<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
----------------
BOMBARDIER RECEIVABLES MASTER TRUST I
(ISSUER WITH RESPECT TO CERTIFICATES)
----------------
BOMBARDIER CREDIT RECEIVABLES CORPORATION
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
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)
----------------
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)
----------------
WITH COPIES TO:
ANDREW W. NELSON PAUL WEIFFENBACH
MORGAN, LEWIS & BOCKIUS LLP ORRICK, HERRINGTON & SUTCLIFFE LLP
101 PARK AVENUE 1150 18TH STREET, N.W.
NEW YORK, NY 10178 WASHINGTON, D.C. 20036
----------------
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. [_]
----------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
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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<S> <C> <C> <C> <C>
Asset Backed
Certificates.......... $1,000,000 100% $1,000,000 $303.03
</TABLE>
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*Estimated for the purpose of calculating the registration fee.
----------------
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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<PAGE>
CROSS REFERENCE SHEET TO FORM S-1
<TABLE>
<CAPTION>
ITEM AND CAPTION IN FORM S-1 CAPTION OR LOCATION IN PROSPECTUS
---------------------------- ---------------------------------
<C> <S> <C>
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 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 Depository
and the Trust; The Floorplan and
Asset-Based Financing Business; The
Accounts
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................ *
</TABLE>
- - --------
* Not applicable or answer is negative.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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, DATED OCTOBER , 1996
PROSPECTUS
$
BOMBARDIER RECEIVABLES MASTER TRUST I
$ Floating Rate Class A Asset
Backed Certificates, Series 1996-2
$ Floating Rate Class B Asset
Backed Certificates, Series 1996-2
BOMBARDIER CREDIT RECEIVABLES CORPORATION
DEPOSITOR
BOMBARDIER CAPITAL INC.
SERVICER
-----------
The Floating Rate Class A Asset Backed Certificates, Series 1996-2 (the
"Class A Certificates") and the Floating Rate Class B Asset Backed
Certificates, Series 1996-2 (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 and inventory. The Receivables
have been and will be sold 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.
-----------
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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<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE DEPOSITOR(1)(3)
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<S> <C> <C> <C>
Per Class A Certificates % % %
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Per Class B Certificates % % %
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Total $ $ $
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</TABLE>
(1) Plus accrued interest, if any, at the applicable Certificate Rate from the
Closing Date, expected to be , 1996.
(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 $ .
-----------
The Certificates are offered subject to prior sale, when, as and if issued by
the Trust and accepted by the Underwriter and subject to its 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
, 1996. The Certificates will be offered in Europe and the United States of
America.
J.P. MORGAN & CO.
The date of this Prospectus is , 1996.
<PAGE>
(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 certificates
representing interests in assets of the Trust, and from time to time, subject
to certain conditions, the Depositor may offer other series of 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 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 held by BCRC and pledged to
BCI).
Interest with respect to the Certificates will accrue from the Closing Date,
expected to be , 1996, and will be payable monthly on or about the 15th
day of each month, commencing 15, 1996. 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 ,
Distribution Date and the final principal distribution on the Class A
Certificates is expected to be made on the , 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 , 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 after 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 UNDERWRITER 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.
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
<PAGE>
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....... $ Floating Rate Class A Asset Backed
Certificates, Series 1996-2 (the "Class A
Certificates").
$ Floating Rate Class B Asset Backed
Certificates, Series 1996-2 (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 (the
"Depositor" or "BCRC"), 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 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 certificates and the
Variable Funding Certificate were issued pursuant
to separate supplements and the Certificates will
be issued pursuant to the Series 1996-2 Supplement
(the "Series 1996-2 Supplement"). The assets of
the Trust include (a) the Receivables existing
under the Initial Accounts on January 1, 1994 (the
"Initial Cut-Off Date"), and the Receivables
existing under Additional Accounts which have been
or will be added to the Trust together with
Receivables generated from time to time in such
Initial Accounts and Additional Accounts (less
Receivables paid or charged-off and Receivables
generated in any Accounts removed from the Trust
from time to time), (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), (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
3
<PAGE>
"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, certificates of other Series, the
BCRC Certificate (which represents the Retained
Interest and will be retained by BCRC) and the
Variable Funding Certificate (which is held by
BCRC and pledged to BCI).
SERIES CUT-OFF DATE....... 1, 1996.
THE ACCOUNTS.............. The Accounts initially included in the Trust and
those which have been added prior to the issuance
of the Certificates are 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 are sold to BCRC pursuant
to the Receivables Purchase Agreement and that
meet the criteria provided in the Pooling and
Servicing Agreement (together with any Additional
Accounts added to the Trust from time to time that
meet the applicable criteria, the "Eligible
Accounts"). 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 subsidiaries of BCI,
(b) which are established by BCI or one of its
subsidiaries other than pursuant to an inventory
security agreement or (c) which are acquired by
BCI or one of its subsidiaries 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, also include Accounts
established or acquired by BCI or one of its
affiliates in connection with the extension of
credit to (i) dealers to finance such dealers'
working capital needs and (ii) manufacturers and
distributors to finance their production and
inventory of consumer, recreational and commercial
products, subject to confirmation by each Rating
Agency that the inclusion of such Accounts in the
Trust will not result in the reduction or
withdrawal of the rating of the Certificates or
the certificates of any other Series and to
certain other conditions. See "The Floorplan and
Asset-Based Financing Business," "Description of
the Certificates--Addition of Accounts" and "--
Removal of Accounts."
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
4
<PAGE>
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
subsidiaries (or made by another lender and
acquired by BCI or one of its subsidiaries) to
dealers to finance such dealers' working capital
needs and to manufacturers and distributors to
finance their 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 subsidiaries or
acquired by BCI or one of its subsidiaries 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 certain
products (the "Eligible Products") which, with
respect to Domestic Inventory Receivables,
currently consist primarily of marine equipment
(boats, motors and trailers) other than products
manufactured by BCI's affiliates, and products
manufactured by BCI's affiliates such as Ski-
Doo(R) snowmobiles, Sea-Doo(R) personal watercraft
and jet boats and Celebrity(R) boats, 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 are used by
the Obligors to provide working capital and to
finance their production and inventory of Eligible
Products. The types of Eligible Products financed
by the Receivables may change over time.
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 the Series 1994-1 Final
Payment Date. Although, after the Series 1994-1
Final Payment Date, Asset-Based Receivables may be
included in the Trust without specific limitation
as to the amount thereof, the inclusion of Asset-
Based Receivables in the Trust will be subject to,
among other things, confirmation by each Rating
Agency that the inclusion of such Receivables in
the Trust will not result in the reduction or
withdrawal of the rating of the Certificates or
the certificates of any other Series then
outstanding. 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 cases, in accordance with a
payment schedule agreed upon with the related
Obligor. See "The Floorplan and Asset-Based
Financing
5
<PAGE>
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 a floating rate
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.
All new Receivables arising under the Accounts
(including the Initial Accounts, the Additional
Accounts added to the Trust prior to the Closing
Date and any Additional Accounts subsequently
added to the Trust) during the term of the Trust
will be sold 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 $ (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 certificateholders
of any other outstanding Series (such other
certificateholders, together with the
Certificateholders, are referred to as
"certificateholders"), with the remainder
allocated to the Variable Funding Certificate and
the 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
6
<PAGE>
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 , in [six] equal
installments equal to the Class A Controlled
Distribution Amount (or 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 , Distribution Date (the
"Class B Expected Payment Date") (or 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 is
used, among other things, to allocate collections
on the Receivables to the Certificates) is
expected to be $ (based on information as of
the Series Cut-Off Date), representing the Initial
Principal Amount of the Certificates [less the
Pre-Funded Amount on the Closing Date. The
Invested Amount will, except as otherwise
described herein, increase to $ during the
Funding Period to the extent amounts are withdrawn
from the Pre-Funding Account and paid to BCRC in
connection with an increase in the Pool Balance,
as described under "Description of the
Certificates--Pre-Funding Account."] The Invested
Amount is subject to reduction as a result of
principal distributions (other than distributions
out of the Excess Funding Account [and any
principal payment made from any amount on deposit
in the Pre-Funding Account]) and any net Investor
Charge-Offs and, during the Revolving Period, 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
7
<PAGE>
--Excess Funding Account" and "--Allocation
Percentages; Allocation to the Certificates."
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 The Certificates will initially be represented by
CERTIFICATES.............. 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 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 certificates (each, a "New
Issuance"). The issuance of the Certificates
pursuant to the Series 1996-2 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 Underwriter 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
8
<PAGE>
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 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) such
new Series will be characterized as debt of BCRC
and (d) the Rating Agencies shall have been
notified of the proposed New Issuance and no
Rating Agency shall, as a result, have given
notice that the New Issuance will result in the
reduction or withdrawal of the rating of the
Certificates or any other Series or class of
certificates then outstanding. 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 15, 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 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 paragraph below, the
Floating Allocation Percentage for any Collection
Period is the percentage (which shall never exceed
100%) obtained by dividing (x) prior to 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) from and 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 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
9
<PAGE>
allocable to the Certificates will be allocated to
the BCRC Certificate, the Variable Funding
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
certificates, the Variable Funding Certificate or
the BCRC Certificate. See "Description of the
Certificates--Allocation of Collections; Deposits
in Collection Account; Limited Subordination of
the Retained Interest."
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 by
the Pool Balance (x) prior to the Series 1994-1
Final Payment Date, on the last day of the
immediately preceding Collection Period and (y)
from and after the Series 1994-1 Final Payment
Date, as of each day in such Collection Period;
provided, however, that for purposes of allocating
Principal Collections to the Certificates, the
Invested Amount used in determining the Principal
Allocation Percentage shall be reduced by the Pre-
Allocated Invested Amount. During the Amortization
Period, distributions of principal on the Class A
Certificates will be limited to the Class A
Controlled Distribution Amount; Available Investor
Principal Collections deposited into the
Collection Account during the Amortization Period
and 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."
The "Pre-Allocated Invested Amount" means, as of
the Closing Date, $ 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 $ ; therefore, the
maximum increase in the Pre-Allocated Invested
Amount after
10
<PAGE>
the Closing Date will be $ . See "Description of
the Certificates--Allocation Percentages."
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, the sum of the
floating allocation percentages for those Series
which are then in a revolving period and the
principal allocation percentages for those Series
which are then in an amortization period, exceeds
100%, then the Principal Collections shall be
allocated among the Series pro rata on the basis
of the respective floating allocation percentage
or principal allocation percentage then in effect
for each Series. 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 , 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"
with respect to any Distribution Date will equal
the weighted average of the interest rates borne
by the Receivables during the preceding Collection
Period less the Servicing Fee Rate, unless the
Servicing Fee is waived as described herein.
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<PAGE>
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, 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, 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 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
Distribution Date (the "Class A Controlled
Distribution 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
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
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 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.
