligible Receivables in such Account on the last day of the Collection
Period immediately preceding such Distribution Date over (y) 2% of the Pool
Balance with respect to Specified Obligors and 1.5% of the Pool Balance
with respect to all other Obligors, in each case on the last day of such
immediately preceding Collection Period. As used in this definition,
"Specified Obligors" means any Obligor with respect to the six largest
Accounts in the Trust calculated on the basis of the amount of Principal
Receivables in such Account. The percentages set forth in this description
of Obligor Overconcentrations and the manner of determining the Specified
Obligors may be adjusted from time to time without the consent of the
Certificateholders if the Rating Agency Condition is satisfied.
"Manufacturer Overconcentrations" on any Distribution Date means the
excess of (x) the aggregate amount of Eligible Receivables created in
connection with the financing of products manufactured by any single
manufacturing entity (other than the Designated Manufacturer described
below in the definition of Designated Manufacturer Overconcentrations)
which Eligible Receivables are in the Pool on the last day of the
Collection Period immediately preceding such Distribution Date over (y) 15%
of the Pool Balance on the last day of such immediately preceding
Collection Period; provided, however, that the percentage specified in
clause (y) may be adjusted from time to time without the consent of the
Certificateholders, if the Rating Agency Condition is satisfied.
"Designated Manufacturer Overconcentrations" on any Distribution Date
means the excess of (x) the aggregate amount of Eligible Receivables
created in connection with the financing of products manufactured by the
Designated Manufacturer which Eligible Receivables are in the Pool on the
last day of the Collection Period immediately preceding such Distribution
Date over (y) 50% of the Pool Balance on the last day of such immediately
preceding Collection Period where the "Designated Manufacturer" is
collectively
68
Bombardier Inc. and its subsidiaries; provided, however, that the
percentage specified in clause (y) and the entities included as Designated
Manufacturer may be adjusted from time to time without the consent of the
Certificateholders, if the Rating Agency Condition is satisfied.
"Industry Overconcentrations" on any Distribution Date means the excess
of (x) the aggregate amount of Eligible Receivables created in connection
with the financing of products manufactured by manufacturing entities that
are part of the same industry (i.e., producing the same principal product,
provided that products manufactured by Bombardier Inc. and its affiliates
will not be included in the calculation of Industry Overconcentration)
which Eligible Receivables are in the Pool on the last day of the
Collection Period immediately preceding such Distribution Date over (y) an
amount equal to 35% of the Pool Balance on the last day of such immediately
preceding Collection Period; provided, however, that with respect to each
industry specified below, the percentage in clause (y) of this definition
shall be deemed to equal the percentage set forth opposite such industry:
INDUSTRY PERCENTAGE
-------- ----------
Marine Products................................................ 45%
Recreational Vehicles.......................................... 15%
Lawn and Garden................................................ 10%
Consumer Electronics and Appliances............................ 10%
Some or all of the percentages specified in this description of Industry
Overconcentrations may be adjusted from time to time without the consent of
the Certificateholders, if the Rating Agency Condition is satisfied.
"Overconcentration Amount" on any Distribution Date means the sum of
(without duplication) the Obligor Overconcentrations, the Manufacturer
Overconcentrations, the Designated Manufacturer Overconcentrations and the
Industry Overconcentrations on such Distribution Date.
If the Available Subordinated Amount for any Distribution Date is less than
the Required Subordinated Amount for such Distribution Date, an Early
Amortization Event will occur. The holder of the BCRC Certificate could elect
to increase the Available Subordinated Amount (but the aggregate amount of
such increases may not exceed an amount equal to 1% of the Initial Principal
Amount of the Certificates) at the time such an Early Amortization Event would
otherwise occur, thus preventing or delaying the occurrence of such Early
Amortization Event.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND
Non-Principal Collections. On each Distribution Date, the Trustee will apply
Investor Non-Principal Collections and Investment Proceeds for such
Distribution Date to make the following distributions in the following order
of priority:
(i) an amount equal to Class A Monthly Interest for such Distribution
Date, plus the amount of any Class A Monthly Interest previously due but
not distributed on a prior Distribution Date (plus, but only to the extent
permitted under applicable law, interest at the Class A Certificate Rate on
Class A Monthly Interest previously due but not distributed), shall be
distributed on the Class A Certificates;
(ii) an amount equal to Class B Monthly Interest for such Distribution
Date, plus the amount of any Class B Monthly Interest previously due but
not distributed on a prior Distribution Date (plus, but only to the extent
permitted under applicable law, interest at the Class B Certificate Rate on
Class B Monthly Interest previously due but not distributed) shall be
distributed on the Class B Certificates;
(iii) an amount equal to the Net Servicing Fee for such Distribution Date
shall be distributed to the Servicer (unless such amount has been deducted
from amounts that would otherwise be deposited to the Collection Account as
described above under "Allocation of Collections; Deposits in Collection
Account; Limited Subordination of the Retained Interest" or waived as
described under "Servicing Compensation and Payment of Expenses" below);
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(iv) an amount equal to the Reserve Fund Deposit Amount, if any, for such
Distribution Date shall be deposited in the Reserve Fund;
(v) an amount equal to the Investor Default Amount, if any, for such
Distribution Date shall be treated as a portion of Available Investor
Principal Collections for such Distribution Date and shall be allocated by
the Trustee in the manner described under "Principal Collections" below;
(vi) an amount equal to the remainder of the Monthly Servicing Fee for
such Distribution Date, if any, due but not paid the Servicer shall be paid
to the Servicer (unless such amount has been deducted from amounts that
would otherwise be deposited to the Collection Account as described above
under "Allocation of Collections; Deposits in Collection Account; Limited
Subordination of the Retained Interest" or waived as described under
"Servicing Compensation and Payment of Expenses" below);
(vii) any Class A Carry-Over Amount for such Distribution Date, plus the
amount of any Class A Carry-Over Amount previously due but not distributed
on a previous Distribution Date, shall be distributed to the Class A
Certificateholders;
(viii) any Class B Carry-Over Amount for such Distribution Date, plus the
amount of any Class B Carry-Over Amount previously due but not distributed
on a previous Distribution Date, shall be distributed to the Class B
Certificateholders; and
(ix) the balance, if any, shall constitute Excess Servicing and shall be
allocated by the Trustee in the manner described under "Excess Servicing"
below.
If such Investor Non-Principal Collections and Investment Proceeds are not
sufficient to make the distributions required by clauses (i), (ii), (iii) and
(v), the Trustee shall withdraw funds from the Reserve Fund and apply such
funds to complete, to the extent available, the distributions pursuant to such
clauses (i), (ii), (iii) and (v) in the numerical order thereof.
If there is a Deficiency Amount for such Distribution Date, the Servicer
will apply or cause the Trustee to apply the aggregate amount of Series 1997-1
Available Retained Collections for the related Collection Period on such
Distribution Date, but only up to the Required Subordination Draw Amount, to
make the distributions required by clauses (i), (ii), (iii) and (v) above that
have not been made through the application of funds from the Reserve Fund as
described in the preceding paragraph. Any such Series 1997-1 Available
Retained Collections remaining after the application thereof pursuant to the
preceding sentence shall be treated as a portion of the Available Investor
Principal Collections, but only up to the amount of unpaid Adjustment Payments
allocated to the Certificates. Prior to the Series 1994-1 Final Payment Date,
if the Required Subordination Draw Amount for the Certificates and the
required subordination draw amounts for all other Series exceeds such
Available Retained Collections, the Available Retained Collections shall be
allocated among such Series pro rata on the basis of such required
subordination draw amounts (including the Required Subordination Draw Amount).
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.
"Investor Non-Principal Collections" for any Distribution Date means the
portion of Non-Principal Collections for the related Collection Period
allocated to the Certificates as described above under "Allocation
Percentages--Allocation to the Certificates" and "Allocation of
Collections; Deposits in Collection Account; Limited Subordination of the
Retained Interest."
"Investment Proceeds" for any Distribution Date means an amount equal to
the sum of (a) all interest and other investment earnings (net of losses
and investment expenses) on funds on deposit in the Reserve Fund and the
Excess Funding Account and (b) the Series 1997-1 Investor Allocation
Percentage of net investment earnings credited to the Collection Account on
the second Business Day prior to the Distribution Date with respect to
funds held in the Collection Account.
"Excess Servicing" for any Distribution Date means the amount described
in clause (ix) above.
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Reserve Fund. An Eligible Deposit Account will be established and maintained
in the name of the Trustee for the benefit of the Certificateholders (the
"Reserve Fund"). BCRC will make an initial deposit into the Reserve Fund on
the Closing Date in an amount equal to $2,135,625. The "Reserve Fund Required
Amount" means an amount which on any Distribution Date will equal 0.50% of the
outstanding principal balance of the Certificates on such Distribution Date
(after giving effect to any reduction thereof on such Distribution Date). If,
after giving effect to the allocations, distributions and deposits in the
Reserve Fund described herein under the caption "Non-Principal Collections,"
the amount in the Reserve Fund is less than the Reserve Fund Required Amount
for such Distribution Date, the Trustee shall deposit any remaining Series
1997-1 Available Retained Collections (to the extent of the Available
Subordinated Amount) for the related Collection Period into the Reserve Fund
until the amount in the Reserve Fund is equal to the Reserve Fund Required
Amount. The "Reserve Fund Deposit Amount" means, with respect to any
Distribution Date, the amount, if any, by which the Reserve Fund Required
Amount for such Distribution Date exceeds the amount on deposit in the Reserve
Fund after giving effect to any withdrawal therefrom on such Distribution
Date. Funds in the Reserve Fund will be invested in the same manner in which
funds in the Collection Account may be invested. On each Distribution Date,
the Servicer will credit to the Collection Account any investment earnings
(net of losses and investment expenses) with respect to the Reserve Fund.
After the payment in full of the aggregate principal balance of the
Certificates, any funds remaining on deposit in the Reserve Fund will be paid
to the holder of the BCRC Certificate.
If, for any Distribution Date with respect to an Early Amortization Period,
after giving effect to the allocations, distributions and deposits described
in the preceding paragraph, the amount in the Reserve Fund is less than the
Excess Reserve Fund Required Amount as of such Distribution Date, the Trustee
shall deposit the remaining Series 1997-1 Available Retained Collections (to
the extent of the Available Subordinated Amount) for the related Collection
Period into the Reserve Fund until the amount in the Reserve Fund is equal to
such Excess Reserve Fund Required Amount. The "Excess Reserve Fund Required
Amount" for any Distribution Date with respect to an Early Amortization
Period, means an amount equal to the greater of (a) 5% of the Initial
Principal Amount of the Certificates and (b) the excess of (i) the Required
Pool Balance (after giving effect to any changes thereto on such Distribution
Date) over (ii) the Pool Balance (after giving effect to changes thereto on
such Distribution Date); provided that the Excess Reserve Fund Required Amount
shall in no event exceed the Available Subordinated Amount for such
Distribution Date.
In connection with the allocations to the Reserve Fund referred to in the
two preceding paragraphs, prior to the Series 1994-1 Final Payment Date, if
the remaining Available Retained Collections are not sufficient to fund the
reserve funds for all outstanding Series (including the Reserve Fund), then
such remaining Available Retained Collections will be allocated to such
reserve funds (including the Reserve Fund, if applicable) pro rata on the
basis of the respective amounts required to be deposited therein.
Excess Servicing. On each Distribution Date, the Trustee will allocate
Excess Servicing with respect to the Collection Period immediately preceding
such Distribution Date, in the following order of priority:
(a) an amount equal to the aggregate amount of Investor Charge-Offs which
have not been previously reimbursed (after giving effect to the allocation
on such Distribution Date of the Series 1997-1 Investor Allocation
Percentage of Miscellaneous Payments with respect to such Distribution
Date) will be included in Available Investor Principal Collections for such
Distribution Date;
(b) an amount equal to the aggregate outstanding amounts of the Monthly
Servicing Fee which have been previously waived as described below under
"Servicing Compensation and Payment of Expenses" will be distributed to the
Servicer; and
(c) the balance, if any, shall be distributed (or made available) to the
holder of the BCRC Certificate and shall also increase the Available
Subordinated Amount to the extent described in the definition thereof.
Principal Collections. The Trustee will allocate Available Investor
Principal Collections as follows:
(a) prior to and including the Series 1994-1 Final Payment Date, for each
Distribution Date with respect to the Revolving Period, first, to make a
deposit to the Excess Funding Account if the Pool Balance
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at the end of the preceding Collection Period is less than the Required
Pool Balance for such Distribution Date (calculated as provided above under
"Excess Funding Account," before giving effect to any deposits to any
excess funding account for any other Series to be made on such Distribution
Date) and, second, to Excess Principal Collections as described above under
"Allocation Percentages--Principal Collections for all Series"; after the
Series 1994-1 Final Payment Date, on each business day, with respect to the
Revolving Period, first, to make a deposit to the Excess Funding Account if
the Pool Balance at the end of the preceding business day was less than the
Required Pool Balance for such day (calculated as provided above under
"Excess Funding Account") and, second, to Excess Principal Collections as
described above under "Allocation Percentages--Principal Collections for
all Series";
(b) for each Distribution Date with respect to the Amortization Period:
(i) an amount equal to the Class A Controlled Distribution Amount is
expected to be distributed to the Class A Certificateholders on each
Class A Amortization Date, until the principal balance of the Class A
Certificates is reduced to zero; and
(ii) an amount equal to the principal balance of the Class B
Certificates is expected to be distributed to the Class B
Certificateholders on the later of the Class B Expected Payment Date
and the date on which the principal balance of the Class A Certificates
has been reduced to zero; and
(iii) 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
(iv) the balance, if any, will be allocated to Excess Principal
Collections; and
(c) for each Distribution Date with respect to any Initial Amortization
Period or Early Amortization Period:
(i) an amount equal to Monthly Principal for such Distribution Date
will be distributed first to the holders of Class A Certificates until
the principal amount thereof is reduced to zero and then to holders of
the Class B Certificates until the principal amount thereof is reduced
to zero; and
(ii) the balance, if any, will be allocated to Excess Principal
Collections.
In the event that the Invested Amount is greater than zero on the Series
1997-1 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 1997-1
Termination Date.