12
<PAGE>
[A limited amount of principal may be distributed
with respect to the Class A Certificates and the
Class B Certificates if at the end of the Funding
Period any amounts (other than investments
earnings) remain in the Pre-Funding Account as
described under "Description of the Certificates--
Pre-Funding Account." In addition,] 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
Principal Payment Date. The first "Initial
Principal Payment Date" will be the ,
Distribution Date; provided, however, principal
will be paid 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 continuing, if necessary, 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 1996-2 Termination Date, and
after 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
1996-2 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 Distribution
Date (the "Series 1996-2 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."
13
<PAGE>
[PRE-FUNDING ACCOUNT...... On the Closing Date, $ of the proceeds of the
Certificates will be deposited into a trust
account to be established with the Trustee (the
"Pre-Funding Account"), and will be held in such
account and disbursed to BCRC from time to time
during the period from the Closing Date to but
excluding the earliest of (i) the commencement of
the Early Amortization Period, (ii) the date on
which the Adjusted Invested Amount first equals
$ and (iii) , 1997 (the "Funding Period").
The "Pre-Funded Amount" means the principal amount
on deposit in the Pre-Funding Account. Funds on
deposit in the Pre-Funding Account will be
invested in Eligible Investments.
Funds on deposit in the Pre-Funding Account will be
withdrawn on a monthly basis to the extent of any
increases in the Adjusted Invested Amount as a
result of an increase in the Pool Balance over the
Required Pool Balance; provided that the Adjusted
Invested Amount will in no event exceed $ or
increase by an amount in excess of the Pre-Funded
Amount immediately prior to giving effect to such
increase. Certificateholders will have no further
right to or interest in such funds upon their
withdrawal from the Pre-Funding Account in
connection with such increases in the Adjusted
Invested Amount. If the Pre-Funded Amount is
greater than zero at the end of the Funding
Period, the amounts remaining on deposit in the
Pre-Funding Account (net of any investment income)
will be payable pro rata to the Class A
Certificateholders and the Class B
Certificateholders as a reduction in the principal
amounts of the Class A Certificates and the Class
B Certificates.]
EXCESS FUNDING ACCOUNT.... During the Revolving Period, Available Investor
Principal Collections will be required to be
deposited in an account held in the name of the
Trustee 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 over (ii)
the Pool Balance and (b) a fraction the numerator
of which is the Series 1996-2 Required Balance and
the denominator of which is the aggregate of the
required balances (including the Series 1996-2
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 to the extent
that 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 termination of the
Revolving
14
<PAGE>
Period, funds on deposit in the Excess Funding
Account will be distributed as principal to the
Certificateholders as described herein. In
addition, no funds will be deposited in the Excess
Funding Account during the Amortization Period or
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) , , (y) the fifth
business day following the last Distribution Date
prior to the Initial Principal Payment Date if BCI
has elected not to extend such 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 , and will continue until the first to occur
of (i) the payment in full to the
Certificateholders of the Invested Amount (ii) the
commencement of an Early Amortization Period or an
Initial Amortization Period and (iii) the Series
1996-2 Termination Date. If an Early Amortization
Event occurs prior to , , the Revolving
Period will thereupon end and an "Early
Amortization Period" will commence. See
"Description of 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 1996-2 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 will no longer be deposited in
the Excess Funding Account or allocated 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
15
<PAGE>
attributable to principal (including any amounts
on deposit in the Excess Funding Account at the
end of the Revolving Period) will be deposited
into the Collection Account and 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 later of the Class B Expected
Payment Date or the Distribution Date on which the
principal balance of 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 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
16
<PAGE>
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........ 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 Monthly
Servicing Fee for such Distribution Date, (iii)
any Investor Default Amount for such Distribution
Date and (iv) the Series 1996-2 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
subordination is the "Available Subordinated
Amount." It is expected that the Available
Subordinated Amount for the first Determination
Date will be no less than $ . 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) any withdrawal from the
Reserve Account
17
<PAGE>
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."
SERVICING................. The Servicer is responsible for servicing, managing
and making collections on the Domestic Inventory
Receivables and will, except as provided below,
deposit such collections as well as 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 up to the amount of such
collections required to be distributed on the
Certificates with respect to 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. The Asset-Based
Receivables may be subserviced by affiliates of
BCI on behalf of BCI as Servicer. See "Description
of the Certificates--Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of Retained Interest."
On the second business day preceding each
Distribution Date (each a "Determination Date"),
the Servicer will calculate the amounts to be
allocated with respect to the related Collection
Period to the holders of the Certificates,
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." 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 receive a monthly
servicing fee and certain other
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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, 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 Certificateholders or the
certificateholders of other outstanding Series,
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 "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 Certificateholders or the
certificateholders of other outstanding Series,
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
"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 On the Closing Date, BCI, BCRC and the Trustee will
AGREEMENT................. enter into an amendment to the Pooling and
Servicing Agreement. Some of such amendments 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, as
so amended, are described in this Prospectus.
Those provisions which will become effective only
following the Series 1994-1 Final Payment Date
(the "Delayed Amendments") are so designated. Such
Delayed Amendments are more fully described
throughout this Prospectus and, in particular, are
summarized under the caption "Amendments to
Pooling and Servicing Agreement." Such Delayed
Amendments relate primarily to the definitions of
Eligible Accounts, Eligible Receivables and the
Excess Funded Amount and to the frequency of and
tests for depositing and
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withdrawing funds from the Excess Funding Account
and the conditions for addition of Accounts. By
purchase and acceptance of the Certificates, the
holders of the Certificates will be deemed to have
consented to such Delayed Amendments.
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 "Aaa" (or the equivalent) and that
the Class B Certificates be rated at least "A" or
"A2" (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."
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RISK FACTORS
Limited Liquidity. There is currently no market for the Certificates. J.P.
Morgan & Co. (the "Underwriter") currently intends to make a market in the
Certificates, but the Underwriter is 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). 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, BCI
may, subject to satisfaction of the Rating Agency Condition, participate out a
portion of certain of the 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--The Retained Interest and Variable
Funding Certificate."
BCI warrants in the Receivables Purchase Agreement that the sale 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 sale 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 recent 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
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<PAGE>
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 Amortization Event other than such bankruptcy or insolvency of
BCRC exits, 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
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 is at the time of creation secured by a first priority perfected
security interest in the related Eligible Product. Following the Series 1994-1
Final Payment Date and subject to the prior written consent of each Rating
Agency, BCI will be permitted to originate Domestic Inventory Receivables
which may be secured by a subordinated perfected security interest in the
related Eligible Products. 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,
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.
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<PAGE>
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 1996-2 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 purchase of Receivables arising under such
additional Eligible Accounts by BCRC from BCI pursuant to the Receivable
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 Amortization Event other than such bankruptcy or insolvency of
BCRC exits, 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 a subsidiary 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 products of types different from those
included in the Trust on the Closing Date. 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, 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 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 will be
owned by the Trust may be different from the Accounts currently held by the
Trust. There can be no assurance that the historical experience of the
portfolio of Domestic Inventory Receivables and Asset-Based Receivables
included in the Trust in the future will be similar to the Receivables
currently included in the Trust.
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<PAGE>
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
could decrease, adversely affecting payment rates with respect to the Domestic
Inventory Receivables and the generation of new Domestic Inventory
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, independent finance companies,
captive finance companies of manufacturers, banks, investment companies,
credit unions 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.
Negative Carry; Decrease in Investor Non-Principal Collections. Funds
[deposited into the Pre-Funding Account and funds,] if any, deposited in the
Excess Funding Account, will be invested in Eligible Investments
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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,
[with respect to the Funding Period and] 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 [Pre-Funding Account or the] Excess Funding
Account, respectively.
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 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 , 1996, from % to more than %. 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 , 1996, approximately % (by
principal balance) of all Domestic Inventory Receivables did not bear
interest. A reduction in interest rates on any Receivables, or the inclusion
of non-interest bearing Receivables in the 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. 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.
See "Description of the Certificates--Early Amortization Events." 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.
Master Trust Considerations. The Trust, as a master trust, has previously
issued two Series of certificates and may issue additional Series (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 certificates (including
subordinated classes of certificates), different methods of allocating
collections from the Pool and any 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
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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. See "Description of the
Certificates--New Issuances." 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 Agencies shall not have given notice that
the issuance of such Series will result in the reduction or withdrawal of
their ratings of the Certificates. The issuance of an additional Series does
not require the consent of any Certificateholders.
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 is $ , 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 "Aaa" (or the
equivalent) and that the Class B Certificates be rated at least "A" or "A2"
(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."
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THE DEPOSITOR AND THE TRUST
THE DEPOSITOR
Bombardier Credit Receivables Corporation (the "Depositor" or "BCRC"), 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 is located at P.O. Box 5544, Burlington, Vermont 05402. The
telephone number of such office 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, 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 (less Receivables paid or charged-off and
excluding Receivables that are removed from the Trust from time to time after
the Initial Cut-Off Date), an assignment of substantially all of BCRC's rights
and remedies under the Receivables Purchase Agreement, all funds collected or
to be collected in respect of the Receivables, all funds on deposit in certain
accounts of the Trust (including funds on deposit in [the Pre-Funding
Account,] the Excess Funding Account, the Collection Account and the Reserve
Fund), the Collateral Security, if any, relating to the Domestic Inventory
Receivables and the Asset-Based Receivables 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.
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The property of the Trust may in the future include Enhancements for the
benefit of certificateholders of other Series. The Certificateholders will not
have any interest in any Enhancement provided for the benefit of the
certificateholders of other Series.
The Trust was formed for the transactions relating to the issuance of the
Series 1994-1 Certificates and the Series 1996-1 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, 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 to repay amounts owing under the Note
and/or to purchase the Receivables from BCI [and to fund the Pre-Funding
Account]. 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 a subsidiary 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) the
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."
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, a
subsidiary of BCI) to dealers (as of , 1996 approximately dealers) 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 a subsidiary) (or made
by another lender and acquired by BCI or
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one of its subsidiaries) to (i) dealers to finance such dealers' working
capital needs and (ii) manufacturers and distributors to finance such
manufacturers' and distributors' production 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 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.
No single Obligor currently or is reasonably likely in the future to account
for [ %] or more 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 snowmobiles, Sea-Doo
personal watercraft and jetboats and Celebrity 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 July
31, 1996, approximately % (based on outstanding receivables) or % (based on
financing volume for the six month period ended July 31, 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.
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.
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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 taken as a trade-in 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 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 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.
In the case of certain dealers financed by BCI, BCI may extend domestic
inventory financing to such dealers without obtaining a repurchase agreement
from any manufacturer, importer or distributor. [Financing provided by BCI on
this basis will not account for more than 10% of the Pool Balance unless the
Rating Agency Condition is satisfied.]
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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 subsidiaries may also acquire Domestic Inventory Receivables
from third-party lenders which, although not established by BCI (or such
subsidiary) pursuant to an inventory security agreement or other floorplan
financing agreement of BCI, will be on substantially similar terms and 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
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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 more than 8.5% per annum
based on risk factors and the manufacturer's, importer's or distributor's
support of the dealer. The interest rate is reset by BCI daily and is applied
to all balances outstanding during the applicable period. The average spread
over the average prime rate charged to dealers for the fiscal years ended
January 31, 1996, 1995, 1994, 1993 and 1992 was approximately 3.83%, 4.09%,
4.82%, 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 some seasonality in the level of outstanding Domestic Inventory
Receivables and in repayments of principal. Dealer inventory financed by
Domestic Inventory Receivables typically increases during the fall and winter
months reaching a peak during the late winter or early spring, at which point
the outstanding Domestic Inventory Receivables then begin liquidating during
the spring and summer. In large part, this seasonality is attributable to the
Domestic Inventory Receivables related to marine products and Bombardier
products.
RELATIONSHIP WITH MANUFACTURERS, IMPORTERS AND DISTRIBUTORS
Domestic Inventory Receivables. BCI's primary marketing focus is the
manufacturer, importer or distributor of the financed product. Affiliates of
BCI (which manufacture Ski-Doo snowmobiles, Sea-Doo personal watercraft and
jetboats and Celebrity boats) and Outboard Marine Corporation (an independent
manufacturer of marine products) in the aggregate manufacture products which
are financed directly by BCI and with respect to which the resulting Domestic
Inventory Receivables represented, as of July 31, 1996,
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approximately 51.6% of BCI's Domestic Inventory Receivables portfolio. With
the exception of three other manufacturers who accounted, as of July 31, 1996,
for approximately 7.44%, 4.24% and 4.18%, 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 loan
charges 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. [At the time of issuance of the Certificates, the Pooling and
Servicing Agreement will be amended to provide that the Domestic Inventory
Receivables otherwise included in the Pool which are not supported by a
repurchase commitment from the manufacturer, importer or distributor of the
product to which the Receivables relate will not account for more than 10% of
the Pool Balance unless the Rating Agency Condition is satisfied.]
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 [Pooling and Servicing Agreement], be assigned by BCI to BCRC,
but not by BCRC to the Trust. BCI will agree 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 products financed by BCI.
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
<PAGE>
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 manufacturer , importer and distributor 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 regional
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 loan charges 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
34
<PAGE>
be expected to continue its ongoing assessment of the borrower's financial
condition and determine its best course of action for purposes of obtaining
repayment, including the possibility of immediate liquidation of all
collateral.
Charge-Off Policy. BCI's historical charge-off policy regarding accounts
included in the BCI Domestic Inventory 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.
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 Receivables
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 Receivables Portfolio (and may in the future also
consist of all or a portion of the accounts in the BCI Asset-Based Receivables
Portfolio) that were, in either case, Eligible Accounts (collectively, the
"Eligible Portfolio") at the time of such selection. In order to be included
in the Eligible Portfolio, each Account must meet certain criteria provided in
the Pooling and Servicing Agreement. See "Description of the Certificates--
Representations and Warranties." All Eligible Accounts sold 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 sold 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).
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 a
subsidiary 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 a subsidiary 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 by dealers to finance working capital needs
and by manufacturers and distributors to finance such manufacturers' and
distributors' production and inventory of consumer, recreational and
commercial products. The terms of such revolving credit arrangements would be
generally negotiated between BCI (or a subsidiary 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
35
<PAGE>
such accounts are designated as Additional Accounts. Pursuant to the
Receivables Purchase Agreement, BCI will from time to time convey 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
"Description of the Certificates--Representations and Warranties." Eligible
Receivables in the BCI Domestic Inventory Receivables 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, 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 from the Trust. See
"Description of the Certificates--Removal of Accounts." 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 [ ], with respect to the Accounts in the BCI Domestic Inventory:
(a) there were approximately Eligible Accounts having an aggregate
principal balance of approximately $ million; (b) there were approximately
Eligible Accounts pursuant to which Domestic Inventory Receivables are
generated having an aggregate principal balance of approximately $ ,
million, [all] of which [ ] Eligible Accounts have been transferred to BCRC
and deposited into the Trust; (c) with respect to Eligible Accounts pursuant
to which Domestic Inventory Receivables are generated, (i) % of the credit
limits per Account range from approximately $0 to $249,999, % of the credit
limits per Account range from $250,000 to $499,999, % of the credit limits
per Account range from $500,000 to $999,999 and % of the credit limits per
Account range from $1,000,000 to $12,000,000, (ii) the average aggregate
credit limit per Account was approximately $ , and (iii) the average
principal balance of Receivables per Account was approximately $ ; (d) with
respect to Eligible Accounts pursuant to which Domestic Inventory Receivables
are generated, the aggregate total principal balance as a percentage of the
aggregate total credit line was approximately %; and (e) with respect to
Eligible Accounts pursuant to which Domestic Inventory Receivables are
generated, approximately % of the Receivables were in Accounts for which the
related credit lines were initially established in the 1996 calendar year,
approximately % in the 1995 calendar year, approximately % in the 1994
calendar year, approximately % in the 1993 calendar year and approximately %
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 , 1996 was approximately %. All of the historical
information (including tables and numbers) contained in this Prospectus
regarding BCI or any Receivables or Accounts also includes receivables and
accounts held by BCI Finance Inc. (formerly BCI Recovery Inc.). BCI Finance
Inc., which was incorporated in 1991, is a wholly-owned subsidiary of
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.
36
<PAGE>
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. While such Portfolio includes receivables arising under
accounts that would not qualify as Eligible Accounts, such receivables arising
under such non-qualifying accounts have generally represented less than [ %]
of the principal balances of all receivables in such Portfolio.
AGGREGATE YEAR-END OUTSTANDING PRINCIPAL BALANCES
<TABLE>
<CAPTION>
PORTFOLIO JAN. 31, 1996 JAN. 31, 1995 JAN. 31, 1994
--------- ------------- ------------- -------------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Domestic Inventory Receiv-
ables.........................
</TABLE>
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 DOMESTIC INVENTORY RECEIVABLES PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
(U.S. DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Number of Dealers....................
Average Month-End Principal Balances
Per Dealer..........................
Average Financing Volume Per Dealer..
</TABLE>
DELINQUENCY
The following table shows delinquency information for the Domestic Inventory
Receivables portfolio as of the dates shown.
<TABLE>
<CAPTION>
JULY 31, 1996 JULY 31, 1995 JAN. 31, 1996 JAN. 31, 1995 JAN. 31, 1994
------------- ------------- ------------- ------------- -------------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Aggregate Principal Bal-
ance...................
Delinquent Amount (1)...
Delinquent
Amount/Aggregate
Principal Balance......
Allowance for Credit
Losses on BCI's Books..
Allowance/Aggregate
Principal Balance......
</TABLE>
- - --------
(1) Consists of the total principal and past due charges on receivables which
were (i) unpaid when due as a result of retail sale of the underlying
product (i.e., sold out of trust) or (ii) unpaid when due under a
scheduled payment program and with respect to which BCI determined that
the payment was undercollateralized after the due date. The percentage of
outstanding Domestic Inventory Receivables which were on a scheduled
payment program as of the above dates was generally less than [ %] by
principal balance.
See the last two paragraphs under "General" above.
37
<PAGE>
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
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JULY 31, YEAR ENDED JANUARY 31,
---------------- ------------------------
1996 1995 1996 1995 1994 1993 1992
------- ------- ---- ---- ---- ---- ----
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Principal Receivables Bal-
ance(1)...........................
Net Losses(2)(4)...................
Net Losses/Liquidations............
Net Losses/Average Principal Re-
ceivables Balance(3)..............
</TABLE>
- - --------
(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 July 31, 1996 and July 31,
1995, each of which is based on a six-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 six-month periods ended July 31, 1995 and July 31,
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
<PAGE>
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. 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.
<TABLE>
<CAPTION>
OUTSTANDING RECEIVABLES
-----------------------------------------------------------------------------------
PRODUCT JULY 31, 1996 JULY 31, 1995 JAN. 31, 1996 JAN. 31, 1995 JAN. 31, 1994 JAN. 31, 1993
------- ------------- ------------- ------------- ------------- ------------- -------------
(U.S. DOLLARS IN MILLIONS/% OF TOTAL)
<S> <C> <C> <C> <C> <C> <C>
Bombardier..............
Marine..................
Manufactured Housing and
Recreational Vehicles..
Customer Electronics and
Appliances.............
Other...................
TOTALS................
<CAPTION>
FINANCING VOLUME
---------------------------------------------------------------------
SIX MONTHS ENDED FISCAL YEAR ENDED
--------------------------- -----------------------------------------
PRODUCT JULY 31, 1996 JULY 31, 1995 JAN. 31, 1996 JAN. 31, 1995 JAN. 31, 1994
------- ------------- ------------- ------------- ------------- -------------
(U.S. DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Bombardier..............
Marine..................
Manufactured Housing and
Recreational Vehicles..
Customer Electronics and
Appliances.............
Others..................
TOTALS................
</TABLE>
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 Vehicle category currently consists primarily of
single and double-wide mobile homes and Class A and Class C motor homes and
trailers and towables, (iv) the Customer Electronics and Appliances category
currently consists primarily of appliances, televisions, stereos and other
electronics equipment and (v) the Other category currently consists primarily
of lawn and garden equipment, motorcycles and horse trailers.
See the last two paragraphs under "General" above.
39
<PAGE>
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 portfolio of
Domestic Inventory Receivables, 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
<TABLE>
<CAPTION>
JANUARY 31,
JULY 31, --------------
DAYS 1996 1996 1995 1994
---- -------- ---- ---- ----
<S> <C> <C> <C> <C>
1-120.............................................
121-180...........................................
181-270...........................................
Over 270..........................................
</TABLE>
See the last two paragraphs under "General" above.
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of dealers on the
basis of the principal amount of receivables outstanding and the number of
dealers generating such receivables with respect to BCI's Domestic Inventory
Receivables portfolio. This table includes dealers who have either month-end
outstanding principal balances as of [July 31, 1996] or who had a positive
average daily principal balance for the month ended [July 31, 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
AS OF [JULY 31, 1996]
<TABLE>
<CAPTION>
RECEIVABLES
OUTSTANDING PERCENTAGE OF PERCENTAGE OF
(THOUSANDS OF RECEIVABLES TOTAL NUMBER NUMBER OF
STATE DOLLARS) OUTSTANDING OF ACCOUNTS ACCOUNTS
----- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
</TABLE>
- - --------
(1) No other state represents more than % of the outstanding Domestic
Inventory Receivables. Five states (Wisconsin, Georgia, Washington, Ohio
and South Carolina) each represent between approximately % and % of
the outstanding Domestic Inventory Receivables and nine states
(Pennsylvania, Maine, Illinois, Tennessee, Alabama, Virginia, Minnesota,
Arkansas and Louisiana) each represent between approximately % and %
of the outstanding Domestic Inventory Receivables. The remaining states
each represent less than % of the outstanding Domestic Inventory
Receivables.