"Available Investor Principal Collections" for any Distribution Date
means the sum of (a) the product of (i) the Floating Allocation Percentage,
with respect to the Revolving Period, or the Principal Allocation
Percentage, with respect to the Amortization Period, any Initial
Amortization Period or any Early Amortization Period, for the related
Collection Period and (ii) Principal Collections for the related Collection
Period, (b) the amount, if any, of Investor Non-Principal Collections,
funds in the Reserve Fund and Series 1997-1 Available Retained Collections
allocated to cover any Investor Default Amount or any unpaid Adjustment
Payments allocated to the Certificates or to reimburse Investor Charge-
Offs, (c) the Series 1997-1 Investor Allocation Percentage of Miscellaneous
Payments for such Distribution Date, (d) Excess Principal Collections, if
any, from other Series allocated to the Certificates, (e) if an Initial
Amortization Period or an Early Amortization Period began during the
related Collection Period, any amounts on deposit in the Excess Funding
Account and (f) on the Series 1997-1 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"). 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 Amortization Period), the floating
allocation percentages for all other outstanding Series of investor
certificates in their revolving periods and the principal allocation
percentages for all other outstanding Series in their amortization or early
amortization periods exceeds 100%, then the Principal Collections shall be
allocated among all Series pro rata on the basis of such floating
allocation percentages and principal allocation percentages.
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"Monthly Principal" with respect to any Distribution Date relating to the
Amortization Period or any Initial Amortization Period or Early
Amortization Period will equal Available Investor Principal Collections for
such Distribution Date; provided, however, that for any Distribution Date
that corresponds to a Class A Amortization Date, Monthly Principal in
respect of the Class A Certificates shall not exceed the Class A Controlled
Distribution Amount; and provided, further, that Monthly Principal will not
exceed the applicable outstanding principal balances of the Class A and
Class B Certificates, respectively.
"Class A Amortization Date" means each Distribution Date with respect to
the Amortization Period.
"Class A Amortization Period Length" means six months.
"Class A Controlled Amortization Amount" for any Class A Amortization
Date means an amount equal to the principal balance of the Class A
Certificates as of the October 2001 Distribution Date divided by the number
of months comprising the Class A Amortization Period Length.
"Class A Controlled Distribution Amount" for any Class A Amortization
Date means the Class A Controlled Amortization Amount plus any Class A
Controlled Amortization Amounts that were not paid on any previous Class A
Amortization Date.
"Class A Expected Final Payment Date" means the April 2002 Distribution
Date.
"Class B Expected Payment Date" means the April 2002 Distribution Date.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that, after the Series 1994-1
Final Payment Date, BCRC may at any time designate a fixed percentage of the
amount of collections in respect of Receivables arising in the Accounts on and
after the date of such designation that otherwise would be treated as
Principal Collections to be treated as Non-Principal Collections. BCRC must
provide 10 days' prior written notice to the Servicer, the Trustee and each
Rating Agency of any such designation, and such designation will become
effective on the date specified therein only if (i) an officer's certificate
is delivered to the Trustee to the effect that in the reasonable belief of
BCRC such designation would not result in an Early Amortization Event or have
a materially adverse effect on the certificateholders and (ii) the Rating
Agency Condition shall have been satisfied.
DEFAULTED RECEIVABLES AND RECOVERIES
"Defaulted Receivables" on any Distribution Date are (i) all Receivables
(other than Receivables that were designated as Ineligible Receivables at the
time of transfer to the Trust and Receivables which became Ineligible
Receivables because they were not paid in full within 491 days after the
origination thereof) which were charged off by the Servicer as uncollectible
in respect of the immediately preceding Collection Period, (ii) all
Receivables that have been SAU for more than 60 days, (iii) all Receivables in
an Account in which interest in the amount of $150 or more has been delinquent
for 90 days or more, and (iv) all Receivables which were Eligible Receivables
when transferred to the Trust, which arose in an Account which became an
Ineligible Account and which were not Eligible Receivables for any six
consecutive Distribution Dates after such Account became an Ineligible
Account. (Receivables are not Defaulted Receivables merely because they become
Ineligible Receivables.) The "Defaulted Amount" for any Collection Period will
be an amount (which shall not be less than zero) equal to (a) the aggregate
principal amount of Receivables that became Defaulted Receivables during the
preceding Collection Period less (b) the full amount of any Defaulted
Receivables subject to retransfer from the Trust to BCRC or purchase by the
Servicer for such Collection Period unless certain events of bankruptcy,
insolvency, or receivership have occurred with respect to either of BCRC or
the Servicer (or unless a Liquidation Event has occurred), in which event the
Defaulted Amount will not be reduced for those Defaulted Receivables.
Receivables will be charged off as uncollectible in accordance with the
written policies of BCI and its affiliates and otherwise in accordance with
procedures that are customary and usual in the industry. A portion of the
Defaulted Amount equal to the product of (x) the Defaulted Amount for such
Collection Period and (y) the Floating Allocation Percentage for such
Collection Period will be allocated to the Certificates. The portion of the
Defaulted Amount allocated to the Certificates is referred to as the "Investor
Default Amount."
"SAU" means, with respect to a Receivable, that if such Receivable was
originally secured by a security interest in an Eligible Product, such
Eligible Product has been sold and such Receivable has not been paid in full.
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If the Servicer adjusts downward the outstanding principal balance of any
Eligible Receivable because of a rebate, billing error, refund, credit
adjustment or billing error to an Obligor, or because such Receivable was
created in respect of a product which was refused or returned by an Obligor,
the amount of such adjustment will be deducted from the Pool Balance.
Furthermore, to the extent that the reduction in the Pool Balance would reduce
the Pool Balance below the Required Pool Balance on the immediately preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the related Distribution Date), then
unless a Liquidation Event has occurred, the Depositor will be required to
deposit a cash amount equal to such deficiency (up to the amount of such
adjustment) into the Collection Account in immediately available funds (an
"Adjustment Payment") on the day on which such adjustment occurs.
INVESTOR CHARGE-OFFS
If the Available Subordinated Amount is reduced to zero, and on any
Distribution Date the Deficiency Amount is greater than zero, the Invested
Amount will be reduced by the excess of such Deficiency Amount over any
remaining Available Subordinated Amount on the related Determination Date, but
not by more than the Investor Default Amount for such Distribution Date (an
"Investor Charge-Off"). Any reduction in the Invested Amount may have the
effect of slowing or reducing the return of principal on the Certificates. If
the Invested Amount has been reduced by any Investor Charge-Offs, it will
thereafter be increased on any Distribution Date (but not by an amount in
excess of the aggregate Investor Charge-Offs) by the sum of (a) the Series
1997-1 Investor Allocation Percentage of Miscellaneous Payments for such
Distribution Date and (b) the amount of Excess Servicing allocated and
available for such purpose as described above.
OPTIONAL REPURCHASE
On any Distribution Date occurring on or after the date on which the
Invested Amount is reduced to 10% or less of the initial aggregate principal
balance of the Certificates, BCRC will have the option, subject to certain
conditions, to repurchase the entire amount of the Certificates. The purchase
price will be equal to the sum of the aggregate principal balance of the
Certificates on such Distribution Date, accrued and unpaid interest due on the
Certificates (together with interest on overdue Monthly Interest to the extent
lawfully payable) on the date of such repurchase and any Class A Carry-Over
Amount or Class B Carry-Over Amount for such Distribution Date or previously
due but not distributed on a prior Distribution Date. The purchase price will
be deposited in the Collection Account in immediately available funds on the
Distribution Date on which BCRC exercises such option. Following any such
deposit, the Certificateholders will have no further rights with respect to
the Certificates, other than the right to receive the final distribution on
the Certificates. In the event that BCRC fails for any reason to deposit such
purchase price, payments will continue to be allocated to the Certificates as
described above under "Distributions from the Collection Account; Reserve
Fund."
EARLY AMORTIZATION EVENTS
Commencing on the first Distribution Date following the Collection Period in
which an Early Amortization Event has occurred, Principal Collections
allocable to the Certificates will no longer be allocated to any other Series
or the BCRC Certificate but instead will be allocated to the Certificates
monthly on each Distribution Date, except as described below, and the Class A
Controlled Distribution Amount will no longer apply to distributions of
principal on the Class A Certificates. An "Early Amortization Event" refers to
any of the following events:
(a) a failure by BCRC to convey Receivables in Additional Accounts to the
Trust within five business days after the day on which it is required to
convey such Receivables pursuant to the Pooling and Servicing Agreement;
(b) failure on the part of BCRC, the Servicer or BCI, as applicable, (i)
to make any payment or deposit required by the terms of the Pooling and
Servicing Agreement, including but not limited to any Transfer Deposit
Amount or Adjustment Payment, on or before the date occurring five (5)
business days after the date such payment or deposit is required to be
made, which failure is not cured within five business days after notice
from the Trustee of such failure; (ii) with respect to any Series, to
deliver a Distribution Date Statement within ten business days after notice
from the Trustee of such failure; (iii) to duly comply with,
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observe or perform in any material respect the covenant of the Depositor
not to create any lien (other than tax and certain other statutory liens
(including liens in favor of the Pension Benefit Guaranty Corporation) and
certain other liens and interests permitted by the Pooling and Servicing
Agreement on any Receivable which failure has a material adverse effect on
the holders of the investor certificates or the holder of the Variable
Funding Certificate and which continues unremedied for a period of 60 days
after written notice of such failure, requiring the same to be remedied,
has been given to the Depositor by the Trustee or any Enhancement Provider;
provided, however, that an Early Amortization Event shall not be deemed to
have occurred if the Depositor shall have repurchased the related
Receivables or, if applicable, all the Receivables during such period in
accordance with the provisions of the Pooling and Servicing Agreement; or
(iv) to duly observe or perform in any material respect any other of its
covenants or agreements set forth in the Pooling and Servicing Agreement,
which failure has a materially adverse effect on the holders of the
investor certificates or the holder of the Variable Funding Certificate and
which continues unremedied for a period of 45 days after written notice of
such failure, requiring the same to be remedied, shall have been given to
the Depositor by the Trustee or any Enhancement Provider;
(c) any representation or warranty made by BCRC in the Pooling and
Servicing Agreement or any information required to be given by BCRC to the
Trustee to identify the Accounts proves to have been incorrect in any
material respect when made or when delivered and continues to be incorrect
in any material respect for a period of 60 days after written notice (or
within such longer period as may be specified in such notice) of such
failure, requiring the same to be remedied, shall have been given to BCRC
by the Trustee, and as a result the interests of the holders of the
investor certificates or the holder of the Variable Funding Certificate are
materially and adversely affected (excluding, however, any representation
or warranty made by BCRC that the Pooling and Servicing Agreement
constitutes, or the transfer of the Receivables to the Trust is, a valid
sale, transfer and assignment to the Trust of all right, title and interest
of BCRC in the Receivables and the Collateral Security if the Pooling and
Servicing Agreement constitutes the grant of a security interest in the
Receivables and Collateral Security); provided, however, that an Early
Amortization Event shall not be deemed to occur thereunder if BCRC has
repurchased the related Receivables or all such Receivables, if applicable,
during such period in accordance with the provisions of the Pooling and
Servicing Agreement;
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to any of Bombardier Corporation, the Depositor or
the Servicer (or BCI if it is not the Servicer);
(e) BCRC or the Trust becomes an investment company within the meaning of
the Investment Company Act of 1940, as amended;
(f) on any Distribution Date, the Available Subordinated Amount is less
than the Required Subordinated Amount after giving effect to the
distributions to be made on such Distribution Date;
(g) on any Distribution Date, the balance of the Reserve Fund is less
than the Reserve Fund Required Amount, in each case after giving effect to
all deposits and distributions on such Distribution Date;
(h) any Servicer Default occurs;
(i) any Class A Carry-Over Amount or Class B Carry-Over Amount, as
applicable, is outstanding on six consecutive Distribution Dates, where the
"Class A Carry-Over Amount" for any Distribution Date on which the Class A
Certificate Rate is calculated on the basis of the Net Receivables Rate, is
the excess of (x) Class A Monthly Interest for such Distribution Date
determined as if the Class A Certificate Rate were based on the LIBOR
formula set forth in the definition of "Class A Certificate Rate" over (y)
the actual Class A Monthly Interest for such Distribution Date and the
"Class B Carry-Over Amount" for any Distribution Date on which the Class B
Certificate Rate is calculated on the basis of the Net Receivables Rate, is
the excess of (x) Class B Monthly Interest for such Distribution Date
determined as if the Class B Certificate Rate were based on the LIBOR
formula set forth in the definition of "Class B Certificate Rate" over (y)
the actual Class B Monthly Interest for such Distribution Date;
(j) the ratio (expressed as a percentage) of (x) the average for each
month of the net losses on the Receivables in the Pool (i.e., gross losses
less recoveries on any Receivables (including, without limitation,
75
recoveries from Collateral Security in addition to the products financed by
the Receivables, recoveries from manufacturers, distributors or importers
and insurance proceeds)) during any three consecutive calendar months to
(y) the average of the month-end Pool Balances for such three-month period,
exceeds 5% on an annualized basis; provided, that this clause (j) may be
revised or waived without the consent of the Certificateholders if the
Rating Agency Condition is satisfied;
(k) the average Monthly Payment Rate (x) with respect to the three
Collection Periods included in the period from January through March of any
calendar year is less than 12% and (y) with respect to any other three
consecutive Collection Periods is less than 14%, where the "Monthly Payment
Rate" for a Collection Period is the percentage obtained by dividing the
aggregate Principal Collections for such Collection Period by the average
daily Pool Balance for such Collection Period; provided, that this clause
(k) may be revised or waived without the consent of the Certificateholders
if the Rating Agency Condition is satisfied;
(l) the failure to pay the outstanding principal amount of the Class A
Certificates on the Class A Expected Final Payment Date or the failure to
pay the outstanding principal amount of the Class B Certificates on the
Class B Expected Payment Date;
(m) a Liquidation Event occurs; at all times the term "Liquidation Event"
will refer to certain events of bankruptcy, insolvency or receivership
relating to BCI or BCRC. In addition, prior to and including the Series
1994-1 Final Payment Date, but not thereafter, a Liquidation Event shall
occur if: (i) there occurs an Event of Default under (and as defined in)
any credit or loan agreement pursuant to which credit facilities (including
loans, loan commitments and letter of credit facilities) in excess of
$10,000,000 in the aggregate have been established or made available to
BCI, (ii) BCI, BCRC and the Trustee receive written notice (the "First
Notice") from any party to such agreement stating that by reason of such
Event of Default the loans outstanding to BCI or BCRC under such agreement
in an aggregate amount in excess of $10,000,000 (the "Defaulted Agreement")
are immediately due and payable and/or any credit commitment established
thereunder in an aggregate amount in excess of $10,000,000 is terminated
and (iii) the party delivering the First Notice delivers, within 30 days
after delivery of the First Notice, a second notice (the "Second Notice")
to BCI, BCRC and the Trustee stating (1) that the First Notice has not been
rescinded, (2) that the Event of Default has not been waived, (3) that the
acceleration of loans under the Defaulted Agreement or the termination of
any credit commitment established thereunder has not been rescinded or
annulled, and (4) that BCI has not paid all its indebtedness and has not
satisfied all its other obligations, contingent or otherwise, under the
Defaulted Agreement (other than obligations which by the terms of the
Defaulted Agreement survive the termination of the Defaulted Agreement and
the repayment of the credit extended thereunder);
(n) the sum of all Eligible Investments and amounts on deposit in the
Excess Funding Account and excess funding accounts for all other Series
represents more than 50% of the total assets of the Trust on each of six or
more consecutive Distribution Dates, after giving effect to all payments
made or to be made on such Distribution Date: or
(o) either (i) at any time during the period from and including the
Closing Date through May 31, 1998, more than 10% of the aggregate principal
amount of Domestic Inventory Receivables that were included in the Pool
Balance on the Closing Date and are then owned by the Trust have not been
paid in full within 491 days following the date of origination thereof or
(ii) at any time during any Origination Period commencing after May 31,
1998, more than 10% of the aggregate principal amount of Domestic Inventory
Receivables originated and transferred to the Trust during the four month
period commencing 16 months prior to such Origination Period and are then
owned by the Trust have not been paid in full within 491 days following the
date of origination thereof.