See the last two paragraphs under "General" above.
40
<PAGE>
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
Inc. 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 July 31, 1996, BCI
was providing inventory financing to approximately 3,200 dealers located
throughout the continental United States and acts as a financing source for
approximately 380 manufacturers and distributors. In the years 1990 through
1995, BCI experienced substantial growth in the number of dealers who received
financing from BCI (as well as the related manufacturers and distributors) and
during this period there was also a substantial increase in the average
receivables per dealer and the average annual financing volume per dealer.
From January 31, 199 to January 31, 199 , average receivables per dealer
changed from approximately $ to $ , while the average annual financing
volume per dealer changed from approximately $ to $ .
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; over the last 5 years there have been approximately such
purchase and leasebacks and the average term of such leases has been
approximately months. 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, respectively,
BCI's assets (primarily financing receivables) increased from $ million to
$ million to $ million and shareholder's equity increased from $ million
to $ million to $ million. For the fiscal years ended 1994, 1995 and 1996,
respectively, total revenues increased from $ million to $ million to $
million.
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.
41
<PAGE>
BCRC is 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.
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
[(other than any principal payment made from any amount on deposit in the Pre-
Funding Account) until the Distribution Date in , unless an Early
Amortization Event has occurred or BCI elects not to extend the Initial
Principal Payment Date. Principal with respect to the Class B Certificates
will not be distributable until all principal with respect to the Class A
Certificates has been distributed. It is expected that 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."
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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."
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 Domestic Inventory
Receivables portfolio, actual monthly payment rates with respect to the
Eligible Accounts may be different.
MONTHLY PRINCIPAL PAYMENT RATES FOR THE DOMESTIC INVENTORY RECEIVABLES
PORTFOLIO
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JULY 31, YEAR ENDED JANUARY 31,
---------- ----------------------
1996 1995 1995 1994 1993
----- ----- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Highest Month.....................
Lowest Month......................
Average of the Months in the Peri-
od...............................
</TABLE>
See the last paragraph under "The Accounts--General."
Because BCI may cause an Initial Amortization Period to commence on any
Initial Principal Payment Date and because the occurrence of an Early
Amortization Event would initiate an Early Amortization Period, the final
distribution of principal on the Certificates may be made, in the case of the
Class A Certificates, prior to the Class A Expected Final Payment Date and, in
the case of the Class B Certificates, prior to the Class B Expected Payment
Date. See "Description of the Certificates--Early Amortization Events" and
"Description of the Certificates--Extension of Initial Principal Payment
Date."
43
<PAGE>
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 certificates and to the
Certificates and the Variable Funding Certificate (as so supplemented and as
further supplemented or 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, a copy 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 $ and the initial principal
balance of the Class B Certificates is $ .
The Certificates will initially be represented by two or more certificates
registered in the name of the nominee of 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 15, 1996. 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 15, 1996. 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) 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
44
<PAGE>
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, with respect to any Adjustment Date, the
weighted average of the interest rates borne by the Receivables included in
the Pool for the preceding Collection Period less the Servicing Fee Rate
(unless the Servicing Fee is waived).
"LIBOR" with respect to any Interest Period will be based on the offered
rates for deposits in United States dollars having a maturity of one month
(the "Index Maturity") commencing on the related Adjustment Date which appears
on the Telerate Page 3750 as of 11:00 A.M., London time, on such date of
calculation. If such rate does not appear on Telerate Page 3750 LIBOR with
respect to such Interest Period will be determined at approximately 11:00
A.M., London time, on such Adjustment Date on the basis of the rates at which
deposits in United States dollars are offered by four major banks in the
London interbank market (selected by the Calculation Agent) to prime banks in
the London interbank market for a period equal to the Index Maturity and in a
principal amount equal to an amount of not less than U.S. $1,000,000 and that
is representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each such bank
to provide a quotation of its rate. If at least two such quotations are
provided, LIBOR will be the arithmetic mean (rounded up or down, as the case
may be, to the nearest whole multiple of 0.0625% per annum; provided, however,
that any amount falling in the middle shall be rounded up to the nearest whole
multiple of 0.0625%) of such quotations. If fewer than two quotations are
provided, LIBOR with respect to such Interest Period will be the arithmetic
mean (rounded upwards or downwards as aforesaid) of the rates quoted at
approximately 11:00 A.M., New York City time, on such Adjustment Date by three
major banks in New York, New York selected by the Calculation Agent for loans
in United States dollars to leading European banks having the Index Maturity
and in a principal amount equal to an amount of not less than U.S. $1,000,000
and that is representative for a single transaction in such market at such
time; provided, however, that if the banks selected as aforesaid are not
quoting as mentioned in this sentence, LIBOR in effect for the applicable
period will be LIBOR in effect for the previous period.
"Telerate Page 3750" means the display page currently so designated on the
Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"London Business Day" means any day on which dealings in deposits in United
States dollars are transacted in the London interbank market.
"Calculation Agent" means the Trustee or any other Calculation Agent
selected by the Depositor which is reasonably acceptable to the Trustee.
[PRE-FUNDING ACCOUNT
Pursuant to the Series 1996-2 Supplement, the Servicer will establish and
maintain in the name of the Trustee, for the benefit of the
Certificateholders, an account with an Eligible Institution to be designated
as the "Pre-Funding Account." On the Closing Date, $ of the proceeds of the
Certificates will be deposited into the Pre-Funding Account. Funds on deposit
in the Pre-Funding Account will be withdrawn on a monthly basis and paid to
BCRC to the extent of any increases in the Adjusted Invested Amount as a
result of increases in the Pool Balance over the Required Pool Balance;
provided that the Adjusted Invested Amount will in no event exceed $ or
increase by an amount in excess of the Pre-Funded Amount immediately prior to
giving effect to such increase. Withdrawals will be made, to the extent of
funds in the Pre-Funding Account, during the period (the "Funding Period")
from the Closing Date through the earliest of (i) the commencement of the
Early Amortization Period, (ii) the date on which the Adjusted Invested Amount
first equals $ and
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<PAGE>
(iii) , 1997. Should the Pre-Funded Amount (net of any investment income)
be greater than zero at the end of the Funding Period, any principal amounts
remaining on deposit in the Pre-Funding Account will be withdrawn and
distributed pro rata to the Certificate Class A Certificateholders and the
Class B Certificateholders on the next Distribution Date as a reduction in the
principal amounts of the Class A Certificates and Class B Certificates.
All amounts on deposit in the Pre-Funding Account will be invested by the
Trustee in Eligible Investments. On each Distribution Date all net investment
income earned on amounts remaining on deposit in the Pre-Funding Account
during the preceding Collection Period will be credited to the Collection
Account. Such investment income will be included in Investment Proceeds
applied to make distributions with respect to the Class A Certificates and the
Class B Certificates as described under "Description of the Certificates--
Distributions from the Collection Account; Reserve Fund."
Certificateholders will have no further right to or interest in such funds
upon their withdrawals from the Pre-Funding Account in connection with such
increases in the Adjusted Invested Amount.
"Pre-Funded Amount" means, as of any date, the principal amount on deposit
in the Pre-Funding Account (net of all interest and other investment income).]
PRINCIPAL
In general, no principal payments will be made on the Certificates until the
Distribution Date in unless (i) BCI elects not to extend the Revolving Period
by electing not to extend the Initial Principal Payment Date[, (ii) the Pre-
Funding Amount is greater than zero at the end of the Funding Period] or (iii)
an Early Amortization Event, as described herein, occurs. If BCI elects not to
extend the Initial Principal Payment Date, principal distribution on the
Certificates will begin on such Initial Principal Payment Date, the earliest
of which would be the Distribution Date. If an Early Amortization Event
occurs, principal distributions on the Certificates will begin on the
Distribution Date following the end of the Collection Period in which such
event occurs. During the Revolving Period, 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 paid (or made available) to the holders of the BCRC
Certificate and the Variable Funding 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, any 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 or the Variable Funding 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 1996-2 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 later of the Class B Expected
Payment Date or the date when the principal balance of the Class A
Certificates has been reduced to zero, up to an amount equal to the principal
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
46
<PAGE>
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 ,
Distribution Date and principal with respect to the Class B Certificates is
expected to be paid, following the final distribution on the Class A
Certificates, on the , Distribution Date; provided, however, that the
Certificateholders will receive payments of principal earlier if BCI elects
not to extend the Initial Principal Payment Date. The first Initial Principal
Payment Date will be the , Distribution Date, but will successively and
automatically be extended to the next Distribution Date after the then-current
Initial Principal Payment Date unless BCI elects not to so extend; 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 1996-2 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 1996-2 Termination Date.
BCI will cause the Trustee to provide written notice to each
Certificateholder, BCRC and the Rating Agencies of any election by BCI not to
extend the Initial Principal Payment Date. The Servicer will cause the Trustee
to mail such notice no later than the fifth business day following the
Distribution Date prior to the then current Initial Principal Payment Date.
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
Underwriter, securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. Indirect
access to the DTC system also is available to others such as banks, brokers,
dealers and trust companies that
47
<PAGE>
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 it will take any action permitted to be
taken by a Certificateholder under the Pooling and Servicing Agreement only at
the direction of one or more Participants to whose account with DTC the
Certificates are credited. Additionally, DTC has advised the Depositor that it
will take such actions with respect to specified percentages of the Invested
Amount only at the direction of and on behalf of Participants whose holdings
include undivided interests that satisfy such specified percentages. DTC may
take conflicting actions with respect to other undivided interests to the
extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
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 lack of simultaneous transfers of securities
and cash. Transactions may now be settled in any of 32 currencies,
48
<PAGE>
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.
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;
49
<PAGE>
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
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 first 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 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
certificates in respect of each prior Series and to any additional Series
(i.e., the Pool Available Subordinated Amount on such date (after giving
effect to the allocations, distributions, withdrawals and deposits to be made
on such date)) and (y) with respect to each Series on any date of
determination, a percentage (which in the case of the Certificates will
initially be %) of the related adjusted invested amount (including the
Adjusted Invested Amount) of such Series. The sum of (x) and (y) is referred
to as the "Retained Participation Amount." As of the Closing Date and as of
the first Determination Date, the amount under the foregoing clause (x) will
be $ and the amount under the foregoing clause (y) with respect to the
first Determination Date will be no less than $ of which $ and $ ,
respectively, are allocable to the Certificates.
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 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 from time to time 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 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 amount (or method for calculating such amount) and the
currency in which it is denominated, (c) its certificate
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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 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 Underwriter or one or more other underwriters or
placement agents. There is no limit to the number of 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) such new Series will be characterized
as debt of BCRC (an opinion of counsel to the effect referred to in clauses
(x) and (y) with respect to any action is referred to herein as a "Tax
Opinion"). Such issuance is also subject to the conditions that (a) the
Depositor shall have delivered to the Trustee and any Enhancement Provider a
certificate of a vice president or more senior officer, dated the related
Series Issuance Date, to the effect that the Depositor reasonably believes
that such issuance will not cause an Early Amortization Event to occur, (b)
after giving effect to such issuance, BCRC shall have an interest in the Pool
represented by the BCRC Certificate and the Variable Funding Certificate equal
in the aggregate to at least 2% of the aggregate amount of Receivables
included in the Pool, in each case as of the Series Issuance Date and after
giving effect to such issuance and (c) written notice of the proposed New
Issuance shall have been given to each Rating Agency at least five Business
Days before the Series Issuance Date and no Rating Agency shall have notified
BCRC, BCI
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or the Trustee that such issuance will result in a reduction or withdrawal of
the ratings of any outstanding Series or class of 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 "Description of the Certificates--Amendments."
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 Initial Issuance 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.
In connection with the sale of the Receivables then existing or thereafter
arising under the Eligible Accounts sold 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
sold to BCRC and that BCRC has transferred its interest therein to the Trust.
In addition, BCI provided to BCRC, and BCRC 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 or the related Additional
Cut-Off Date, 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."
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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 purchase from BCI under the Receivables Purchase
Agreement the Receivables then existing or thereafter created in such
Additional Accounts and to convey to the Trust such Additional Accounts and
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" 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 (and, in the case
of an Additional Account, as of the Additional Cut-Off Date and the date the
related Accounts are transferred to the Trust (an "Addition Date")), each
Account or Additional Account will be an Eligible Account, (b) each Receivable
and all Collateral Security conveyed to the Trust, in the case of the Eligible
Accounts designated by BCRC as of the Initial Cut-Off Date, on the Initial
Closing Date or, in the case of Additional Accounts, the Addition Date, or on
any business day on which Receivables are created in the Eligible Accounts
prior to the earlier of (x) the occurrence of a Liquidation Event and (y) the
Termination Date (each, a "Transfer Date"), have been or will be conveyed to
the Trust free and clear of any liens, except for liens created or permitted
under the Pooling and Servicing Agreement and (c) 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 or will be 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 or the certificateholders of 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).
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 such
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
Certificateholders or the Trustee on behalf of Certificateholders.
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In the Pooling and Servicing Agreement, BCRC also makes representations and
warranties to the Trustee to the effect, among other things, that as of the
Initial Closing Date and each Series Issuance Date (including the Closing Date
for the Certificates) (a) it is duly incorporated and in good standing and has
the authority to consummate the transactions contemplated by the Pooling and
Servicing Agreement and the Pooling and Servicing Agreement (or in the case of
Additional Accounts, the related assignment) constitutes a valid, binding and
enforceable agreement of BCRC and (b) the Pooling and Servicing Agreement
constitutes a valid sale, transfer and assignment to the Trust of all right,
title and interest of BCRC in the Receivables and the Collateral Security,
whether then existing or thereafter created, and the proceeds thereof, under
the UCC as then in effect in the State of Vermont, which is effective on the
Closing Date (or as of the Addition Date, if applicable). In the event that
(i) any of the representations and warranties described in clause (a) of this
paragraph has been breached, (ii) the representation and warranty with respect
to the Pooling and Servicing Agreement in clause (b) of this paragraph has
been breached and the Pooling and Servicing Agreement does not constitute the
grant of a perfected security interest in the Receivables and the Collateral
Security (and the proceeds thereof) under the UCC as then in effect in the
State of Vermont or (iii) certain other representations and warranties set
forth in the Pooling and Servicing Agreement are breached, and, in the case of
clause (i), (ii) or (iii), such breach has a materially adverse effect on the
Certificateholders or the certificateholders of 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 certificates of all
outstanding Series (including the Certificates) evidencing not less than 51%
of the aggregate unpaid principal amount of all outstanding Series, 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 Determination Date
preceding 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 the Trustee gives a notice 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
certificateholders or the holder of the Variable Funding Certificate or the
Trustee on behalf of such certificateholders.
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 a subsidiary of BCI or established by a third party and
acquired by BCI (or a subsidiary 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 agreement other than
an inventory security agreement, in the ordinary course of business, or (ii)
after the Series 1994-1 Final Payment Date, each individual line of credit
extended by BCI (or a subsidiary of BCI) to an Obligor secured by assets of
such Obligor, which, in each case, as of the date of determination thereof (a)
related to an Obligor that is an "Eligible Obligor" and (b) is in existence
and 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).
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After the Series 1994-1 Final Payment Date, BCI (or its subsidiary) 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. The
definition of Eligible Account may be changed by amendment to the Pooling and
Servicing Agreement without the consent of the Certificateholders if each
Rating Agency confirms in writing that such amendment will not result in a
withdrawal or reduction of the rating of any outstanding Series or class of
certificates.
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 a
subsidiary of BCI or acquired by BCI (or a subsidiary 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
arose was an Eligible Account (whether or not such Account was part of the
Pool at the time the Receivable arose), (c) which is owned by BCI (or, after
the Series 1994-1 Final Payment Date, a subsidiary of BCI) at the time of sale
by BCI (or such subsidiary) to BCRC, (d) which with respect to Domestic
Inventory Receivables represents the obligation of an Obligor to repay an
advance made to or on behalf of such Obligor (or credit extended for such
Obligor) to finance an Eligible Product, (e) which in the case of Domestic
Inventory Receivables, at the time of creation and (except with respect to
Receivables that are payable in accordance with a repayment schedule
regardless of whether the related Eligible Products have been sold 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 perfected first priority
security interest in the Eligible Product relating thereto provided that after
the Series 1994-1 Final Payment Date and subject to satisfaction of the Rating
Agency Condition, the obligations with respect to Domestic Inventory
Receivables may be secured by a subordinate perfected security interest in the
Eligible Product and, if Asset Based Receivables are included in the Trust,
the obligations with respect thereto may be secured by a security interest,
which may be a subordinate interest, in goods, work in process, raw materials,
component parts or other 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 governmental authorizations required to be obtained by BCI (or a
subsidiary 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 a
subsidiary 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
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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 a subsidiary 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 a subsidiary 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 Domestic Inventory Receivables (1) that
have not been paid in full within 491 days or, after the Series 1994-1 Final
Payment Date 614 days following the origination thereof, (2) 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, with respect
to which the related Eligible Products have been sold by the Obligor and the
principal of which Receivable has not been paid in full within 21 days or,
after the Series 1994-1 Final Payment Date, 30 days following the date of such
sale or, 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 or, after the Series 1994-
1 Final Payment Date, 30 days following its due date or (3) with respect to
which interest payments (aggregating at least $150 or, after the Series 1994-1
Final Payment Date $1,000 with respect to Receivables under the same Account)
are more than 120 days or, after the Series 1994-1 Final Payment Date, 90 days
delinquent; provided further, however, that the foregoing definition of
"Eligible Receivables" may be changed by amendment to the Pooling and
Servicing Agreement without the consent of the Certificateholders if the
Rating Agency Condition for such amendment is satisfied.
It is not required or anticipated that BCRC or the Trustee will make any
initial or periodic general examination of the Receivables or any records
relating to the Receivables for the purpose of establishing the presence or
absence of defects, compliance with representations and warranties of BCI or
for any other purpose. In addition, it is not anticipated or required that
BCRC or the Trustee will make any initial or periodic general examination of
the Servicer for the purpose of establishing the compliance by the Servicer
with its representations or warranties, the observation of its obligations
under the Pooling and Servicing Agreement or for any other purpose.
INELIGIBLE RECEIVABLES
Any Receivable that is not an Eligible Receivable is an "Ineligible
Receivable." Although Ineligible Receivables existing or arising in Eligible
Accounts will from time to time 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 on the last day of
any Collection Period either (i) the Pool Balance is less than the Required
Pool Balance (as defined below) as of the following Distribution Date (after
giving effect to the allocations, distributions, withdrawals and deposits to
be made on such Distribution Date) 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 on such last day. In either case referred to in the preceding sentence,
unless certain insolvency events have occurred with respect to BCI or BCRC,
BCRC under the Receivables Purchase Agreement will be required to purchase
from BCI (but BCI will have no obligation to sell to BCRC), within 10 business
days after the end of such Collection Period, the Receivables arising in such
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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 the Rating Agency confirmations referred to in the
second following paragraph), 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 Conditions (described below) are 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)
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 after the
Series 1994-1 Final Payment Date) 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 addition of
Accounts after the Series 1994-1 Final Payment Date, that (i) the Addition
will occur only after all Series 1994-1 Certificates have been paid in full,
(ii) such Accounts do not contain Asset-Based Receivables unless Asset-Based
Receivables have been previously added to the Trust after having met the
Rating Agency Condition, (iii) 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 [15%] of the number of all
Accounts at the end of the preceding calendar quarter, and (iv) 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. When determining the amount of Accounts which have been added
to the Trust for purposes of the tests set forth in (iii) and (iv) 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.
"Rating Agency Condition" means, with respect to any action, that after the
required notice has been given to the applicable Rating Agencies, no such
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 the
rating of any outstanding Series or class within a Series 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
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arrangements for any Series on the Distribution Date for which the Required
Pool Balance is calculated, plus (y) the Pool Available Subordinated Amount on
the most recent preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date), minus (z) any amount on
deposit in any reserve fund (including the Reserve Fund) on such date;
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 (including
the Reserve Fund) at the end of such Business Day; provided, further, that for
Series 1996-2, the Pre-allocated Invested Amount will be subtracted from the
product of the Required Investor Percentage and the Adjusted Invested Amount
for purposes of calculating the Required Pool Balance at all times.
The "Series 1996-2 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.
"Required Investor Percentage" will mean, with respect to the Certificates,
%; provided, however, that BCRC may, upon ten days' prior notice to the
Trustee, each Rating Agency and any Enhancement Provider reduce the Required
Investor Percentage so long as each Rating Agency shall have notified BCRC
that any such reduction will not result in a reduction or withdrawal of the
rating of the Certificates or any other outstanding Series or class of
certificates rated by it at the request of the Depositor.
REMOVAL OF ACCOUNTS
BCRC shall have the right at any time to require the removal of Receivables
in certain designated Accounts (the "Removed Accounts") from the Trust,
including all amounts then held or thereafter received in respect of such
Receivables to be removed. To remove any Receivables in such Removed Account
and such amounts, BCRC (or the Servicer on its behalf) shall, among other
things, (a) on or before the fifth business day prior to the date such removal
will occur (the "Removal Date"), furnish to the Trustee, any Enhancement
Provider and each Rating Agency a written notice (the "Removal Notice")
specifying the Removal Date; (b) on or before the fifth business day after the
Removal 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 Date; (c) represent and warrant that
such removal on the Removal Date 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 such removal will not result in a reduction or
withdrawal of the ratings of the Certificates or any other outstanding Series
or class of certificates by any Rating Agency; and (f) on or before the
related Removal Date, deliver to the Trustee and any Enhancement Provider an
officers' certificate confirming the items set forth in clauses (c), (d) and
(e) above.