Upon the occurrence of any event described above, an Early Amortization
Event will be deemed to have occurred without any notice or other action on
the part of any other party immediately upon the occurrence of such event. The
Early Amortization Period will commence as of the day on which the Early
Amortization Event occurs. Monthly distributions of principal on the
Certificates will begin on the first Distribution Date following the
Collection Period in which an Early Amortization Period has commenced.
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If an Early Amortization Period results from the failure by BCRC to convey
Receivables in Additional Accounts to the Trust as described in clause (a)
above during the Revolving Period and no other Early Amortization Event has
occurred, the Early Amortization Period resulting from such failure will
terminate and the Revolving Period will recommence (unless the scheduled
termination date of the Revolving Period has occurred) as of the end of the
first Collection Period during which an Early Amortization Event would no
longer be deemed to exist as described in clause (a) above. An Early
Amortization Event would no longer be deemed to exist as described in clause
(a) above as a result of a reduction in the Invested Amount or the invested
amounts of other Series occurring due to principal payments distributed on the
Certificates and the certificates at other outstanding Series during the Early
Amortization Period or as a result of the subsequent addition of Receivables
to the Trust.
In addition to the consequences of an Early Amortization Event discussed
above, if a Liquidation Event occurs, or BCRC violates its covenant set forth
in clause (b)(iii) above (and such violation of such covenant becomes an
"Early Amortization Event" as described in clause (b)(iii) above), on the day
of such Liquidation Event or such Early Amortization Event occurring because
of such violation, as applicable, BCRC will immediately cease to transfer
Receivables to the Trust and promptly give notice to the Trustee of such
Liquidation Event or Early Amortization Event occurring because of such
violation, as applicable. Furthermore, under the terms of the Pooling and
Servicing Agreement, within 15 days following an insolvency event with respect
to BCRC or an Early Amortization Event as described in the preceding sentence
as a result of the occurrence of a violation set forth in (b)(iii) above, the
Trustee will publish a notice of such insolvency event or Early Amortization
Event occurring because of such violation stating that the Trustee intends to
sell, liquidate or otherwise dispose of all Receivables in the Trust in a
commercially reasonable manner and on commercially reasonable terms and,
unless within a specified period of time holders of Certificates and
certificates of each other outstanding Series representing more than 50% of
the aggregate outstanding principal balance of the certificates of each such
Series (or, with respect to any Series with two or more classes, the
certificates of each such class) and the holder of the Variable Funding
Certificate, instruct the Trustee not to sell, liquidate or dispose of the
Receivables in the Trust, the Trustee will proceed to dispose of the
Receivables. In the event of any such sale, liquidation or disposition, the
related proceeds will be allocated pro rata (based on the applicable
allocation percentages for each Series and the Variable Funding Percentage)
among the Certificates, any other outstanding Series and the interest
represented by the Variable Funding Certificate. If the portion of such
proceeds allocated to the Certificates and the proceeds of any collections on
the Receivables in the Collection Account allocable to the Certificates are
not sufficient to pay the aggregate unpaid principal balance of the
Certificates in full plus accrued and unpaid interest thereon,
Certificateholders will incur a loss. Notwithstanding the above, in the case
of the violation of the covenant described in clause (b)(iii) above, the
Trustee will not sell the Receivables upon an Early Amortization Event
occurring because of such violation unless the proceeds allocable to the
Certificates are sufficient to pay the aggregate unpaid principal balance of
each Series of certificates in full plus accrued and unpaid interest thereon.
TERMINATION
The Trust and the respective obligations and responsibilities of the
Depositor, the Servicer and the Trustee created by the Pooling and Servicing
Agreement will terminate on the earlier to occur of (a) the day following the
Distribution Date on which the aggregate of the invested amounts for all
Series is zero and (b) January 1, 2014 (the "Termination Date"). Upon
termination of the Trust, all right, title and interest in the Receivables and
the Collateral Security and other funds related thereto (other than amounts in
the Collection Account for the final distribution of principal and interest to
certificateholders) will be conveyed and transferred to the Depositor.
In any event, the last payment of principal and interest on the Certificates
will be due and payable no later than the Series 1997-1 Termination Date. In
the event that the Invested Amount is greater than zero on the Series 1997-1
Termination Date, the Trustee will use its best efforts to sell or cause to be
sold an interest in the Pool Balance then represented by the Certificates. The
net proceeds of such sale will be paid pro rata to Certificateholders as of
the Series 1997-1 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.
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INDEMNIFICATION
The Pooling and Servicing Agreement provides that (x) the Depositor will
indemnify the Trust and the Trustee from and against any loss, liability,
reasonable expense, damage or injury suffered or sustained by reason of any
acts or omissions or alleged acts or omissions arising out of or based upon
the arrangement created by the Pooling and Servicing Agreement, including any
judgment, general settlement, reasonable attorneys' fees and other costs and
expenses incurred by the Trustee in connection with the defense of any actual
or threatened action, proceeding or claim (other than any losses on
Receivables and amounts due with respect thereto) and (y) the Servicer will
indemnify (i) the Trust and the Trustee from and against any loss, liability,
reasonable expense, damage or injury suffered or sustained by the Trust or the
Trustee arising out of or based upon the arrangement created by the Pooling
and Servicing Agreement, including any judgment, general settlement,
reasonable attorney fees and other costs and expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim
(other than losses on Receivables and amounts due with respect thereto) and
(ii) the Trustee and its officers, directors, employees and agents from and
against any loss, liability, reasonable expense, damage or injury suffered or
sustained by reason of the acceptance of the Trust by the Trustee, the
issuance by the Trust of the Certificates or any of the other matters
contemplated in the Pooling and Servicing Agreement or in any Supplement
thereto (other than losses on Receivables and amounts due with respect
thereto); provided that, in any such case, the Trust, the Trustee, and its
officers, directors, employees and agents will not be so indemnified if such
acts or omissions constitute, or such actual or threatened action, proceeding
or claim arises out of, or such loss, liability, expense, damage or injury is
caused by, fraud, gross negligence, breach of fiduciary duty or willful
misconduct by the Trustee and provided further that neither BCRC nor the
Servicer shall be liable, directly or indirectly, for or in respect of any
indebtedness or obligation evidenced or created by any certificate, recourse
as to which is limited solely to the assets of the Trust allocated for the
payment thereof as provided in the Pooling and Servicing Agreement and any
applicable Supplement. In addition, neither the Servicer nor the Depositor
will indemnify the Trust, the Trustee or the certificateholders or any other
beneficiaries of the Trust for any act taken by the Trustee at the request of
the certificateholders or for any federal, state or local income or franchise
tax (or any interest or penalties with respect thereto) required to be paid by
the Trust or the certificateholders or any other beneficiaries. Furthermore,
any such indemnification by the Depositor will only be from assets of the
Depositor not pledged to third parties or otherwise encumbered as permitted
under the Depositor's certificate of incorporation and will be made only after
the deposit by the Depositor of any amounts required to be made in the
Collection Account. Any indemnification by the Servicer shall not be payable
from the assets of the Trust.
The Pooling and Servicing Agreement provides that, except as described above
and with certain other specified exceptions, neither the Servicer nor BCRC nor
any of their affiliates, directors, officers, employees, stockholders, agents,
representatives or advisors will be under any liability to the Trustee or any
other person for taking any action, or for refraining from taking any action,
pursuant to the Pooling and Servicing Agreement or otherwise. However, neither
the Servicer nor BCRC will be protected against any liability which would
otherwise be imposed by reason of their willful misfeasance, bad faith or
gross negligence.
In addition, the Pooling and Servicing Agreement provides that the Servicer
is not under any obligation to appear in, prosecute or defend any legal action
other than as part of the good faith performance of its servicing obligations.
The Servicer may, in its sole discretion, undertake any such legal action
which it may deem necessary or desirable for the benefit of the Trust.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Servicer is responsible
for servicing, collecting, enforcing and administering the Receivables in
accordance with procedures that are customary and usual in the industry for
servicing receivables comparable to such Receivables, except where the failure
to so act would not materially and adversely affect the rights of the Trust or
any beneficiaries thereof. BCI has delegated certain of its servicing,
collection, enforcement and administrative duties to third parties and BCI may
from time to time in the future delegate all or a portion of such duties to
third parties in accordance with the terms of the Pooling and Servicing
Agreement, provided that no such delegation will relieve BCI of its
responsibilities as Servicer with respect to such duties.
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Subject to compliance with all requirements of law, the Servicer (or BCI) and
any affiliate of BCI may change the terms and provisions of the Accounts,
including the inventory security agreements and other floorplan financing
agreements and the financing guidelines, in any respect (including the
calculation of the amount or the timing of charge-offs and the rate of the
finance charge) only if, in the Servicer's reasonable judgment, no Early
Amortization Event will occur as a result of the change.
Servicing activities to be performed by the Servicer include collecting and
recording payments, communicating with Obligors, investigating payment
delinquencies, evaluating the increase of credit limits, and maintaining
internal records with respect to each Account. Managerial and custodial
services performed by the Servicer include providing assistance in any
inspections of the documents and records relating to the Accounts and
Receivables by BCRC or the Trustee (on behalf of the Certificateholders),
maintaining the agreements, documents and files relating to the Accounts and
Receivables as custodian and providing related data processing and reporting
services for holders of certificates and on behalf of the Trustee.
SERVICER COVENANTS
In the Pooling and Servicing Agreement the Servicer covenants that: (a) it
will duly satisfy all obligations on its part to be fulfilled under or in
connection with the Receivables and Accounts, will maintain in effect all
qualifications required in order to service properly the Receivables and the
Accounts and will comply in all material respects with all requirements of law
in connection with servicing the Receivables and the Accounts, except where
the failure to do any of the foregoing would not have a material adverse
effect on the beneficiaries of the Trust; (b) it will do nothing to impair the
rights of the beneficiaries of the Trust in the Receivables or in the
certificates; and (c) it will not reschedule, revise, defer, cancel or settle
payments due on any Receivable except in accordance with sound industry
practices for servicing receivables comparable to the Receivables.
Under the terms of the Pooling and Servicing Agreement, if the Depositor or
the Servicer receives written notice from the Trustee or any Enhancement
Provider that any covenant of the Servicer set forth above has not been
complied with in all material respects and such noncompliance has not been
cured within 30 days thereafter (or such longer period as the Trustee may
agree to) and has a materially adverse effect on the interests of all
certificateholders or the Variable Funding Interest in any Receivable or
Account, then, unless a Liquidation Event has occurred, the Servicer will
purchase such Receivable or all Receivables in such Account, as applicable.
Such purchase will be made on the Determination Date following the expiration
of the 30-day cure period by deposit into the Collection Account of an amount
equal to the amount of such Receivable or Receivables plus accrued and unpaid
interest thereon. The amount of such deposit shall be deemed a Transfer
Deposit Amount. The purchase by the Servicer constitutes the sole remedy
available to certificateholders if such covenant or warranty of the Servicer
is not satisfied and such purchased Receivables shall be automatically
assigned to the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities under the Pooling
and Servicing Agreement and reimbursement for its expenses will be a monthly
servicing fee (the "Servicing Fee") in an amount payable in arrears on each
Distribution Date on or prior to the Termination Date equal to the aggregate
of the monthly servicing fees specified in the Supplements. The share of the
Servicing Fee allocable to the Certificates with respect to any Distribution
Date (the "Monthly Servicing Fee") will generally be equal to one-twelfth of
the product of (a) 2% or, for any Distribution Date in respect of which the
Monthly Servicing Fee has been waived, 0% (the "Servicing Fee Rate") and (b)
the Invested Amount as of the last day of the second preceding Collection
Period, provided that the Monthly Servicing Fee for the first Distribution
Date will be equal to $ . A portion of the Monthly Servicing Fee (the "Net
Servicing Fee") will be payable in the priority set forth above in
"Description of the Certificates--Distribution from the Collection Account;
Reserve Fund" and will generally be equal to one-twelfth of the product of (a)
1%, if BCI is the Servicer, or 2%, if BCI is not the Servicer, or for any
Distribution Date in respect of which the Monthly Servicing Fee has been
waived, 0% (the "Net Servicing Fee Rate") and (b) the Invested Amount as of
the last day of the second preceding 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
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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." The remainder of the Servicing Fee
not allocable to the Certificates shall be paid by the holders of the Variable
Funding Certificate and the BCRC Certificate and the holders of the
certificates of other outstanding Series. The Monthly Servicing Fee shall be
payable to the Servicer solely to the extent amounts are available for
distribution therefor in accordance with the terms of the Series 1997-1
Supplement.
The Servicer will be permitted to waive its right to receive the Monthly
Servicing Fee on any Distribution Date, so long as it believes that sufficient
Non-Principal Collections will be available on a future Distribution Date to
pay the Monthly Servicing Fee relating to the amount thereof so waived, in
which case the Monthly Servicing Fee (including the Net Servicing Fee) for
such Distribution Date shall be deemed to be zero.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Accounts and the Receivables
including, without limitation, payment of fees and disbursements of the
Trustee and independent accountants and all other fees and expenses which are
not expressly stated in the Pooling and Servicing Agreement to be payable by
the Trust or the certificateholders other than federal, state and local income
and franchise taxes, if any, of the Trust or the certificateholders.
CERTAIN MATTERS REGARDING THE SERVICER
The Servicer may not resign from its obligations and duties under the
Pooling and Servicing Agreement, except upon determination that such duties
are no longer permissible under applicable law. No such resignation will
become effective until the Trustee or a successor to the Servicer has assumed
the Servicer's responsibilities and obligations under the Pooling and
Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the Servicer is a party, or any
person succeeding to the business of the Servicer, will be the successor to
the Servicer under the Pooling and Servicing Agreement.