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 (the "Designated Balance"); (c) from and after such
Removal Commencement Date, ceasing to transfer to the Trust any Receivables
arising in the Ineligible Accounts; (d) from and after such Removal
Commencement Date, allocating
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all Principal Collections in respect of each Ineligible Account first to the
oldest outstanding principal balance of such Ineligible Account, until the
Determination Date on which the Designated Balance in such Ineligible Account
is reduced to zero (with respect to any such Account, the "Removal Termination
Date"); and (e) on each business day from and after such Removal Commencement
Date until the related Removal Termination Date, allocating (x) to the Trust
(to be further allocated pursuant to the Pooling and Servicing Agreement),
Non-Principal Collections in respect of such Ineligible Accounts based on the
ratio of (1) the amount of Principal Receivables in such Ineligible Accounts
on such business day that were previously sold to the Trust to (2) the total
amount of Principal Receivables in such Ineligible Account on such business
day and (y) to the Depositor the remainder of the Non-Principal Collections in
respect of such Ineligible Accounts on such business day.
Upon satisfaction of the above conditions on the related Removal Termination
Date, such Ineligible Accounts shall be deemed to have been removed from the
Trust and BCRC shall be permitted to sell, transfer, assign, set over and
otherwise convey, without recourse, representation or warranty, all the right,
title and interest in and to the Receivables remaining and thereafter arising
in the Ineligible Accounts, all amounts received or to be received with
respect thereto and all proceeds thereof.
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 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,
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"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 its 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. The
Excess Funding Account is held in the Trust 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 1996-2 Required Balance and the denominator of which is
the aggregate of the required balances for all Series (including the Series
1996-2 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 to the extent that
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.
Following the Series 1994-1 Final Payment Date, on each Business Day during
the Revolving Period, if the Pool Balance at the end of the preceding Business
Day was less than the Required Pool Balance also calculated as of the end of
such preceding Business Day, 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 (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 such day over (ii) the
Pool Balance as of the end of such day and (b) a fraction the numerator of
which is the Series 1996-2 Required Balance and the denominator of which is
the aggregate of the required balances for all Series (including the Series
1996-2 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, funds on deposit in the Excess Funding
Account (including without limitation the Excess Funded Amount) will, on each
Business Day, 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 day on the preceding Business Day, the excess referred to the preceding
sentence (i.e., the amount under clause (i) over the amount under (ii)) has
been reduced or no longer exists.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee at the direction of the Servicer in Eligible Investments that bear
interest at a rate based on LIBOR. Such investments are required to mature on
or before the next Distribution Date. On each Distribution Date, all net
investment income earned on
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amounts in the Excess Funding Account since the preceding Distribution Date
will be withdrawn from the Excess Funding Account and applied as described
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 (or, after the Series 1994-1 Final
Payment Date, daily) 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 1996-2 Investor Allocation Percentage;
provided, however, that with respect to the allocation of Principal
Collections among Series 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 and (ii)
the principal allocation percentage (including the Principal Allocation
Percentage, if applicable) for each Series in its amortization, accumulation
or early amortization period, then Principal Collections for such Collection
Period will be allocated among the Series pro rata on the basis of such
allocation percentages.
"Floating Allocation Percentage" for any Collection Period means the
percentage (which shall never exceed 100%) obtained (x) prior to the Series
1994-1 Final Payment Date, 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) from and after the Series 1994-1 Final Payment Date, by
dividing 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
first Collection Period, 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" for any Collection Period means the
percentage (which shall never exceed 100%) obtained by dividing the Invested
Amount as of the last day of the Revolving Period by the Pool Balance (x)
prior to 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 day in such Collection Period; provided,
however, that, for purposes of allocating Principal Collections, when
calculating the Principal Allocation Percentage, the Invested Amount shall be
reduced by the Pre-Allocated Invested Amount.
"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 or the Pre-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 dates.
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"Adjusted Invested Amount" means the Initial Principal Amount of the
Certificates less (x) the Pre-Funded Amount, plus (y) 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 (z) 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" means until the Series 1994-1 Final Payment
Date, $ plus the aggregate amount of all principal payments made with
respect to the Series 1994-1 Certificates since the Closing Date, and shall be
zero from and after the Series 1994-1 Final Payment Date.
"Miscellaneous Payments" for any Collection Period means the sum of (a)
Adjustment Payments and Transfer Deposit Amounts on deposit in the Collection
Account on the related Distribution Date received with respect to such
Collection Period and (b) Unallocated Principal Collections available to be
treated as Miscellaneous Payments as of the Distribution Date following such
Collection Period as described below under "Principal Collections for all
Series."
"Pool Available Subordinated Amount" means for any date the sum of the
Available Subordinated Amount and the aggregate available subordinated amounts
for all other outstanding Series.
"Pool Invested Amount" means for any date the sum of the Invested Amount and
the invested amounts for all other outstanding Series.
"Series 1996-2 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.
Principal Collections for all Series. Available Investor Principal
Collections 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." Available Investor Principal Collections 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. The Servicer will determine the amount of Available
Investor Principal Collections for any Collection Period 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
if the Pool Balance (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 or, with respect to the first
Determination Date, the Required Pool Balance for the Closing Date (in each
case such Required Pool Balance to be determined after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date). [Any amount
not allocated 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") until the Pool Balance exceeds the
Required Pool Balance, at which time such amount will be allocated to the
holder of the BCRC Certificate, or until an early amortization event occurs or
an amortization period commences for any Series, after which event or
commencement such amount will be treated as a Miscellaneous Payment.]
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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 certificates.
In addition 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, 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 Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date) or, after the
Series 1994-1 Final Payment Date, the Required Pool Balance on such 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
the related Distribution Date), has been deposited in the Collection Account
from such Available Retained Collections.
"Available Retained Collections" for any date on which the Servicer
deposits collections in the Collection Account (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 on the Determination Date occurring in such
Collection Period.
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"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 over (ii) the Excess Retained
Percentage for such Collection Period 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 over (ii) the Excess Retained
Percentage for such Collection Period and (b) Principal Collections for
such date.
"Excess Retained Percentage" 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 Determination Date preceding such
Collection Period (or the Pool Available Subordinated Amount as of the
Closing Date with respect to the first Collection Period) and the
denominator of which is the Pool Balance at the end of the preceding
Collection Period (or as of the Closing Date with respect to the first
Collection Period).
"Retained Percentage" for any Collection Period means 100% minus (a) when
used with respect to Non-Principal Collections, the sum of (i) the
aggregate of the floating allocation percentages for each outstanding
Series (including the Certificates) and (ii) the Variable Funding
Percentage for the related Collection Period, and (b) when used with
respect to Principal Collections, the sum of (i) the aggregate of the
floating allocation percentages for each outstanding Series (including the
Certificates, if applicable) in its revolving period, (ii) the aggregate of
the principal allocation percentages for each outstanding Series (including
the Certificates, if applicable) in its amortization, accumulation or early
amortization period and (iii) the Variable Funding Percentage for the
related Collection Period, but in each case the Retained Percentage shall
not be less than 0%.
"Variable Funding Percentage" for any Collection Period means a
percentage (which percentage shall never be less than 0% nor more than
100%) equal to (x) prior to 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 each day in such Collection Period divided by the Pool Balance as of
each such day; provided, however, that for purposes of allocating Principal
Collections following the occurrence of a Liquidation Event, the Variable
Funding Percentage will be calculated on the basis of the Variable Funding
Amount as of the last day immediately preceding the date of such
Liquidation Event; provided, further, that following a Liquidation Event,
the relative interest of the Variable Funding Certificate in further
allocations of Non-Principal Collections will not be less than the relative
interest thereof as of the Liquidation Event.
Limited Subordination of Retained Interest. A portion of the Retained
Participation Amount up to the Available Subordinated Amount will be available
to fund payment of principal and interest on the Certificates in the event
that the proportionate interests of the Certificates in collections received
with respect to the Receivables during any particular Collection Period are
less than the required distributions thereon. The following paragraphs
describe the extent to which collections otherwise allocable to the BCRC
Certificate will be available to satisfy shortfalls with respect to the
payment of principal and interest on the Certificates.
Deficiency Amount. On each Determination 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 the following Distribution Date, (ii)
Monthly Interest accrued but not paid with respect to prior Distribution Dates
(and interest thereon), (iii) the Monthly Servicing Fee for such Distribution
Date, (iv) the Investor Default Amount for such Distribution Date, and (v) the
Series 1996-2 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".
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"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; provided, however, that (x) for any date of
determination, on or prior to the Determination Date immediately following the
end of the Revolving Period, the Required Subordinated Amount shall in no
event be less than an amount equal to % of the Initial Principal Amount of
the Certificates and (y) for any date of determination on or after the second
Determination Date following the end of the Revolving Period, the Required
Subordinated Amount shall be equal to the Subordinated Percentage multiplied
by the Initial Principal Amount of the Certificates.
Available Subordinated Amount. The "Available Subordinated Amount" for a
Determination Date is equal to the sum of:
(i) the lesser of:
(a) the Available Subordinated Amount for the preceding Determination
Date, minus, with certain limitations, the Required Subordination Draw
Amount for the preceding Distribution Date, minus 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 which is the Available
Subordinated Amount as of the second preceding Determination Date (or
in the case of the first or second Determination 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 second preceding
Collection Period (or in the case of the first Determination 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 such preceding Determination Date,
plus the Incremental Subordinated Amount for the current Determination
Date; and
(b) the Required Subordinated Amount for such Determination Date; 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 the first Determination Date is equal to
the Required Subordinated Amount as of the Closing Date, which will equal
$ .
The "Subordinated Percentage" will equal the percentage equivalent of a
fraction, the numerator of which is % and the denominator of which will
be the excess of 100% over %.
The "Incremental Subordinated Amount" on any Determination 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
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preceding Collection Period (or with respect to the first Determination
Date, the Invested Amount on the Closing Date) and the Available
Subordinated Amount for such Determination Date (calculated without
subtracting or adding the Incremental Subordinated Amount for such
Determination 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 excess, if any, of (x) the Overconcentration
Amount on such Determination Date over (y) the Overconcentration Default
Amount on such Determination Date minus Defaulted Receivables in each
Account containing any portion of the Overconcentration Amount during the
preceding Collection Period that are subject to reassignment to BCRC,
unless certain insolvency events relating to the BCRC or BCI have occurred,
as further described in the Pooling and Servicing Agreement.
"Obligor Overconcentrations" on any Determination 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 Determination Date over (y) [ ]% of the
Pool Balance on the last day of such immediately preceding Collection
Period. Certain designated Obligors may be subject to a higher percentage
limit with Rating Agency approval, but in no case higher than %.
"Manufacturer Overconcentrations" on any Determination 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 which Eligible Receivables are in the Pool on the last
day of the Collection Period immediately preceding such Determination Date
over (y) % 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 with the consent
of the Rating Agencies.
"Designated Manufacturer Overconcentrations" on any Determination Date
means the excess of (x) the aggregate amount of Eligible Receivables
created in connection with the financing of products manufactured by the
"Designated Manufacturers" which Eligible Receivables are in the Pool on
the last day of the Collection Period immediately preceding such
Determination Date over (y) % of the Pool Balance on the last day of such
immediately preceding Collection Period, where the Designated Manufacturers
are the two manufacturing entities whose products account for the largest
aggregate principal balances of Receivables in the Pool on such last day;
provided, however, that the percentage specified in clause (y) may be
adjusted from time to time with the consent of the Rating Agencies.
"Industry Overconcentrations" on any Determination 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)
which Eligible Receivables are in the Pool on the last day of the
Collection Period immediately preceding such Determination Date over (y) an
amount equal to % (provided that such percentage may be adjusted from time
to time with the consent of the Rating Agencies) of the Pool Balance on the
last day of such immediately preceding Collection Period; provided,
however, that with respect to each industry specified below, the percentage
in clause (y) of this definition shall be deemed to equal the percentage
set forth opposite such industry:
<TABLE>
<CAPTION>
INDUSTRY PERCENTAGE
-------- ----------
<S> <C>
Recreational Vehicles.......................................... %
Lawn and Garden................................................ %
Consumer Electronics and Appliances............................ %
</TABLE>
"Overconcentration Amount" on any Determination Date means the sum of
(without duplication) the Dealer Overconcentrations, the Manufacturer
Overconcentrations, the Designated Manufacturer Overconcentrations and the
Industry Overconcentrations on such Determination Date.
"Overconcentration Default Amount" on any Determination Date means, with
respect to all Accounts included in the Pool with respect to which there
existed a Dealer Overconcentration, a Manufacturer Overconcentration, a
Designated Manufacturer Overconcentration or an Industry Overconcentration
during the immediately preceding Collection Period, the lesser of (a) the
aggregate amount of Receivables in each
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such Account that became Defaulted Receivables during such Collection
Period and (b) the aggregate amount (without duplication) of such Dealer
Overconcentrations, Manufacturer Overconcentrations, Designated
Manufacturer Overconcentrations or Industry Overconcentrations on such
Determination Date.
If the Available Subordinated Amount for any three consecutive Distribution
Dates is less than the Required Subordinated Amount for the three related
Determination Dates, 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 Monthly 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);
(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) 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;
(vii) 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
(viii) the balance, if any, shall constitute Excess Servicing and shall
be allocated by the Trustee in the manner described under "Principal
Collections" 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 in the numerical order thereof; [provided, however, that during an
Early Amortization Period, the application of funds in the Reserve Fund to
cover the amount in clause (v) will be reduced or eliminated to the extent
necessary to maintain the amount in the Reserve Fund at least equal to
$1,000,000.]
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If there is a Deficiency Amount for such Distribution Date, the Trustee
shall apply the amount of Available Retained Collections for the related
Collection Period on deposit in the Collection Account 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 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.
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 the Series. 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."
"Investment Proceeds" for any Distribution Date means an amount equal to
the sum of (a) all interest and other investment earnings (net of losses
and investment expenses) on funds on deposit in the Reserve Fund, the Pre-
Funding Account and the Excess Funding Account and (b) the Series 1996-2
Investor Allocation Percentage of net investment earnings credited to the
Collection Account on the related Determination Date with respect to funds
held in the Collection Account.
"Excess Servicing" for any Distribution Date means the amount described
in clause (viii) above.
Reserve Fund. An Eligible Deposit Account will be established and maintained
in the name of the Trustee for the benefit of the Certificateholders (the
"Reserve Fund"). BCRC will make an initial deposit into the Reserve Fund on
the Closing Date in an amount equal to $ . The "Reserve Fund Required
Amount" means an amount which on any Distribution Date will equal % 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 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 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 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 the
related Determination Date) over (ii) the Pool Balance (after giving effect to
changes thereto on such Determination Date); provided that the Excess Reserve
Fund Required Amount shall in no event exceed the Available Subordinated
Amount for such Determination Date.
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In connection with the allocations to the Reserve Fund referred to in the
two preceding paragraphs, 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 1996-2 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 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 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) 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
1996-2 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 1996-2
Termination Date.
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"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 Non-Principal Collections, funds in the
Reserve Fund and Available Retained Collections allocated to cover any
Investor Default Amount or reimburse Investor Charge-Offs, (c) the Series
1996-2 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 the Amortization Period, 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 1996-2 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").
"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 Distribution Amount" for any Class A Amortization
Date means an amount equal to the principal balance of the Class A
Certificates as of the Distribution Date (after giving effect to any
changes therein on such date) divided by the number of months comprising
the Class A Amortization Period Length.
"Class A Expected Final Payment Date" means the Distribution Date.
"Class B Expected Payment Date" shall mean the 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 30 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) each Rating
Agency shall have notified BCRC, the Servicer and the Trustee that such action
will not result in a reduction or withdrawal of the then existing rating of
any outstanding Series or class.
DEFAULTED RECEIVABLES AND RECOVERIES
"Defaulted Receivables" on any Determination Date are (i) all Receivables
(other than Receivables that were designated as Ineligible Receivables at the
time of transfer to the Trust) which were charged off by the Servicer as
uncollectible in respect of the immediately preceding Collection Period and
(ii) 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 Determination 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
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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, and,
provided that unless the Depositor has given the Rating Agencies prior notice
of its election not to take the following actions with respect to the
Receivables and the Rating Agency Condition shall have been satisfied with
respect to such election, the Servicer shall charge off as uncollectible each
Receivable with respect to which [principal payments are delinquent by 60 days
or more or with respect to interest payments (with respect to Receivables
aggregating at least $1,000 under the same Account) are delinquent by 90 days
or more]. Receivables will not be deemed to be Defaulted Receivables merely
because they become Ineligible Receivables. 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."
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 such 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
1996-2 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 after 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 Invested Amount and accrued and unpaid interest due on the Certificates
on the date of such repurchase. 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
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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 the Servicer or BCI, as applicable, (i) to
make any payment or deposit required by the terms of the Pooling and
Servicing Agreement, including but not limited to any Transfer Deposit
Amount or Adjustment Payment, on or before the date occurring five (5)
business days after the date such payment or deposit is required to be
made, which failure is not cured within five business days after notice
from the Trustee of such failure; (ii) with respect to any Series, to
deliver a Distribution Date Statement within ten business days after notice
from the Trustee of such failure; (iii) to duly comply with, observe or
perform in any material respect the covenant of the Depositor not to create
any lien (other than tax and certain other statutory liens (including liens
in favor of the Pension Benefit Guaranty Corporation)) on any Receivable or
any Collateral Security, or any interest therein, or the Depositor's
rights, remedies, powers or privileges with respect to the Receivables
under the Receivables Purchase Agreement, among other things, 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 Determination Date, the Available Subordinated Amount is less
than the Required Subordinated Amount after giving effect to the
distributions to be made on the next Distribution Date and the Available
Subordinated Amounts for the two preceding Determination Dates were less
than the respective Required Subordinated Amounts for such two preceding
Determination Dates (after giving effect to the distributions made on the
related Distribution Dates);
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(g) any Servicer Default occurs;
(h) 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 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 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;
(i) the ratio (expressed as a percentage) of (x) the average for each
month of the net losses on the Receivables in the Pool (i.e., gross losses
less recoveries on any Receivables (including, without limitation,
recoveries from Collateral Security in addition to the products financed by
the Receivables, recoveries from manufacturers, distributors or importers
and insurance proceeds)) during any three consecutive calendar months to
(y) the average of the month-end Pool Balances for such three-month period,
exceeds [5]% on an annualized basis; provided, that this clause (i) may be
amended or waived with the consent of each of the Rating Agencies;
(j) 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]%; provided, that this
clause (j) may be amended or waived with the consent of each of the Rating
Agencies;
(k) 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; or
(l) a Liquidation Event occurs; 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); a "Liquidation Event" shall
also occur upon certain events of bankruptcy, insolvency or receivership
relating to BCI or BCRC.
Upon the occurrence of any event described above, an Early Amortization
Event will be deemed to have occurred without any notice or other action on
the part of any other party immediately upon the occurrence of such event. The
Early Amortization Period will commence as of the day on which the Early
Amortization Event occurs. Monthly distributions of principal on the
Certificates will begin on the first Distribution Date following the
Collection Period in which an Early Amortization Period has commenced.
If an Early Amortization Period results from the failure by BCRC to convey
Receivables in Additional Accounts to the Trust as described in clause (a)
above during the Revolving Period and no other Early Amortization Event has
occurred, the Early Amortization Period resulting from such failure will
terminate and the Revolving Period will recommence (unless the scheduled
termination date of the Revolving Period has
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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 such violation, 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 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 1996-2 Termination Date. In
the event that the Invested Amount is greater than zero on the Series 1996-2
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 1996-2 Termination Date, up to the amount necessary to pay
principal of and accrued and unpaid interest on outstanding Certificates, as
the final payment of the Certificates.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that (x) the Depositor will
indemnify the Trust and the Trustee from and against any loss, liability,
reasonable expense, damage or injury suffered or sustained by reason
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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,
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 or the Trustee
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 penalties with
respect thereto) required to be paid by the Trust. 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.
Subject to compliance with all requirements of law, the Servicer (or BCI)
and any affiliate of BCI may change the terms and provisions of the Accounts,
including the Inventory Security Agreements and the financing
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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. The remainder of the Servicing Fee 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 1996-2
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 for such Distribution Date shall be
deemed to be zero.
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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 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;
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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; (c) the
Investor Default Amount for such Distribution Date; (d) the Required
Subordination Draw Amount, if any, for the preceding Collection Period; (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 the Determination Date with respect to such
Distribution Date (consisting of an eleven-digit decimal expressing the
Invested Amount as of such Determination 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 Determination 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.
On or before January 31 of each calendar year, beginning with January 31,
1997, 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
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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 an owner of Certificates upon request in writing delivered
to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement may be amended 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.
The Pooling and Servicing Agreement may also be amended by BCRC, the
Servicer, the Trustee and BCI (if not the Servicer) with the consent of the
holder of the Variable Funding Certificate, if it would be adversely affected
by such amendment, and holders of certificates evidencing not less than a
majority of the aggregate unpaid principal amount of the certificates of all
adversely affected Series for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
certificateholders. No such amendment, however, may (a) reduce in any manner
the amount of, or delay the timing of, distributions required to be made on
any certificate (including the Variable Funding Certificate) or the deposits
to be made therefor, (b) change the definition or the manner of calculating
interest on any certificate, (c) reduce the amount available under any
Enhancement, (d) adversely affect the rating of any Series or class by any
Rating Agency which rated such Series or class or (e) reduce the percentage of
the unpaid principal balance of certificates the holders of which are required
to consent to any such amendment, without, in the case of (a), (b), (c) or (e)
the consent of each affected certificateholder or the Variable Funding
Certificate, as applicable and, in the case of (d), the consent of the holders
of certificates of such Series or class evidencing not less than 66 2/3% of
the aggregate unpaid principal amount of the certificates of such Series or
class. Promptly following the execution of any amendment to the Pooling and
Servicing Agreement (other than an amendment described in the preceding
paragraph), the Trustee will furnish notice of the substance of such amendment
to each certificateholder.