SERVICER DEFAULT
In the event and during the continuance of any Servicer Default, the Trustee
by written notice to the Servicer, may terminate all of the rights and
obligations of the Servicer, as servicer, under the Pooling and Servicing
Agreement and in and to the Receivables and the proceeds thereof and appoint a
new Servicer (a "Service Transfer"). The Trustee shall as promptly as possible
appoint a successor Servicer and if no successor Servicer has been appointed
by the Trustee and has accepted such appointment by the time the Servicer
ceases to act as Servicer, all rights, authority, power and obligations of the
Servicer under the Pooling and Servicing Agreement shall pass to and be vested
in the Trustee. Prior to any Service Transfer, the Trustee will review any
bids obtained from potential servicers meeting certain eligibility
requirements set forth in the Pooling and Servicing Agreement to serve as
successor Servicer for servicing compensation not in excess of the Servicing
Fee (provided that if all such bids exceed the Servicing Fee, the Depositor at
its own expense will pay when due the amount of any compensation in excess of
the Servicing Fee).
A "Servicer Default" refers to any of the following events:
(a) failure by the Servicer to make any payment, transfer or deposit into
the Trust (or into any Series Account), on or before the date the Servicer
is required to do so under the Pooling and Servicing Agreement, which
failure is not cured within a five business day grace period after notice
from the Trustee of such failure;
(b) failure on the part of the Servicer duly to observe or perform (x)
its covenant not to create any lien on any Receivable which failure has a
material adverse effect on the certificateholders and which continues
unremedied for a period of 60 days after written notice to it; provided,
however, that a Servicer Default shall not be deemed to have occurred if
BCRC or the Servicer shall have repurchased the related
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Receivables or, if applicable, all the Receivables during such period in
accordance with the terms and provisions of the Pooling and Servicing
Agreement or (y) any other covenants or agreements of the Servicer in the
Pooling and Servicing Agreement (exclusive of breaches of covenants in
respect of which the Servicer repurchases the related Receivables, as
described above under "--Servicer Covenants") which failure has a
materially adverse effect on the certificateholders or the holder of the
Variable Funding Certificate and which continues unremedied for a period of
30 days after written notice thereof to the Servicer;
(c) any representation, warranty or certification made by the Servicer in
the Pooling and Servicing Agreement or in any certificate delivered
pursuant to the Pooling and Servicing Agreement proves to have been
incorrect when made and continues to be incorrect in any material respect
for a period of 60 days after written notice thereof has been given to the
Servicer by the Trustee and as a result the interests of the
certificateholders or the holder of the Variable Funding Certificate are
materially and adversely affected; provided, however, that a Servicer
Default shall not be deemed to have occurred if BCRC shall have repurchased
the related Receivables or, if applicable, all the Receivables during such
period in accordance with the provisions of the Pooling and Servicing
Agreement; or
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred
to under clause (a) above for a period of up to ten business days after the
applicable grace period or a delay in or failure of performance (or the
continuance of any such delay or failure) referred to under clauses (b) or (c)
for a period of up to 60 business days, shall not constitute a Servicer
Default if such delay or failure or continuance was caused by an act of God or
other similar occurrence. Upon the occurrence of any such event, the Servicer
shall not be relieved from using its best efforts to perform its obligations
in a timely manner in accordance with the terms of the Pooling and Servicing
Agreement and the Servicer shall provide the Trustee, any Enhancement Provider
and BCRC prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. In addition, the
Servicer shall immediately notify the Trustee in writing of any Servicer
Default.
REPORTS
On each Distribution Date, the Trustee will forward (or cause to be
forwarded) to each Certificateholder of record (which is expected to be Cede,
as nominee for DTC, unless Definitive Certificates are issued) a statement
(the "Distribution Date Statement") prepared by the Servicer setting forth the
following information (which, where appropriate, will be stated on the basis
of an original principal amount of $1,000 per Certificate if the Amortization
Period, an Initial Amortization Period or an Early Amortization Period has
commenced): (a) the aggregate amount of principal paid or distributed on the
Certificates and the aggregate amount of interest paid or distributed on the
Certificates on such Distribution Date; (b) the Floating Allocation Percentage
and the Principal Allocation Percentage for such Collection Period (or, after
the Series 1994-1 Final Payment Date, the average for the Deposit Dates in
such Collection Period); (c) the Investor Default Amount for such Distribution
Date; (d) the Required Subordination Draw Amount, if any, for the preceding
Collection Period (or, after the Series 1994-1 Final Payment Date, for such
Distribution Date); (e) the amount of the Investor Charge-Offs and the amounts
of reimbursements thereof for the preceding Collection Period; (f) the amount
of Class A Carry-Over Amount, if any, and the amount of Class B Carry-Over
Amount, if any, being paid and the amount remaining unpaid; (g) the Pool
Balance; (h) the outstanding principal amount of Class A Certificates and
Class B Certificates after giving effect to distributions on such date; (i)
the applicable Class A Certificate Rate and Class B Certificate Rate; (j) the
amount of the Monthly Servicing Fee for the preceding Collection Period; (k)
the "pool factor" for the Certificates as of such Distribution Date
(consisting of an eleven-digit decimal expressing the Invested Amount as of
such Distribution Date (determined after taking into account any reduction in
the Invested Amount which will occur on such Distribution Date) as a
percentage of the Adjusted Invested Amount); (l) the Available Subordinated
Amount for such Distribution Date; (m) the Reserve Fund balance for such
Distribution Date; (n) the Excess Funding Account balance; (o) the Collection
Account balance with respect to such Distribution Date and (p) whether an
Early Amortization Event has occurred or whether BCI has elected to not extend
the Initial Principal Payment Date.
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On or before January 31 of each calendar year, beginning with January 31,
1998, the Trustee will furnish (or cause to be furnished) to each person who
at any time during the preceding calendar year was a Certificateholder of
record (which is expected to be Cede, as nominee for DTC, unless Definitive
Certificates are issued) a statement prepared by the Servicer containing the
information that is required to be contained in the Distribution Date
Statement, aggregated for such calendar year, together with information
required to be provided by an issuer of indebtedness under the Code for such
preceding calendar year or the applicable portion thereof during which such
person was a Certificateholder, together with such other customary information
as is necessary to enable the Certificateholders to prepare their tax returns.
In addition, the Trustee from time to time will furnish to each
Certificateholder of record information furnished by the Servicer regarding
material changes in the servicing or crediting procedures required under the
Pooling and Servicing Agreement. As long as the Certificateholder of record is
Cede, as nominee for DTC, Certificate Owners will receive tax and other
information from Participants and Indirect Participants rather than from the
Trustee. See "Certain Federal Income Tax Consequences."
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing Agreement provides that on or before April 30 of
each calendar year the Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or BCRC) to furnish a report relating to certain matters in
connection with the servicing of BCI's portfolio of Receivables.
The Pooling and Servicing Agreement provides for delivery to the Trustee on
or before April 30 of each calendar year of a statement signed by an officer
of the Servicer to the effect that the Servicer has fully performed, or caused
to be fully performed its obligations in all material respects under the
Pooling and Servicing Agreement throughout the preceding year or, if there has
been a default in the performance of any such obligation, specifying the
nature and status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by any Certificateholder (which is expected to be Cede, as
nominee for DTC, unless Definitive Certificates are issued), upon request in
writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement may be amended from time to time
(including in connection with the issuance of a Supplemental Certificate) by
BCRC, the Servicer, the Trustee and BCI (if BCI is not then the Servicer),
without additional consent, so long as any such action shall not, as evidenced
by an opinion of counsel, adversely affect in any material respect the
interests of the certificateholders or the holder of the Variable Funding
Certificate. In addition, the Pooling and Servicing Agreement may be amended
by BCRC, the Servicer, the Trustee and BCI (if BCI is not then the Servicer)
to conform the provisions regarding removal of Accounts with those in effect
prior to the Closing Date to allow for the removal of existing Receivables in
Removed Accounts (including all amounts then held or thereafter received in
respect of such Receivables) if, at the time of such amendment, such
provisions will be consistent with sale treatment of the Receivables by BCRC
under generally accepted accounting principles. Notwithstanding the above, the
Trustee, with the consent on any Enhancement Providers, may at any time and
from time to time amend, modify or supplement the form of Distribution Date
Statement.
The Pooling and Servicing Agreement may also be amended by BCRC, the
Servicer, the Trustee and BCI (if not the Servicer) with the consent of the
holder of the Variable Funding Certificate, if it would be adversely affected
by such amendment, and holders of certificates evidencing not less than a
majority of the aggregate unpaid principal amount of the certificates of all
adversely affected Series for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
certificateholders. No such amendment, however, may (a) reduce in any manner
the amount of, or delay the timing of, distributions required to be made on
any certificate (including the Variable Funding Certificate) or the deposits
to be made therefor, (b) change the definition or the manner of calculating
interest on any certificate, (c) reduce the amount available under any
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Enhancement, (d) adversely affect the rating of any Series or class by any
Rating Agency which rated such Series or class or (e) reduce the percentage of
the unpaid principal balance of certificates the holders of which are required
to consent to any such amendment, without, in the case of (a), (b), (c) or (e)
the consent of each affected certificateholder or the Variable Funding
Certificate, as applicable and, in the case of (d), the consent of the holders
of certificates of such Series or class evidencing not less than 66 2/3% of
the aggregate unpaid principal amount of the certificates of such Series or
class. Promptly following the execution of any amendment to the Pooling and
Servicing Agreement (other than an amendment described in the preceding
paragraph), the Trustee will furnish notice of the substance of such amendment
to each certificateholder.
The Pooling and Servicing Agreement may not be amended in any manner which
materially adversely affects the interests of any Enhancement Provider without
its prior consent.
LIST OF CERTIFICATEHOLDERS
Upon written request of any three or more certificateholders of record, the
Trustee will afford such certificateholders access during business hours to
the current list of registered certificateholders of a Series or of all
Series, as applicable, for purposes of communicating with other
certificateholders with respect to their rights under the Pooling and
Servicing Agreement. It is anticipated that the only Certificateholder will be
Cede, as nominee of DTC, and that Certificate Owners will not be recognized by
the Trustee as Certificateholders for this purpose. See "Book-Entry
Registration" and "Definitive Certificates" above.
The Pooling and Servicing Agreement does not provide for any annual or other
meetings of Certificateholders.
THE TRUSTEE
Bankers Trust Company, a New York banking corporation, is Trustee under the
Pooling and Servicing Agreement. The Trustee is located at Four Albany Street,
New York, New York 10006. BCI and BCRC and their respective affiliates may
from time to time enter into other banking and trustee relationships with the
Trustee and its affiliates. The Trustee may hold Certificates in its own name
and may deal with BCRC, the Servicer or any Enhancement Provider with the same
rights it would have if it were not the Trustee. In addition, for purposes of
meeting the legal requirements of certain local jurisdictions, the Trustee
shall have the power to appoint a co-trustee or separate trustees of all or a
part of the Trust. In the event of such appointments, all rights, powers,
duties and obligations shall be conferred or imposed upon the Trustee and such
separate trustee or co-trustee jointly, or, in any jurisdiction in which the
Trustee shall be incompetent or unqualified to perform certain acts, singly
upon such separate trustee or co-trustee, who shall exercise and perform such
rights, powers, duties and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event BCRC will be obligated to
appoint a successor Trustee. The Servicer may also remove the Trustee if the
Trustee ceases to be eligible to continue as such under the Pooling and
Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Servicer may appoint a successor Trustee. Any resignation
or removal of the Trustee and appointment of a successor Trustee does not
become effective until the acceptance of the appointment by the successor
Trustee. See "Description of the Certificates--Indemnification."
The fees and expenses of the Trustee will be paid by the Servicer out of its
servicing compensation. See "Description of the Certificates--Servicing
Compensation and Payment of Expenses."
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AMENDMENTS TO POOLING AND SERVICING AGREEMENT
AND RECEIVABLES PURCHASE AGREEMENT
On the Closing Date, BCRC, BCI and the Trustee will enter into certain
amendments to the Pooling and Servicing Agreement and to the Receivables
Purchase Agreement. The terms of the Pooling and Servicing Agreement and the
Receivables Purchase Agreement, as described in this Prospectus, include such
amendments. Certain of such amendments will not become effective until after
the Series 1994-1 Final Payment Date (the "Delayed Amendments"). Provisions
which will not become effective until after the Series 1994-1 Final Payment
Date are so noted in this Prospectus wherever the affected terms are
described. Numerous Delayed Amendments are contained in the documents which
amend the Pooling and Servicing Agreement and the Receivables Purchase
Agreement. The following lists, in brief and general terms, some of the
Delayed Amendments contained in Amendment Number 1 to the Pooling and
Servicing Agreement and Amendment Number 1 to the Receivables Purchase
Agreement; however this listing does not purport to provide a complete
description of such amendments. For further information, owners and
prospective owners of Certificates are advised to examine the Pooling and
Servicing Agreement and Amendment Number 1 thereto and the Receivables
Purchase Agreement and Amendment Number 1 thereto, copies of which (without
certain exhibits or schedules) will be made available by the Trustee upon
written request.
--The definition of "Eligible Accounts" will be amended (i) to provide
that such accounts may include, in addition to accounts "established" by
BCI or an affiliate of BCI, accounts "acquired" by BCI or an affiliate,
(ii) to allow BCI to assign or grant participation rights in an Eligible
Account or the Receivables therein and the security and rights related
thereto, (iii) to make provision for the inclusion of accounts in which
Asset-Based Receivables will arise, (iv) to provide that the obligors with
respect to such accounts may, in addition to dealers, include manufacturers
and distributors and (v) to provide that the definition of "Eligible
Accounts" may be further amended without consent of the holders of the
Certificates if the Rating Agency Condition is satisfied. See "Description
of the Certificates--Eligible Accounts and Eligible Receivables."
--The definition of "Eligible Receivables" will be amended (i) to provide
for the inclusion of Asset-Based Receivables, (ii) to include Receivables
acquired by BCI or an affiliate of BCI in addition to those originated by
BCI or an affiliate of BCI, (iii) to remove the restriction on assigment
and participation of Receivables and (iv) to provide that the definition of
Eligible Receivables may be further amended without consent of the holders
of the Certificates if the Rating Agency Condition is satisfied. See
"Description of the Certificates--Eligible Accounts and Eligible
Receivables."
--The provisions relating to the Excess Funding Account and the
calculation of Excess Funded Amount (including the definition of "Required
Pool Balance") will be amended to provide for a calculation as of each
business day of the amount required to be on deposit in the Excess Funding
Account and to provide for deposits and withdrawals on a daily basis. See
"Description of the Certificates--Excess Funding Account" and "--Required
Pool Balance."
--The provisions relating to the designation of Additional Accounts will
be amended to allow the addition of a limited amount of Accounts in each
quarter and in each year without review or approval by the Rating Agencies.
See "Description of the Certificates--Addition of Accounts."
--Provisions are added which permit the granting of Participation
Interests in Receivables and which permit the assignment of Receivables
including interests in the collateral securing such Receivables. See "The
Floorplan and Asset-Based Financing Business--Participation Arrangements"
and "Description of the Certificates--Removal of Accounts and Assignment of
Receivables."
--Numerous calculations, allocations, deposits and releases of funds,
which currently are done on a monthly basis, will be made on a daily basis.
The holders of the Certificates, by the purchase and acceptance of the
Certificates, will accept the terms of the documents as amended including such
Delayed Amendments and those amendments to the Pooling and Servicing Agreement
and Receivables Purchase Agreement effective as of or prior to the Closing
Date.
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DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The Receivables transferred and to be transferred to the Trust have been and
will be acquired by BCRC from BCI pursuant to the Receivables Purchase
Agreement, dated as of January 1, 1994, between BCI, as seller, and BCRC, as
purchaser, filed as an exhibit to the Registration Statement of which this
Prospectus is a part (as amended by Amendment Number 1 dated as of January 1,
1997 to the Receivables Purchase Agreement ("RPA Amendment Number 1") and as
otherwise supplemented or amended from time to time, the "Receivables Purchase
Agreement"). The Receivables Purchase Agreement provides that it is governed
by New York law. The following discussion represents a summary of certain
terms of the Receivables Purchase Agreement relating to the sale or
contribution of the Receivables to BCRC and does not purport to provide a
complete description. For further information, owners and prospective owners
of Certificates are advised to examine the Receivables Purchase Agreement, a
copy of which (without certain exhibits or schedules) including RPA Amendment
Number 1, will be made available by the Trustee upon written request.
SALE AND TRANSFER OF RECEIVABLES
Pursuant to the Receivables Purchase Agreement, BCI has sold and transferred
to BCRC all of its right, title and interest in and to all of the Domestic
Inventory Receivables and the Collateral Security (and the related repurchase
agreements and other agreements with manufacturers, importers or distributors)
relating to the Accounts as of the Initial Cut-Off Date and from time to time
has sold and transferred and will sell or contribute and transfer to BCRC
Domestic Inventory Receivables created thereafter (and the related Collateral
Security) with respect to the Accounts and Additional Accounts and, after the
Series 1994-1 Final Payment Date, subject to satisfaction of the Rating Agency
Condition, may sell or contribute and transfer Asset-Based Receivables in
Accounts designated for the Trust.
Under the Receivables Purchase Agreement, BCI has transferred and will
continue to transfer the Receivables to BCRC in exchange for (i) the net cash
proceeds received by BCRC from the sale of the investor certificates (which
proceeds equals the proceeds, after expenses, raised from the sale of the
investor certificates), less any amounts deposited by BCRC in the Reserve Fund
and (ii) a promissory note (the "Note") issued by BCRC in favor of BCI. The
value of and the purchase price in the case of sales of Eligible Receivables
transferred will be deemed to equal the principal amount of such Receivables
plus accrued and unpaid interest thereon on the date of transfer (less, if
applicable, the amount of principal and interest allocable to any
Participation Interest). The value of and the purchase price in the case of
sales with respect to Ineligible Receivables transferred will equal the net
book value of such Receivables (less, if applicable, the amount of principal
and interest allocable to any Participation Interest). With respect to
Receivables which are sold to BCRC, the principal amount of the Note will be
increased from time to time in connection with the sale of additional
Receivables by BCI to BCRC for inclusion in the Trust pursuant to the
Receivables Purchase Agreement to the extent the purchase price for such
Receivables is not paid in cash by BCRC. As security for the Note, BCRC has
pledged to BCI the Variable Funding Certificate held by BCRC. Principal and
interest payable on the Note may be paid by BCRC from time to time out of
monies available to BCRC from any source (including through BCRC's interest in
the BCRC Certificate and Variable Funding Certificate). Interest on the Note
will accrue at a rate per annum equal to 15%. In the event of a bankruptcy
where BCRC and the Trust are substantively consolidated or in any other
instance where the holder of the Note and the holders of the investor
certificates will be claiming against a common fund, the portion of the
aggregate amounts then due under the Note in excess of the amount by which (x)
the Variable Funding Amount plus the Retained Participation Amount exceeds (y)
the Available Subordinated Amount will be subordinate to the prior
indefeasible payment in full of the investor certificates. RPA Amendment
Number 1 will provide, among other things, that, in addition to the sale of
Receivables by BCI to BCRC, BCI may transfer the Receivables to BCRC as a
capital contribution. When Receivables are transferred by contribution, BCRC
will not be required to pay cash to BCI or to increase the amount of the Note
as consideration for such Receivables.
In connection with the sale or contribution of the Receivables to BCRC, BCI
will indicate in its computer files that the Receivables have been transferred
to BCRC, and that BCRC has transferred its interest therein to the Trust. In
addition, BCI will provide to BCRC and the Trustee a computer file or
microfiche or written list
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containing a true and complete list of all Accounts, identifying the balances
of the Receivables as of the Initial Cut-Off Date and Receivables in the
Additional Account as of the applicable Additional Cut-Off Date. The records
and agreements relating to the Accounts and Receivables have not been, and will
not be, segregated by BCI from other documents and agreements relating to other
accounts and receivables and will not be stamped or marked to reflect the sale
of the Receivables, but the computer records of BCI have been marked to
evidence such transfer. BCI has filed and will file UCC financing statements
with respect to the sale or contribution of the Receivables meeting the
requirements of Vermont state law. See "Risk Factors--Certain Legal Aspects"
and "Certain Legal Aspects of the Receivables--Transfer of Receivables and
Certificates."
REPRESENTATIONS AND WARRANTIES
BCI makes certain representations and warranties to BCRC to the effect that,
among other things, as of the Closing Date and each Series Issuance Date, it
was duly incorporated and in good standing and that it has the authority to
consummate the transactions contemplated by the Receivables Purchase Agreement.
BCI also makes representations and warranties to BCRC relating to the
Receivables to the effect that, among other things, as of the Initial Cut-Off
Date, the Closing Date and each Series Issuance Date each Account is an
Eligible Account and, in the case of Additional Accounts, as of the Additional
Cut-Off Date and each Addition Date, each such Additional Account is an
Eligible Account. In the event of a breach of any representation and warranty
set forth in this paragraph which results in the requirement that BCRC accept
retransfer of Receivables from the Trust pursuant to the Pooling and Servicing
Agreement, then BCI shall, unless a Liquidation Event has occurred, repurchase
such Receivables from BCRC. The purchase price for such Receivables shall be
the principal balance thereof (together with accrued interest), which amount
shall be paid by BCI in immediately available funds on the business day
preceding the date of such retransfer.
BCI also makes representations and warranties to BCRC to the effect, among
other things, that as of the Initial Closing Date, the Closing Date and each
Series Issuance Date (a) the Receivables Purchase Agreement constitutes a
legal, valid and binding obligation of BCI and (b) the Receivables Purchase
Agreement constitutes a valid sale to BCRC of all right, title and interest of
BCI in and to the Receivables, whether then existing or thereafter created in
the Accounts, the Collateral Security and, with certain exceptions, the
proceeds thereof which is effective as to each Receivable upon the creation
thereof. If the breach of any of the representations and warranties described
in this paragraph results in the obligation of BCRC under the Pooling and
Servicing Agreement to repurchase an interest in Receivables from the Trust,
BCI will be obligated to repurchase such interest retransferred to BCRC for the
amount which BCRC was required to pay to the Trust in connection with such
retransfer.
CERTAIN COVENANTS
BCI has covenanted that, except for the sale or contribution and conveyances
under the Receivables Purchase Agreement, BCI will not sell, pledge, assign or
transfer any interest in the Receivables (except for certain tax and
governmental and other statutory liens) being transferred to BCRC to any other
person; provided that after the Series 1994-1 Final Payment Date, BCRC may
remove Receivables from the Trust for the purpose of assigning or selling such
Receivables to a third party and may grant Participation Interests in the
Receivables. See "The Floorplan and Asset-Based Financing Business--
Participation Arrangements" and "Description of the Certificates--Removal of
Accounts and Assignment of Receivables." BCI also has covenanted to defend and
indemnify BCRC for any loss, liability or expense incurred by BCRC in
connection with a breach by BCI of certain of its representations, warranties
or covenants contained in the Receivables Purchase Agreement.
In addition, BCI has expressly acknowledged and consented to BCRC's
assignment of its rights relating to the Receivables under the Pooling and
Servicing Agreement to the Trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after the Trust
terminates. In addition, if BCI becomes party to any bankruptcy or similar
proceeding (other than as a claimant) and, if such proceeding
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either is voluntary or is involuntary and, in the case of an involuntary
proceeding, such involuntary proceeding is not dismissed within 60 days of its
institution, BCI will immediately cease to sell or transfer Receivables to
BCRC and will promptly give notice of such event to BCRC and the Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES AND CERTIFICATES
In connection with any Receivables sold or contributed and assigned by BCI
to BCRC, BCI represents and warrants that such transfer constitutes a valid
transfer and assignment to BCRC of all right, title and interest in and to the
Receivables and that, under the UCC (as in effect in Vermont), there exists in
favor of BCRC a valid, subsisting and enforceable first priority perfected
ownership interest in the Pool of Receivables transferred to BCRC. BCI also
represents and warrants with respect to any Receivables subsequently created
in the Accounts or Additional Accounts transferred to BCRC that there exists
in favor of BCRC a valid, subsisting and enforceable first priority perfected
ownership interest in all such Receivables subsequently created in such
Accounts or Additional Accounts on and after their creation. For a discussion
of BCRC's rights arising from these representations and warranties not being
satisfied, see "Description of the Certificates--Representations and
Warranties."
Each of BCI and BCRC have represented that the Receivables are either
"accounts" or "chattel paper" for purposes of the UCC as in effect in Vermont.
If the Receivables are deemed to be either accounts or chattel paper, the UCC
as in effect in Vermont applies and the transferee must (i) in the case of
Receivables that are deemed to be accounts, file an appropriate financing
statement or statements and (ii) in the case of Receivables that are deemed to
be chattel paper, either take possession of the chattel paper or file an
appropriate financing statement or statements, in order to perfect its
interest therein. Financing statements relating to the transfer of the
Receivables have been filed under the UCC as in effect in Vermont by BCI and
BCRC to perfect the interests of BCRC and the Trust, respectively, in the
Receivables. Continuation statements will be filed as required to continue the
perfection of such interests. The Receivables will not be stamped to indicate
the interest of BCRC or the Trust.
In addition, in connection with any Domestic Inventory Receivables conveyed
to the Trust BCI represents and warrants in the Receivables Purchase
Agreement, and BCRC represents and warrants in the Pooling and Servicing
Agreement, that except for certain liens permitted by the Pooling and
Servicing Agreement each such Domestic Inventory Receivable included in the
Pool Balance is and will be secured by a first priority perfected security
interest in the related Eligible Product and if Asset-Based Receivables are
included in the Trust, the obligations with respect thereto will be secured by
a first priority perfected security interest in goods, accounts, work in
process, raw materials, component parts or other assets of the Obligor.
However, when an Eligible Product is sold by an Obligor, BCI's security
interest in the Eligible Product will terminate in most instances. Therefore,
if an Obligor fails to remit to BCI amounts owed with respect to Eligible
Products that have been sold, the related Domestic Inventory Receivables may
no longer be secured by Eligible Products, although they may, in certain
circumstances, still be secured by the proceeds of such Eligible Products. In
the event that Asset-Based Receivables are included in the Trust, the same
issues discussed above with respect to Domestic Inventory Receivables may
exist with respect to Asset-Based Receivables.
There are certain limited circumstances under the UCC and applicable federal
law in which prior or subsequent transferees of Receivables could have an
interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables who gives new value and takes possession of the
instruments which evidence the Receivables (i.e., the chattel paper) in the
ordinary course of such purchaser's business may, under certain circumstances
(e.g., where the purchaser is without notice of any adverse claim), have
priority over the interest of the Trust in the Receivables. The failure to
stamp the Receivables to indicate the interest of BCRC and the Trust therein,
as described above, could support a claim by a subsequent purchaser of the
Receivables that such purchaser acted without notice of any claim by BCRC or
the Trust with respect to the Receivables. A tax or other government lien or
non-consensual lien on property of BCI or BCRC arising prior to the time a
Receivable is conveyed to the Trust may also have priority over the interest
of the Trust in such Receivable.
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Under the Receivables Purchase Agreement, in connection with any Receivables
sold or contributed and assigned by BCI to BCRC, BCI warrants to BCRC that the
Receivables have been transferred free and clear of the lien of any third party
except for tax and other statutory liens (including liens in favor of the
Pension Benefit Guaranty Corporation) and, after the Series 1994-1 Final
Payment Date, any Participation Interests. Under the Pooling and Servicing
Agreement, BCRC warrants to the Trust that, except for the conveyances
contemplated by the Pooling and Servicing Agreement, the Receivables have been
transferred to the Trust free and clear of the lien of any third party, except
for tax and other statutory liens (including liens in favor of the Pension
Benefit Guaranty Corporation) and after the Series 1994-1 Final Payment Date,
any Participation Interests. Each of BCI and BCRC also has covenanted that it
will not sell, pledge, assign, transfer or grant any lien on any Receivable
included in the Trust other than to BCRC and the Trust and except (i) for tax
and other statutory liens (including liens in favor of the Pension Benefit
Guaranty Corporation) and (ii) after the Series 1994-1 Final Payment Date, BCRC
and BCI may assign or participate out a portion of the Receivables. See
"Floorplan and Asset-Based Financing Business--Participation Arrangements" and
"Description of the Certificates--Removal of Accounts and Assignment of
Receivables." In addition, while BCI is the Servicer, cash collections on the
Receivables may be commingled with the funds of BCI prior to each Distribution
Date and, in the event of the bankruptcy of BCI, the Trust may not have a
perfected interest in such collections. In the event of such commingling, the
amount so commingled at any given time (and to which the Certificateholders
would otherwise be entitled) may exceed the amount distributable to
Certificateholders on the following Distribution Date.
BCRC has represented and warranted to the Trustee that the transfer of the
Receivables on the Initial Closing Date constitutes, and the transfer of BCRC's
right to any subsequent Receivables in the Accounts (and in any Additional
Accounts) will constitute, a valid transfer and assignment to the Trust of all
right, title and interest of BCRC in and to the Receivables, including any
additional Receivables thereafter created in the Accounts (and in any
Additional Accounts) (except for certain tax and governmental liens and
claims), all monies due or to become due thereon and, with certain exceptions,
the proceeds thereof which is effective as to each Receivable upon the transfer
thereof to the Trust.