The Pooling and Servicing Agreement may not be amended in any manner which
materially adversely affects the interests of any Enhancement Provider without
its prior consent.
LIST OF CERTIFICATEHOLDERS
Upon written request of any three or more certificateholders of record, the
Trustee will afford such certificateholders access during business hours to
the current list of registered certificateholders of a Series or of all
Series, as applicable, for purposes of communicating with other
certificateholders with respect to their rights under the Pooling and
Servicing Agreement. It is anticipated that the only Certificateholder will be
Cede, as
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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 "--Certificates-Servicing Compensation and Payment
of Expenses."
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AMENDMENTS TO POOLING AND SERVICING AGREEMENT
On the Closing Date, BCRC, BCI and the Trustee will enter into certain
amendments to the Pooling and Servicing Agreement. The terms of the Pooling
and Servicing 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"). Those
provisions which will not become effective until the Series 1994-1 Final
Payment Date are so designated in this Prospectus wherever the affected terms
are described. The Delayed Amendments are briefly summarized below:
--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, (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 Agencies have notified BCRC
that such amendment will not cause the ratings on the Certificates to be
reduced or withdrawn. See "Description of 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 in addition to those originated by BCI or
an Affiliate and (iii) to extend the period during which Receivables can be
outstanding before they become Ineligible Receivables. See "Description of
Certificates--Eligible Accounts and Eligible Receivables."
--See "Description of the Certificates--Excess Funding Account" and "--
Addition of Accounts--Required Pool Balance."
--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.
--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."
The holders of the Certificates, by the purchase and acceptance of the
Certificates, will conclusively be deemed to have consented to each of such
Delayed Amendments.
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DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The Receivables transferred and to be transferred to BCRC 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 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 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) 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 and transfer to BCRC (i) Domestic
Inventory Receivables created thereafter (and the related Collateral Security)
with respect to the Accounts or Additional Accounts and (ii) after the Series
1994-1 Final Payment Date, and subject to receipt by the Trustee of letters
from the Rating Agencies confirming that the inclusion of Asset-Based
Receivables in the Trust will not result in the reduction or withdrawal of the
rating of the Certificates or any other Series or class of certificates then
outstanding and subject to certain other conditions, Asset-Based Receivables
created with respect to the Accounts.
Under the Receivables Purchase Agreement, BCI has transferred and will
transfer the Receivables to BCRC in exchange for (i) the net cash proceeds
received by BCRC from the sale of the investor certificates to the
underwriters (which proceeds equals the proceeds, after expenses, raised from
the sale of the investor certificates) and (ii) a promissory note (the "Note")
issued by BCRC in favor of BCI. (The purchase price with respect to Eligible
Receivables transferred will equal the principal amount of such Receivables
plus accrued and unpaid interest thereon on the date of transfer. The purchase
price with respect to Ineligible Receivables transferred will equal the net
book value of such Receivables.) The principal amount of the Note will be
increased from time to time in connection with the transfer of additional
Receivables by BCI to BCRC for inclusion in the Trust pursuant to the
Receivables Purchase Agreement to the extent the purchase price for such
Receivables is not paid in cash by BCRC. As security for the Note, BCRC has
pledged to BCI the Variable Funding Certificate held by BCRC. Principal and
interest payable on the Note may be paid by BCRC from time to time out of
monies available to BCRC from any source (including through BCRC's interest in
the BCRC Certificate and Variable Funding Certificate). Interest on the Note
will accrue at a rate per annum equal to 15%. In the event of a bankruptcy
where BCRC and the Trust are substantively consolidated or in any other
instance where the holder of the Note and the holders of the investor
certificates will be claiming against a common fund, the portion of the
aggregate amounts then due under the Note in excess of the amount by which (x)
the Variable Funding Amount plus the Retained Participation Amount exceeds (y)
the Available Subordinated Amount will be subordinate to the prior
indefeasible payment in full of the investor certificates.
In connection with the sale of the Receivables to BCRC, BCI will indicate in
its computer files that the Receivables have been sold to BCRC, and that BCRC
has transferred its interest therein to the Trust. In addition, BCI will
provide to BCRC and the Trustee a computer file or microfiche or written list
containing a true and complete list of all Accounts, identifying the balances
of the Receivables as of the Initial Cut-Off Date and any Receivables in any
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 sale. BCI has filed and will file UCC financing statements
with respect to the sale of the Receivables meeting the requirements
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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 (or, in the case of an
Additional Account, as of the Additional Cut-Off Date and each Addition Date),
each Account or 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 on the
business day preceding the date of such retransfer. 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.
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 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
liens) being transferred to BCRC to any other person. BCI also has covenanted
to defend and indemnify BCRC for any loss, liability or expense incurred by
BCRC in connection with a breach by BCI of certain of its representations,
warranties or covenants contained in the Receivables Purchase Agreement.
In addition, BCI has expressly acknowledged and consented to BCRC's
assignment of its rights relating to the Receivables under the Pooling and
Servicing Agreement to the Trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after the
Trust terminates. In addition, if BCI becomes party to any bankruptcy or
similar proceeding (other than as a claimant) and, if such proceeding either
is voluntary or is involuntary and, in the case of an involuntary proceeding,
such involuntary proceeding is not dismissed within 60 days of its
institution, BCI will immediately cease to sell or transfer Receivables to
BCRC and will promptly give notice of such event to BCRC and the Trustee.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES AND CERTIFICATES
In connection with any Receivables sold and assigned by BCI to BCRC, BCI
represents and warrants that such sale 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 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; provided that, after the Series 1994-1 Final
Payment Date and subject to satisfaction of the Rating Agency Condition, the
obligations with respect to Domestic Inventory Receivables may be secured by a
subordinate perfected security interest in the Eligible Product and, if Asset
Based Receivables are included in the Trust, the obligations with respect
thereto may be secured by a security interest, which may be a subordinate
interest, in goods, work in process, raw materials, component parts or other
assets of the Obligor. However, at a time 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.
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. Under the Receivables Purchase Agreement, in
connection with any Receivables sold 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. 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
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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).
Each of BCI and BCRC also have 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 for tax and other statutory liens
(including liens in favor of the Pension Benefit Guaranty Corporation),
respectively; provided that, after the Series 1994-1 Final Payment Date, BCI
may, subject to satisfaction of the Rating Agency Condition, participate out a
portion of certain of the Receivables. In addition, while BCI is the Servicer,
cash collections on the Receivables may, under certain circumstances, 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 recently decided 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 and assigned by BCI to BCRC under
the Receivables Purchase Agreement, BCI warrants to BCRC in the Receivables
Purchase Agreement that the sale of such Receivables by it to BCRC is a valid
sale of such Receivables. In addition, BCI and BCRC have agreed to treat the
transfer of Receivables by BCI to BCRC under the Receivables Purchase
Agreement as a sale of the Receivables to BCRC, and BCI has or will take all
actions that are required under Vermont law to perfect BCRC's ownership
interest in the Receivables. Notwithstanding the foregoing, if BCI were to
become a debtor in a bankruptcy case and a bankruptcy trustee for BCI as
debtor-in-possession or a creditor of BCI were to take the position that the
sale of Receivables from BCI to BCRC under the Receivables Purchase Agreement
should be recharacterized as a pledge of such Receivables to secure a
borrowing by BCI, then delays in payments of collections of Receivables to
BCRC could occur or (should the court rule in favor of any such trustee,
debtor in possession or creditor) reductions (which, in certain circumstances,
could be substantial) in the amount of such payments could result.
In addition, if BCI were to become a debtor in a bankruptcy case and a
creditor or bankruptcy trustee of such debtor or such debtor itself were to
request a court to order that BCI should be substantively consolidated with
BCRC, delays in payments on the Receivables and, accordingly, the Certificates
could result. Should the bankruptcy court rule in favor of any such creditor,
bankruptcy trustee or such debtor, reductions (which, in certain circumstances
could be substantial) in the amount of such payments could result.
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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 an association 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.
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, that deemed
partnership could be classified as a PTP taxable as a corporation (with the
tax consequences described below).
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POSSIBLE CHARACTERIZATION OF THE TRUST AS A CORPORATION
If (contrary to the view expressed above) the Certificates were neither
treated as indebtedness of BCRC nor interests in a partnership (other than a
PTP taxable as a corporation), the Trust could be classified as an association
taxable as a corporation. In that event the Trust would be subject to federal
income tax at corporate rates on the taxable income that the Trust derives
from the Receivables. Such tax would reduce the amounts available for
distribution to the Certificateholders. Such classification would be of little
additional significance for the Certificateholders if the Certificates
continued to be treated as indebtedness and sufficient cash is available to
pay any taxes. If, however (contrary to the views expressed above), the
Certificates were treated as equity interests in the Trust, that is, stock in
a corporation, 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
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part that gain on the sale or other disposition of a Certificate and partial
principal payments on a Certificate are treated as ordinary income to the
extent of accrued market discount. The market discount rules also provide for
deferral of a portion of interest deductions with respect to debt incurred to
purchase or carry a Certificate that has market discount. Alternatively, a
Certificateholder may elect to include market discount in income as it accrues
in lieu of the tax treatment described in the two preceding sentences.
Market Premium. A Certificateholder who purchases a Certificate at a premium
price may elect to offset the premium against interest income over the
remaining term of the Certificate in accordance with the provisions of Section
171 of the Code.
SALE OR EXCHANGE OF CERTIFICATES
Upon a sale of a Certificate, a Certificateholder generally will recognize
gain or loss equal to the difference between the amount realized on the sale
or exchange and the Certificateholder's adjusted basis in the Certificate. The
adjusted basis in the Certificate will equal its cost, increased by any OID or
market discount includible in income with respect to the Certificate prior to
its sale, and reduced by any principal payments previously received with
respect to the Certificate and any amortized premium. Generally, gain or loss
will be capital gain or loss if the Certificate was held as a capital asset,
and will be long-term gain or loss if held for more than one year. Generally,
capital losses generally 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 with respect to
Certificates issued in registered form, 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 prepinion 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 (including in
Exhibit 5.1 hereof)*...................................
23.2 Consent of Morgan, Lewis & Bockius LLP (including in
Exhibit 8.1 hereof)*...................................
24.1 Power of Attorney.......................................
99.1 Form of Inventory Security Agreement*...................
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* To be Filed by Amendment.