Tax and certain other statutory liabilities, such as liabilities to the
Pension Benefit Guaranty Corporation relating to the underfunding of pension
plans of Bombardier Inc. or any of its subsidiaries including Bombardier
Corporation and BCI, can be asserted against the Depositor. To the extent that
any such liabilities arise after the transfer of Receivables to the Trust, the
Trust's interest in the Receivables would be prior to the interest of the
claimant with respect to any such liabilities. However, the existence of a
claim against the Depositor could permit the claimant to subject the Depositor
to an involuntary proceeding under the Bankruptcy Code or other Insolvency Law.
A case decided in 1993 by the United States Court of Appeals for the Tenth
Circuit concluded that accounts receivable sold by a debtor prior to a filing
for bankruptcy remain property of the debtor's bankruptcy estate. If, following
a bankruptcy of BCI or BCRC, a court were to follow the reasoning of the Tenth
Circuit, delays in distributions of collections on or in respect of the
Receivables could occur, and reductions (which, in certain circumstances, could
be substantial) in the amount of payments to Certificateholders could result.
CERTAIN MATTERS RELATING TO BANKRUPTCY
In connection with any Receivables sold or contributed and assigned by BCI to
BCRC under the Receivables Purchase Agreement, BCI warrants to BCRC in the
Receivables Purchase Agreement that the sale of such Receivables by it to BCRC
is a valid sale of such Receivables. In addition, BCI and BCRC have agreed to
treat the transfer of Receivables by BCI to BCRC under the Receivables Purchase
Agreement as a sale of the Receivables to BCRC, and BCI has or will take all
actions that are required under Vermont law to perfect BCRC's ownership
interest in the Receivables. Notwithstanding the foregoing, if BCI were to
become a debtor in a bankruptcy case and a bankruptcy trustee for BCI as
debtor-in-possession or a creditor of BCI were to take the position that the
sale of Receivables from BCI to BCRC under the Receivables Purchase Agreement
should be recharacterized as a pledge of such Receivables to secure a borrowing
by BCI, then delays in payments of collections of Receivables to BCRC could
occur or (should the court rule in favor of any such trustee, debtor in
possession or creditor) reductions (which, in certain circumstances, could be
substantial) in the amount of such payments could result.
88
In addition, if BCI were to become a debtor in a bankruptcy case and a
creditor or bankruptcy trustee of such debtor or such debtor itself were to
request a court to order that BCI should be substantively consolidated with
BCRC, delays in payments on the Receivables and, accordingly, the Certificates
could result. Should the bankruptcy court rule in favor of any such creditor,
bankruptcy trustee or such debtor, reductions (which, in certain circumstances
could be substantial) in the amount of such payments could result.
BCRC represents and warrants to the Trustee in connection with the transfer
of any Receivables to the Trust that the transfer of such Receivables to the
Trust and of BCRC's right to additional Receivables will constitute a valid
transfer and assignment to the Trust of all right, title and interest of BCRC
in and to the Receivables, including any additional Receivables thereafter
created (except for certain tax and government liens and claims), all monies
due or to become due thereon and, with certain exceptions, the proceeds
thereof which is effective as to each Receivable upon the transfer thereof to
the Trust.
BCRC's certificate of incorporation provides that BCRC is required to have
two independent directors and that it shall not file a voluntary application
for relief under Title 11 of the United States Code (the "Bankruptcy Code")
without the affirmative vote of its two independent directors. Pursuant to the
Pooling and Servicing Agreement, BCI, the Servicer and any Enhancement
Provider covenant that they will not at any time institute against BCRC any
bankruptcy, reorganization or other proceedings under any federal or state
bankruptcy or similar law. In addition, certain other steps have been taken to
avoid BCRC's becoming a debtor in a bankruptcy case. Notwithstanding such
steps, if BCRC were to become a debtor in a bankruptcy case, and a bankruptcy
trustee for BCRC or BCRC as debtor in possession or a creditor of BCRC were to
take the position that the transfer of the Receivables from BCRC to the Trust
should be recharacterized as a pledge of the Receivables, then delays in
payments on the Certificates or (should the court rule in favor of any such
trustee, debtor in possession or creditor) reductions (which, in certain
circumstances, could be substantial) in the amount of such payments could
result.
BCRC does not intend to file, and BCI has agreed that it will not cause BCRC
to file, a voluntary or involuntary petition for relief under the Bankruptcy
Code or any similar applicable state law with respect to BCRC so long as BCRC
is solvent and does not foresee becoming insolvent. If BCI were to become a
debtor under the Bankruptcy Code, the applicable bankruptcy court might hold
unenforceable or invalid BCI's agreement not to cause BCRC to file any such
petition and permit BCI as creditor of BCRC (on account of the Note issued by
BCRC to BCI as partial consideration for the transfer of the Receivables to
BCRC and on account of the related pledge of the Variable Funding Certificate
as security for the Note) to commence an involuntary petition against BCRC.
If BCI or BCRC were to become a debtor in a bankruptcy case causing an Early
Amortization Event to occur, then, pursuant to the Pooling and Servicing
Agreement and the Receivables Purchase Agreement, new Receivables would no
longer be transferred to BCRC by BCI and, pursuant to the Pooling and
Servicing Agreement, only collections on Receivables theretofore sold to BCRC
and transferred to the Trust would be available to be applied to pay interest
accruing on the Certificates and to pay the principal amount of the
Certificates. Under such circumstances, the Servicer is obligated to allocate
all principal collections on Receivables to the oldest principal balance
first. If such allocation method were to be altered by the bankruptcy court,
the rate of payment on the Certificates might be adversely affected. In
addition, distributions of principal on each Class A Certificate would not be
subject to the Class A Controlled Distribution Amount.
The occurrence of certain events of bankruptcy, insolvency or receivership
with respect to the Servicer will result in a Servicer Default, which Servicer
Default, in turn, will result in an Early Amortization Event. If no other
Servicer Default other than the commencement of such bankruptcy or similar
event exists, a bankruptcy trustee of the Servicer may have the power to
prevent either the Trustee or the Certificateholders from appointing a
successor Servicer.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain United States federal
income tax consequences relating to the purchase, ownership and disposition of
the Certificates. This discussion is based on current law, which is subject to
retroactive or prospective change, either of which could adversely affect the
tax consequences described herein. The discussion does not address all of the
tax consequences that may be relevant to a particular Certificateholder in
light of its own circumstances (for example, banks, insurance companies, tax-
exempt organizations and persons whose functional currency is not the U.S.
dollar), and some Certificateholders may be subject to special tax rules and
limitations not discussed herein. Prospective purchasers are urged to consult
their own tax advisors as to the federal, state, local, foreign and other tax
consequences to them of the purchase, ownership and disposition of the
Certificates.
CHARACTERIZATION OF THE CERTIFICATES AND THE TRUST
Although no transaction closely comparable to the issuance of the
Certificates has been the subject of any Treasury regulation, public ruling or
judicial decision, Morgan, Lewis & Bockius LLP, special U.S. tax counsel to
BCRC and the Trust ("Special U.S. Tax Counsel") is of the opinion that, for
federal income tax purposes, the Certificates will be characterized as
indebtedness of BCRC secured by the Receivables, and the Trust will be treated
as a mere security device. The Internal Revenue Service ("IRS") could assert
that the Certificates are not indebtedness but rather are an interest in the
nature of an equity interest and that the Trust is not a mere component of a
security device but rather is either a partnership (between BCRC and some or
all classes of Certificateholders) or a publicly traded partnership taxable as
a corporation (in which BCRC owns common stock and some or all classes of
Certificateholders own preferred stock).
Because BCRC will retain the benefits of ownership and most of the risk of
loss with respect to the Receivables, and the Certificateholders will be
entitled only to the payment of a fixed return on their investments and the
repayment of those investments (which payments and repayments will be
adequately secured by the Receivables, and other collateral to be held by the
Trust), Special U.S. Tax Counsel is of the opinion that the IRS would not
prevail in any attempt to characterize the Certificates as other than
indebtedness. Accordingly, notwithstanding that the transaction will be
treated as a sale of the Receivables for regulatory and financial accounting
purposes, Special U.S. Tax Counsel is of the opinion that such treatment will
not apply for U.S. federal income tax purposes.
POSSIBLE CHARACTERIZATION OF THE TRUST AS A PARTNERSHIP
If (contrary to the views expressed above) some or all classes of
Certificates were characterized as interests in the nature of equity
interests, then the Trust could be characterized as a partnership or a
publicly traded partnership ("PTP"). If the Trust were treated as a
partnership (other than a PTP taxable as a corporation), such partnership
would not be subject to federal income tax. Instead, each item of income,
gain, deduction and loss generated through the partnership's ownership and
servicing of the Receivables would be taken into account directly in computing
the taxable income of BCRC and the Certificateholders treated as partners, in
accordance with their respective ownership of the interests of such
partnership. The amount and timing of the items of income and deductions of
the Certificateholders could differ if the Certificates were held to
constitute partnership interests, rather than indebtedness of BCRC. In
addition, if the Trust were treated as a partnership, income derived from the
partnership by a Certificateholder that is a pension fund or other tax-exempt
entity treated as a partner may be treated as unrelated business taxable
income. Partnership characterization also may have adverse state and local
income or franchise tax consequences for a Certificateholder.
POSSIBLE CHARACTERIZATION OF THE TRUST AS A CORPORATION
If the Trust were treated in whole or in part as a partnership in which some
or all of the Certificateholders were treated as partners rather than holders
of indebtedness, that deemed partnership could be classified as a PTP taxable
as a corporation. In that event the Trust would be subject to federal income
tax at corporate rates on
90
the taxable income that the Trust derives from the Receivables. Such tax would
reduce the amounts available for distribution to the Certificateholders. Cash
distributions to the Certificateholders would be treated as dividends for tax
purposes to the extent of the Trust's earnings and profits (and, for corporate
Certificateholders, eligible for the dividends received deduction, subject to
limitations). Moreover, the amounts available for distribution to
Certificateholders would be substantially diminished by the taxes imposed on
the Trust.
The remainder of this section assumes that, for U.S. federal income tax
purposes, the Certificates will be characterized as indebtedness of BCRC
secured by the Receivables. BCRC and the Certificateholders have agreed to
treat the Certificates as indebtedness for federal income tax purposes and
neither the Trustee nor BCRC will comply with the reporting requirements
applicable to corporations, PTPs or partnerships.
TAXATION OF INTEREST INCOME TO CERTIFICATEHOLDERS
General. In general, stated interest, original issue discount and market
discount received or accrued on a Certificate will be ordinary income, and
principal payments on a Certificate will be a return of capital to the extent
of the Certificateholder's basis in the Certificate allocable to those
payments. A holder of a Certificate issued with original issue discount must
use the accrual method of accounting with respect to original issue discount
accruing on such Certificate regardless of its regular method of accounting.
Original Issue Discount. It is not anticipated that the Certificates will be
issued with original issue discount ("OID"). However, because the failure to
pay interest currently on the Certificates does not give rise to any remedy to
compel payment, the IRS may take the position on the basis of Treasury
regulations that all of the interest payments on the Certificates should be
treated as payments of principal and the Certificates should be treated as
having OID. A holder of a Certificate having OID generally must include OID in
ordinary income as it accrues in advance of receipt of the cash attributable
to the discount, regardless of the holder's regular method of accounting.
The amount of OID on a Certificate is the excess of its "stated redemption
price at maturity" over its "issue price." The issue price of a Certificate in
a particular class is the price at which a substantial amount of the
Certificates of that class are first sold to the public. The stated redemption
price at maturity of a Certificate is the total of all payments on the
Certificate other than "qualified stated interest" payments. A qualified
stated interest payment generally is stated interest that is unconditionally
payable in cash or in property at least annually at a single fixed rate, a
single objective rate or one or more qualified floating rates.
A Certificateholder generally must include in gross income for any taxable
year the sum of the "daily portions" of the OID that occur on the Certificate
for each day during the Certificateholder's taxable year on which the
Certificate is held. A calculation will be made of the portion of the OID that
accrues on each Certificate during each "accrual period," which in general is
the period corresponding to the period between Distribution Dates. The OID
accruing during any accrual period is divided by the number of days in the
period to determine the daily portion of OID for each day in the period. The
amount of OID that accrues in each year will be computed under a constant
yield method, with the consequence that a United States holder will include in
gross income progressively larger amounts of OID over time.
Market Discount A Certificateholder who purchases a Certificate at more than
a de minimis discount may be subject to the "market discount" rules of Section
1276 through 1278 of the Code. These rules provide, in part, that gain on the
sale or other disposition of a Certificate and partial principal payments on a
Certificate are treated as ordinary income to the extent of accrued market
discount. The market discount rules also provide for deferral of a portion of
interest deductions with respect to debt incurred to purchase or carry a
Certificate that has market discount. Alternatively, a Certificateholder may
elect to include market discount in income as it accrues in lieu of the tax
treatment described in the two preceding sentences.
Market Premium. A Certificateholder who purchases a Certificate at a premium
price may elect to offset the premium against interest income over the
remaining term of the Certificate in accordance with the provisions of Section
171 of the Code.
91
SALE OR EXCHANGE OF CERTIFICATES
Upon a sale of a Certificate, a Certificateholder generally will recognize
gain or loss equal to the difference between the amount realized on the sale
or exchange and the Certificateholder's adjusted basis in the Certificate. The
adjusted basis in the Certificate will equal its cost, increased by any OID or
market discount includible in income with respect to the Certificate prior to
its sale, and reduced by any principal payments previously received with
respect to the Certificate and any amortized premium. Generally, gain or loss
will be capital gain or loss if the Certificate was held as a capital asset,
and will be long-term gain or loss if held for more than one year. Generally,
capital losses may be used only to offset capital gains.
FOREIGN INVESTORS
In general, a Certificateholder that is not (A) a citizen or resident of the
United States, (B) a domestic partnership, (C) a domestic corporation, (D) a
domestic estate or domestic trust or (E) any other person or entity whose
income in respect of a Certificate is "effectively connected" with a United
States trade or business (a "non-U.S. Certificateholder") will not be subject
to U.S. federal income tax on interest (including original issue discount) on
a Certificate unless the non-U.S. Certificateholder is a direct or indirect 10
percent or greater shareholder of, or a controlled foreign corporation related
to, BCRC. To qualify for the exemption from taxation, the last U.S. Person in
the chain of payment prior to payment to a non-U.S. Certificateholder (the
"Withholding Agent") must have received (in the year in which a payment of
interest or principal occurs, or in either of the two preceding years) a
statement that (i) is signed by the non-U.S. Certificateholder under penalties
of perjury, (ii) certifies that the non-U.S. Certificateholder is not a U.S.
Person and (iii) provides the name and address of the non-U.S.
Certificateholder. The statement may be made on an IRS Form W-8 or
substantially similar substitute form, and the non-U.S. Certificateholder must
inform the Withholding Agent of any change in the information on the statement
within 30 days of the change. If a Certificate is held through a securities
clearing organization or certain other financial institutions, the
organization or institution may provide a signed statement to the Withholding
Agent. However, in that case, the signed statement must be accompanied by an
IRS Form W-8 or substitute form provided by the non-U.S. Certificateholder to
the organization or institution holding the Certificate on behalf of the non-
U.S. Certificateholder.
Generally, any gain or income realized by a non-U.S. Certificateholder upon
retirement or disposition of a Certificate will not be subject to U.S. federal
income tax, provided that (i) in the case of a Certificateholder that is an
individual, such Certificateholder is not present in the United States for 183
days or more during the taxable year in which such retirement or disposition
occurs (or satisfies a "substantial presence" test for such year) and (ii) in
the case of gain representing accrued interest, the conditions described in
the preceding paragraph for exemption from withholding are satisfied. Certain
exceptions may be applicable, and an individual non-U.S. Certificateholder
should consult a tax adviser.
A Certificate will not be includible in the estate of a non-U.S.
Certificateholder unless the non-U.S. Certificateholder is a direct or
indirect 10 percent or greater shareholder of BCRC.
If the Certificates were treated as an interest in a partnership, the
recharacterization could cause a non-U.S. Certificateholder to be treated as
engaged in a trade or business in the United States. In that event, the non-
U.S. Certificateholder would be required to file a federal income tax return
and, in general, would be subject to U.S. federal income tax (including the
branch profits tax) on its net income from the partnership. Further, certain
withholding obligations apply with respect to income allocable or
distributions made to a foreign partner. That withholding may be at a rate as
high as 39.6 percent. If the Certificates were treated as stock in a
corporation, distributions to a non-U.S. Certificateholder, to the extent
treated as dividends, generally would be subject to withholding of tax at the
rate of 30 percent, unless that rate were reduced by an applicable tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under certain circumstances interest (including OID), principal or proceeds
of the sale of a Certificate may be subject to information reporting or to
"backup withholding" of United States federal income tax at a 31%
92
rate. Information reporting and backup withholding generally do not apply to
corporations and certain other exempt recipients, which may be required to
establish their exempt status. Backup withholding generally applies if, among
other circumstances, a non-exempt United States person holding a Certificate
fails to furnish that person's correct social security number or other
taxpayer identification number. Information reporting and backup withholding
generally do not apply to a non-United States person holding a Certificate who
satisfies the applicable identification requirements.
STATE AND LOCAL TAXATION
The discussion above does not address the tax consequences of purchase,
ownership or disposition of the Certificates under any state or local tax law.
Investors should consult their own tax advisers regarding state and local tax
consequences.
ALL INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE
FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR ESTATE TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE CERTIFICATES.
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
Section 406 of ERISA and section 4975 of the Internal Revenue Code of 1986,
as amended (the "Code"), prohibit certain pension, profit sharing or other
employee benefit plans, individual retirement accounts or annuities and
employee annuity plans (collectively, "Benefit Plans") from engaging in
certain transactions involving "plan assets" with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect to
the Benefit Plan. A violation of these "prohibited transaction" rules may
generate excise tax and other liabilities under ERISA and the Code for such
persons.
A possible violation of the prohibited transaction rules could occur if the
Certificates were to be purchased with assets of, and held by, any Benefit
Plan if BCRC, the Trustee, the Underwriter or any of their affiliates were a
"fiduciary" or other "party in interest" or a "disqualified person," with
respect to such Benefit Plan. BCRC, the Trustee, the Underwriter and their
affiliates are "parties in interest" or "disqualified persons" with respect to
many Benefit Plans. Prior to the purchase of a Certificate, the fiduciary of
any Benefit Plan should consider whether a prohibited transaction might arise
by virtue of the relationship between the Benefit Plan and BCRC, the Trustee,
the Underwriter or any affiliate of any thereof and, if so, should consult
counsel regarding the purchase. The Department of Labor (the "DOL") has issued
three class exemptions that may apply to otherwise prohibited transactions
arising from the purchase or holding of the Certificates: DOL Prohibited
Transaction Exemption 84-14 (Class Exemption for Plan Asset Transactions
Determined by Independent Qualified Professional Asset Managers), 91-38 (Class
Exemption for Certain Transactions Involving Bank Collective Investment Funds)
and 90-1 (Class Exemption for Certain Transactions Involving Insurance Company
Pooled Separate Accounts).
Other prohibited transactions may arise through the operation of a
regulation (the "Plan Asset Regulation") issued by the DOL. Under certain
circumstances, the Plan Asset Regulation treats the assets of an entity in
which a Benefit Plan has an equity interest as assets of such Benefit Plan. An
equity interest is defined as an interest in an entity other than an
instrument treated as debt under applicable local law and that has no
substantial equity features. Although BCRC and the Certificateholders have
agreed to treat the Certificates as debt instruments for federal income tax
purposes, the Certificates may be considered equity interests in the Trust for
purposes of the Plan Asset Regulation. In such a case, unless one of the two
exceptions described below applies, the Plan Asset Regulation may apply to
treat assets of the Trust as assets of an investing Benefit Plan. If the Plan
Asset Regulation were to apply so that the Trust is considered to hold "plan
assets," transactions involving the Trust and "parties in interest" or
"disqualified persons" with respect to a Benefit Plan that is a
Certificateholder, or the acquisition or holding of the Certificates by a
Benefit Plan, might be prohibited under Section 406 of ERISA and section 4975
of the Code unless an exemption is applicable. The three DOL class exemptions
mentioned above may not provide relief for all transactions involving the
Trust's assets even if they would otherwise be applicable to the purchase of a
Certificate by a Benefit Plan.
93
The first exception applies if equity participation in the entity by
"benefit plan investors" (i.e., Benefit Plans and other plans not subject to
ERISA, such as governmental plans, as well as entities holding assets deemed
to be plan assets) is not "significant." Equity participation in an entity by
benefit plan investors is not significant on any date on which the
Certificates are issued and outstanding if, immediately after the most recent
acquisition of any equity interest in the entity, less than 25% of the value
of each class of beneficial interests in the entity (excluding interests held
by BCRC, the Trustee or their affiliates) is held by benefit plan investors.
No assurance can be given by BCRC or the Underwriter as to whether the value
of any class of beneficial interests in the Trust held by benefit plan
investors will be less than that amount at the completion of the offering or
thereafter and no monitoring or other measures will be taken with respect to
the satisfaction of the conditions to this exception.
The second exception applies to a "publicly-offered security." A publicly-
offered security is a security that is (a) freely transferable, (b) part of a
class of securities that is owned, immediately subsequent to the initial
offering, by 100 or more investors independent of the issuer and of one
another and (c) either is (i) part of a class of securities registered under
section 12(b) or 12(g) of the Exchange Act or (ii) sold to the plan as part of
an offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or
such later time as may be allowed by the Commission) after the end of the
fiscal year of the issuer during which the offering of such securities to the
public occurred. Each of the Class A Certificates and the Class B Certificates
should be deemed a "class" of securities that would be tested separately from
any other securities that may be issued by the Trust. There are no
restrictions imposed on the transfer of the Class A Certificates and the Class
B Certificates and the Certificates will be sold as part of an offering
pursuant to an effective registration statement under the Securities Act and
then will be timely registered under the Exchange Act. However, the
Underwriter does not expect that the Class B Certificates will be held by 100
persons at the conclusion of the offering. Therefore, since no exception under
the Plan Asset Regulation is readily available, Benefit Plans, or any entity
using the assets of a Benefit Plan, will be prohibited from purchasing the
Class B Certificates. The Underwriter will notify the Trustee as to whether or
not the Class A Certificates will be held by 100 independent persons at the
conclusion of the offering. If so, then Benefit Plans, or any entity using the
assets of a Benefit Plan, will not be prohibited from purchasing the Class A
Certificates (although BCRC will not determine whether the 100-investor
requirement of the second exception is satisfied). If not, then Benefit Plans,
or any entity using the assets of a Benefit Plan, will be prohibited from
purchasing the Class A Certificates.
Fiduciaries of a Benefit Plan considering the purchase of Certificates
should consult their own counsel regarding whether the assets of the Trust
which are represented by the Certificates would be considered plan assets, the
consequences that would apply if the Trust's assets were considered plan
assets and the possibility of exemptive relief from the prohibited transaction
rules. Prospective investors that are insurance companies should consider the
impact of the 1993 Supreme Court decision in John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank, pursuant to which general
account assets of an insurance company may be treated as assets of Benefit
Plans subject to ERISA under certain circumstances.
Finally, fiduciaries of a Benefit Plan should consider the fiduciary
standards under ERISA or other applicable law in the context of the Benefit
Plan's particular circumstances before authorizing an investment of a portion
of a Benefit Plan's assets in the Certificates. Accordingly, among other
factors, such fiduciaries should consider whether the investment (i) satisfies
the diversification requirement of ERISA or other applicable law, (ii) is in
accordance with the Benefit Plan's governing instruments and (iii) is prudent
considering the "Risk Factors" and other factors discussed in this Prospectus.
94
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among the
Depositor, BCI and the underwriters named below (the "Underwriters") relating
to the Certificates (the "Underwriting Agreement"), the Depositor has agreed
to sell to the Underwriters, and each Underwriter has agreed to purchase the
principal amount of Class A and Class B Certificates set forth opposite its
name below.
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF CLASS A CERTIFICATES OF CLASS B CERTIFICATES
----------- ----------------------- -----------------------
J.P. Morgan Securities Inc. .. $ $
CS First Boston Corporation...
Merrill Lynch, Pierce, Fenner
& Smith
Incorporated.............
----------- -----------
Total....................... $ $
=========== ===========
The Underwriters propose to offer the Certificates in part directly to
purchasers at the initial public offering price set forth on the cover page of
this Prospectus and in part to certain securities dealers at such prices less
concessions not to exceed, in the case of the Class A Certificates, % of the
principal amount thereof and, in the case of the Class B Certificates, % of
the principal amount thereof. The Underwriters may allow, and such dealers may
reallow, concessions not to exceed, in the case of the Class A Certificates,
% of the principal amount thereof and, in the case of the Class B
Certificates, % of the principal amount thereof, to certain brokers and
dealers. After the Class A and Class B Certificates are released for sale to
the public, the offering price and other selling terms may be varied by the
Underwriters.
The Underwriting Agreement provides that BCI and the Depositor will
indemnify the Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, or contribute to payments the Underwriters
may be required to make in respect thereof. The Underwriters have agreed to
reimburse BCI and the Depositor for certain expenses of the issuance and
distribution of the Certificates.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the Trust by
Morgan, Lewis & Bockius LLP, New York, New York and for the Underwriters by
Orrick, Herrington & Sutcliffe LLP, Washington, D.C. Certain federal income
tax matters will be passed upon for the Depositor and the Trust by Morgan,
Lewis & Bockius LLP, New York, New York.
95
INDEX OF DEFINED TERMS
TERMS PAGE
- ----- ---------
Accounts.............................................................. 1, 57
Addition Date......................................................... 53
Additional Accounts................................................... 57
Additional Cut-Off Date............................................... 53
Adjusted Invested Amount.............................................. 63
Adjustment Date....................................................... 44
Adjustment Payment.................................................... 74
Amendment Number 1.................................................... 43
Amortization Period................................................... 14
Appointment Date...................................................... 53
Asset-Based Receivables............................................... 5, 29
Automatic Addition Condition.......................................... 57
Available Investor Principal Collections.............................. 72
Available Retained Collections........................................ 65
Available Retained Non-Principal Collections.......................... 65
Available Retained Principal Collections.............................. 66
Available Subordinated Amount......................................... 17, 67
Bankruptcy Code....................................................... 21, 89
BCI................................................................... 1, 3
BCI Domestic Inventory Portfolio...................................... 29
BCRC.................................................................. 1, 3, 27
BCRC Certificate...................................................... 50
Benefit Plans......................................................... 93
Calculation Agent..................................................... 45
Cede.................................................................. 2, 44
Cedel................................................................. 8
Cedel Participants.................................................... 47
Certificate Owners.................................................... 2, 26
Certificate Rate...................................................... 7
certificateholders.................................................... 6
Certificateholders.................................................... 26
Certificates.......................................................... 1, 3
Citibank.............................................................. 8, 48
Class A Amortization Date............................................. 12, 73
Class A Amortization Period Length.................................... 73
Class A Carry-Over Amount............................................. 75
Class A Certificate Rate.............................................. 7, 44
Class A Certificates.................................................. 1, 3
Class A Controlled Amortization Amount................................ 12, 73
Class A Controlled Distribution Amount................................ 73
Class A Expected Final Payment Date................................... 12, 73
Class A Monthly Interest.............................................. 67
Class B Carry-Over Amount............................................. 75
Class B Certificate Rate.............................................. 7, 44
Class B Certificates.................................................. 1, 3
Class B Expected Payment Date......................................... 7, 12, 73
Class B Monthly Interest.............................................. 67
Closing Date.......................................................... 7
Code.................................................................. 93
96
TERMS PAGE
- ----- --------
Collateral Security.................................................... 4
Collection Account..................................................... 60
Collection Period...................................................... 9
Commission............................................................. 2
Cooperative............................................................ 48
Daily Allocation....................................................... 65
Defaulted Agreement.................................................... 76
Defaulted Amount....................................................... 73
Defaulted Receivables.................................................. 73
Deficiency Amount...................................................... 67
Definitive Certificates................................................ 49
Delayed Amendments..................................................... 19, 84
Deposit Date........................................................... 65
Depositaries........................................................... 8, 48
Depositary............................................................. 48
Depositor.............................................................. 1, 3, 27
Depository............................................................. 44
Designated Balance..................................................... 59
Designated Manufacturer Overconcentrations............................. 68
Designated Manufacturer................................................ 68
Determination Date..................................................... 54
Distribution Date...................................................... 9
Distribution Date Statement............................................ 81
DOL.................................................................... 93
Domestic Inventory Receivables......................................... 5, 29
DTC.................................................................... 2
Early Amortization Event............................................... 74
Early Amortization Period.............................................. 14
Eligible Account....................................................... 55
Eligible Deposit Account............................................... 60
Eligible Institution................................................... 61
Eligible Investments................................................... 61
Eligible Obligor....................................................... 55
Eligible Products...................................................... 5
Eligible Receivable.................................................... 55
Enhancement............................................................ 4
Enhancement Provider................................................... 54
ERISA.................................................................. 20
Euroclear.............................................................. 8
Euroclear Operator..................................................... 48
Euroclear Participants................................................. 47
Excess Funded Amount................................................... 13, 61
Excess Funding Account................................................. 13
Excess Principal Collections........................................... 64
Excess Reserve Fund Required Amount.................................... 71
Excess Retained Percentage............................................. 66
Excess Servicing....................................................... 70
Exchange Act........................................................... 2
First Notice........................................................... 76
Floating Allocation Percentage......................................... 63
Holders................................................................ 49
97
TERMS PAGE
- ----- ----------
Incremental Subordinated Amount...................................... 68
Index Maturity....................................................... 44
Indirect Participants................................................ 47
Industry Overconcentrations.......................................... 69
Ineligible Receivable................................................ 57
Initial Amortization Period.......................................... 13, 15
Initial Closing Date................................................. 52
Initial Cut-Off Date................................................. 3
Initial Principal Amount............................................. 6
Initial Principal Payment Date....................................... 13
Insolvency Laws...................................................... 27
Interest Period...................................................... 11, 44
Invested Amount...................................................... 63
Investment Proceeds.................................................. 70
investor certificateholders.......................................... 6
Investor Charge-Off.................................................. 74
Investor Default Amount.............................................. 73
Investor Non-Principal Collections................................... 70
IRS.................................................................. 90
LIBOR................................................................ 44
Liquidation Event.................................................... 25, 76
London Business Day.................................................. 45
Manufacturer Overconcentrations...................................... 68
Miscellaneous Payments............................................... 63
Monthly Interest..................................................... 67
Monthly Payment Rate................................................. 76
Monthly Principal.................................................... 73
Monthly Servicing Fee................................................ 79
Morgan............................................................... 8, 48
Net Receivables Rate................................................. 11, 44
Net Servicing Fee.................................................... 79
Net Servicing Fee Rate............................................... 79
New Issuance......................................................... 8
Non-Principal Collections............................................ 6
non-U.S. Certificateholder........................................... 92
Note................................................................. 85
Obligor Overconcentrations........................................... 68
Obligors............................................................. 5
OID.................................................................. 91
Origination Period................................................... 56
Overconcentration Amount............................................. 69
Participants......................................................... 46
Participation Interest............................................... 3, 35
Plan Asset Regulation................................................ 93
Pool................................................................. 1
Pool Available Subordinated Amount................................... 63
Pool Balance......................................................... 9
Pool Invested Amount................................................. 63
Pooling and Servicing Agreement...................................... 3, 43
Pre-Allocated Invested Amount........................................ 10, 26, 63
Principal Allocation Percentage...................................... 6, 63
98
TERMS PAGE
- ----- --------
Principal Collections.................................................. 6
Principal Shortfalls................................................... 64
Principal Terms........................................................ 51
PTP.................................................................... 90
Rating Agency.......................................................... 26
Rating Agency Condition................................................ 58
Receivables............................................................ 1
Receivables Purchase Agreement......................................... 6, 85
Record Date............................................................ 46
Registration Statement................................................. 2
Removal Commencement Date.............................................. 59
Removal Notice......................................................... 59
Removal Termination Date............................................... 59
Removed Accounts....................................................... 59
Required Investor Percentage........................................... 59
Required Pool Balance.................................................. 58
Required Subordinated Amount........................................... 67
Required Subordination Draw Amount..................................... 67
Reserve Fund........................................................... 17, 71
Reserve Fund Deposit Amount............................................ 71
Reserve Fund Required Amount........................................... 71
Retained Interest...................................................... 50
Retained Participation Amount.......................................... 50
Retained Percentage.................................................... 66
Revolving Period....................................................... 14
RPA Amendment Number 1................................................. 85
SAU.................................................................... 73
Second Notice.......................................................... 76
Securities Act......................................................... 2
Series................................................................. 2
Series Cut-Off Date.................................................... 4
Series 1994-1 Certificates............................................. 8
Series 1994-1 Final Payment Date....................................... 19
Series 1996-1 Certificates............................................. 8
Series 1997-1 Available Retained Collections........................... 66
Series 1997-1 Investor Allocation Percentage........................... 63
Series 1997-1 Required Balance......................................... 58
Series 1997-1 Supplement............................................... 3
Series 1997-1 Termination Date......................................... 13
Series Issuance Date................................................... 51
Service Transfer....................................................... 80
Servicer............................................................... 1, 3, 43
Servicer Default....................................................... 80
Servicing Fee.......................................................... 79
Servicing Fee Rate..................................................... 79
Special U.S. Tax Counsel............................................... 90
Specified Obligors..................................................... 68
Subordinated Percentage................................................ 68
Supplement............................................................. 8, 50
Supplemental Certificate............................................... 52
99
TERMS PAGE
- ----- --------
Tax Opinion........................................................... 51
Telerate Page 3750.................................................... 45
Termination Date...................................................... 77
Terms and Conditions.................................................. 48
Transfer Date......................................................... 53
Transfer Deposit Amount............................................... 54
Trust................................................................. 1, 3
Trustee............................................................... 1, 3, 43
UCC................................................................... 21
Unallocated Principal Collections..................................... 64
Underwriters.......................................................... 95
Underwriting Agreement................................................ 95
Variable Funding Amount............................................... 11
Variable Funding Certificate.......................................... 50
Variable Funding Interest............................................. 50
Variable Funding Percentage........................................... 66
Withholding Agent..................................................... 92
100
ANNEX I
PRIOR SERIES
The Certificates will be the third Series to be issued by the Trust. The
table below summarizes certain of the principal characteristics of the Series
1994-1 Certificates and the Series 1996-1 Certificates, the other Series
heretofore issued by the Trust and outstanding. "LIBOR," as used below in
connection with the Series 1994-1 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 1994-1
Certificates and "Net Receivables Rate," as used below in connection with the
Series 1994-1 Certificates shall have the meaning set forth in the Supplement
relating to the Series 1994-1 Certificates.
SERIES 1994-1
Initial Principal Amount................. $400,000,000
Principal Amount as of December 31,
1996.................................... $211,750,000
Controlled Amortization Commencement
Date.................................... September 1996
Class A Interest Rate.................... Lesser of (i) One month LIBOR plus
0.20% and (ii) Net Receivables Rate
Class B Interest Rate.................... 5.20% per annum
Series 1994-1 Termination Date........... April 15, 1999
Series Issuance Date..................... January 24, 1994
Series Servicing Fee Rate................ 2%
Initial Available Subordination Amount... $32,758,621
SERIES 1996-1
Initial Principal Amount................. $100,000,000
Principal Amount as of December 31,
1996.................................... $400,000,000
Controlled Amortization Commencement
Date.................................... June 1997
Class A Certificate Rate................. Commercial Paper Rate
Series 1996-1 Termination Date........... May 17, 1999
Series 1996-1 Issuance Date.............. May 14, 1996
Series Servicing Fee Rate................ 2%
Initial Available Subordinated Amount.... $23,616,900
I-1
ANNEX II
RECEIVABLES IN ADDITIONAL ACCOUNTS CONVEYED TO THE TRUST BY BCRC
PRINCIPAL
AMOUNT OF
DATE RECEIVABLES RELEVANT NUMBER RECEIVABLES
ASSIGNMENT TRANSFERRED TO CUT OFF OF ADDITIONAL IN ADDITIONAL
NUMBER TRUST DATE ACCOUNTS ACCOUNTS
---------- ------------------ ------------------ ------------- -------------
1............ September 30, 1994 September 26, 1994 277 $28,569,849
2............ January 30, 1996 January 18, 1996 610 $86,817,128
II-1
ANNEX III
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Certificates
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold such Global Securities through any of The
Depository Trust Company ("DTC"), Cedel or Euroclear. The Global Securities
will be tradeable as home market instruments in both the European and U.S.
domestic markets. Initial settlements and all secondary trades will settle in
same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations and prior asset-backed certificates issues.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of Cedel and Euroclear (in
such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to prior asset-backed certificates issues.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior asset-
backed certificates issues in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
III-1
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last Distribution Date
(or if the transfer is prior to the first Distribution Date, the Closing Date)
to and excluding the settlement date, on the basis of actual days elapsed and
a year of 360 days. Payment will then be made by the respective Depositary of
the DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear Participant's
account. The securities credit will appear the next day (European time) and
the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the Cedel or Euroclear cash debt
will be valued instead as of the actual settlement date.
Cedel 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 Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel 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, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited
to their accounts. However, interest on the Global Securities would accrue
from the value date. Therefore, in many cases the investment income on the
Global Securities earned during that one-day period may substantially reduce
or offset the amount of such overdraft charges, although this result will
depend on each Cedel Participant's or Euroclear Participant's particular cost
of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC Participant a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through
the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases,
Cedel or Euroclear will instruct the respective Depositary, as appropriate, to
deliver the Global Securities to the DTC Participant's account against
payment. Payment will include interest accrued on the Global Securities from
and including the last Distribution Date (or if the transfer is prior to the
first Distribution Date, the Closing Date) to and excluding the settlement
date on the basis of actual days elapsed and a year of 360 days. The payment
will then be reflected in the account of the Cedel Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedel
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 Cedel 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 Cedel Participant's or Euroclear
Participant's account would instead be valued as of the actual settlement
date.
III-2
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel 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:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments
of interest (including original interest discount) on registered debt issued
by U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business in the chain of intermediaries between such beneficial owner
and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons generally can obtain a complete exemption
from the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are Certificate Owners residing in a
country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless
the filer alternatively files Form W-8. Form 1001 may be filed by the
Certificate Owner or his agent.
Exemption of U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States, any state thereof, or any political subdivision of either
III-3
(including the District of Columbia), or (iii) an estate or trust the income
of which is includible in gross income for United States tax purposes
regardless of its source. This summary does not deal with all aspects of U.S.
Federal income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
The Internal Revenue Service has recently proposed new regulations that
would revise some aspects of the current system for withholding on amounts
paid to foreign persons. Under these proposed regulations, interest or
original issue discount paid or deemed paid to a nonresident alien would
continue to be exempt from United States withholding taxes (including backup
withholding) provided that the holder complies with the new certification
procedures.
III-4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY BCRC OR THE UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SE-
CURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAW-
FUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIV-
ERY OF THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY CIRCUM-
STANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS COR-
RECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
-----
Available Information................................................... 2
Reports to Certificateholders........................................... 2
Prospectus Summary...................................................... 3
Risk Factors............................................................ 21
The Depositor and The Trust............................................. 27
Use of Proceeds......................................................... 28
The Floorplan and Asset-Based Financing Business........................ 28
The Accounts............................................................ 35
Bombardier Capital Inc.................................................. 41
Maturity and Principal Payment Considerations........................... 42
Description of the Certificates......................................... 43
Amendments to Pooling and Servicing Agreement and Receivables Purchase
Agreement.............................................................. 84
Description of the Receivables Purchase Agreement....................... 85
Certain Legal Aspects of the Receivables................................ 87
Certain Federal Income Tax Consequences................................. 90
Employee Benefit Plan Considerations.................................... 93
Underwriting............................................................ 95
Legal Matters........................................................... 95
Index of Defined Terms.................................................. 96
Annex I................................................................. I-1
Annex II................................................................ II-1
Annex III............................................................... III-1
UNTIL APRIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS WHEN ACTING AS UN-
DERWRITERS, AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$400,000,000 FLOATING RATE
CLASS A ASSET BACKED
CERTIFICATES, SERIES 1997-1
$27,125,000 FLOATING RATE
CLASS B ASSET BACKED
CERTIFICATES, SERIES 1997-1
BOMBARDIER RECEIVABLES
MASTER TRUST I
BOMBARDIER CREDIT
RECEIVABLES CORPORATION
DEPOSITOR
BOMBARDIER CAPITAL INC.
SERVICER
---------------------------------------
PROSPECTUS
---------------------------------------
J.P. MORGAN & CO.
CS FIRST BOSTON
MERRILL LYNCH & CO.
JANUARY , 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with the
offering of the Certificates being registered under this Registration
Statement, other than underwriting discounts and commissions:
SEC Registration Fee........................................ $129,431.82*
Printing and Engraving...................................... $ 50,000.00
Legal Fees and Expenses..................................... $300,000.00
Trustee Fees and Expenses................................... $ 15,000.00
Blue Sky Fees and Expenses.................................. $ 5,000.00
Rating Agency Fees.......................................... $200,000.00
Miscellaneous............................................... $ 10,000.00
-----------
Total..................................................... $709,431.82
===========
- --------
* Actual
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article XII 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 or 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 the Registrant 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 one Series of asset backed certificates in a
transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act. On May 14, 1996, BCRC sold by
private placement to an institutional investor $100,000,000 initial principal
amount of Class A Certificates, Series 1996-1.
II-1
ITEM 16. EXHIBITS.
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 Form of Series 1997-1 Supplement
4.3 Variable Funding Supplement
4.4 Receivables Purchase Agreement
4.5 Form of Amendment Number 1 to Pooling and Servicing Agreement
4.6 Form of Amendment Number 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 hereof)
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 8.1 hereof)
24.1 Powers of Attorney*
99.1 Form of Inventory Security Agreement
- --------
* 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
this registration statement in reliance upon Rule 430A and contained in a
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 shall be deemed to be the initial bona fide offering thereof.
II-2
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
BURLINGTON, STATE OF VERMONT, ON THE 9TH DAY OF JANUARY, 1997.
Bombardier Credit Receivables
Corporation
By: /s/ Blaine Filthaut
--------------------------------
NAME:BLAINE FILTHAUT
TITLE:VICE PRESIDENT AND TREASURER
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 9TH DAY OF JANUARY, 1997.
SIGNATURES TITLE
---------- -----
Pierre-Andre Roy* President and Director
- ------------------------------------- (Principal Executive
PIERRE-ANDRE ROY Officer)
/s/ Blaine Filthaut Vice President and
- ------------------------------------- Treasurer (Principal
BLAINE FILTHAUT Financial and
Accounting Officer)
William P. Brady* Vice President and
- ------------------------------------- Director
WILLIAM P. BRADY
Paul H. Larose* Director
- -------------------------------------
PAUL H. LAROSE
Director
- -------------------------------------
DONALD L. RUSHFORD
Director
- -------------------------------------
MARGARET L. MONTGOMERY
Jean Rivard* Director
- -------------------------------------
JEAN RIVARD
*By: /s/ Blaine Filthaut
- -------------------------------------
BLAINE FILTHAUT
ATTORNEY-IN-FACT
NOTE: Powers of Attorney appointing Blaine Filthaut 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
REGISTRATION STATEMENT NO. 333-14431
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
EXHIBITS
TO
FORM S-1
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
BOMBARDIER CREDIT RECEIVABLES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBITS NUMBERED
NUMBER PAGE
-------- ------------
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 Form of Series 1997-1 Supplement........................
4.3 Variable Funding Supplement.............................
4.4 Receivables Purchase Agreement..........................
4.5 Form of Amendment Number 1 to Pooling and Servicing
Agreement..............................................
4.6 Form of Amendment Number 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 hereof)....................................
23.2 Consent of Morgan, Lewis & Bockius LLP (included in
Exhibit 8.1 hereof)....................................
24.1 Power of Attorney*......................................
99.1 Form of Inventory Security Agreement....................
- --------
* Previously Filed.