<PAGE>
Filed Pursuant to Rule 424(B)(5)
Registration Number 333-38676
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus supplement is not complete and may be +
+changed. AmSouth Auto Receivables LLC may not sell the securities that are +
+described in this prospectus supplement until we deliver a final prospectus +
+supplement and attached prospectus. This prospectus supplement is not an +
+offer to sell these securities and is not a request for any offers to buy +
+these securities in any state where the laws in that state do not permit the +
+seller to offer or sell these securities. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion dated October 9, 2000
Prospectus Supplement to Prospectus dated October 9, 2000
$931,410,000
AmSouth Auto Trust 2000-1
Issuer
AmSouth Auto Receivables LLC AmSouth Bank
Seller Servicer
Before you The trust will issue the following notes:
purchase <TABLE>
any of <CAPTION>
these Principal Interest Final Scheduled
securities, Amount Rate Distribution Date
be sure you ------------ -------- -----------------
understand <S> <C> <C> <C>
the Class A-1 notes........... $230,000,000 % November 15, 2001
structure Class A-2 notes........... $240,000,000 % February 17, 2003
and the Class A-3 notes........... $315,000,000 % July 15, 2004
risks. See Class A-4 notes........... $103,640,000 % February 15, 2005
especially Class B notes............. $ 28,510,000 % July 15, 2005
the risk Class C notes............. $ 14,260,000 % February 15, 2007
factors </TABLE>
beginning -----
on page S-
12 of this . The notes are secured by the assets of
prospectus the trust, which consist primarily of
supplement motor vehicle installment sales
and on page contracts secured by new and used
4 of the automobiles and light-duty trucks.
attached
prospectus. . The trust will pay interest and
principal on the notes on the 15th day
These notes of each month, or if the 15th is not a
are asset business day, the next business day.
backed
securities . The trust will pay principal
issued by a sequentially to the earliest maturing
trust. The class of notes then outstanding until
notes are paid in full.
not
obligations The underwriters are offering the following
of AmSouth notes by this prospectus supplement:
Bank, the
seller or <TABLE>
any of <CAPTION>
their Initial Proceeds
affiliates. Public to the
Offering Underwriting Seller
Neither the Price (1) Discount (1)(2)
notes nor --------- ------------ --------
the <S> <C> <C> <C>
receivables Per Class A-1 note................ % % %
are insured Per Class A-2 note................ % % %
or Per Class A-3 note................ % % %
guaranteed Per Class A-4 note................ % % %
by the Per Class B note.................. % % %
Federal Per Class C note.................. % % %
Deposit Total............................. $ $ $
Insurance </TABLE>
Corporation -------
or any (1) The price of the notes will also
other include interest accrued on the
governmental notes, if any, from October , 2000.
agency or
instrumentality.
(2) Before deducting expenses payable by
No one may the seller estimated to be
use this $ .
prospectus
supplement
to offer
and sell
these
securities
unless it
is
accompanied
by the
prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the attached prospectus are accurate or complete.
Any representation to the contrary is a criminal offense.
Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Salomon Smith Barney
The date of this prospectus supplement is October , 2000.
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Where to Find Information in These Documents............................... S-3
Summary of Terms of the Notes.............................................. S-4
Structural Summary......................................................... S-7
Risk Factors............................................................... S-12
Capitalized Terms.......................................................... S-19
The Trust.................................................................. S-19
Limited Purpose and Assets............................................... S-19
Capitalization of the Trust.............................................. S-19
The Owner Trustee........................................................ S-20
The Trust Property......................................................... S-20
The Receivables Pool....................................................... S-21
Pool Composition......................................................... S-21
Weighted Average Life of the Notes....................................... S-23
The Servicer............................................................... S-28
Size of Servicing Portfolio.............................................. S-28
Delinquencies, Loss and Repossession Experience.......................... S-28
How You Can Compute Your Portion of the Amount Outstanding on the Notes.... S-30
Maturity and Prepayment Considerations..................................... S-30
Use of Proceeds............................................................ S-31
Description of the Notes................................................... S-31
Payments of Interest..................................................... S-31
Payments of Principal.................................................... S-32
Optional Redemption...................................................... S-33
</TABLE>
<TABLE>
<S> <C>
The Indenture............................................................ S-33
The Indenture Trustee.................................................... S-36
Description of the Sale and Servicing Agreement............................ S-36
Sale and Assignment of the Receivables................................... S-36
Accounts................................................................. S-36
Servicing Compensation and Expenses...................................... S-36
Rights Upon an Event of Servicing Termination............................ S-37
Waiver of Past Events of Servicing Termination........................... S-37
Distributions............................................................ S-37
Reserve Account.......................................................... S-42
Material Legal Aspects of the Receivables.................................. S-43
Legal Investment........................................................... S-43
Material Federal Income Tax Consequences................................... S-43
State Tax Matters.......................................................... S-44
ERISA Considerations....................................................... S-44
The Notes................................................................ S-44
Independent Review and Consultation with Counsel......................... S-45
Underwriting............................................................... S-46
Legal Matters.............................................................. S-47
Glossary of Terms.......................................................... S-48
</TABLE>
S-2
<PAGE>
Where to Find Information in These Documents
This prospectus supplement and the attached prospectus provide information
about the trust, AmSouth Auto Trust 2000-1, including terms and conditions
that apply to the notes to be issued by the trust. You should rely only on the
information provided in this prospectus supplement and the attached
prospectus, including the information incorporated by reference. We have not
authorized anyone to provide you with different information.
We tell you about the notes in two separate documents that progressively
provide more detail:
. the attached prospectus, which provides general information, some of
which may not apply to your notes; and
. this prospectus supplement, which describes the specific terms of your
notes.
We have started with several introductory sections in this prospectus
supplement describing the notes and the trust in abbreviated form, followed by
a more complete description of the terms. The introductory sections are:
. Summary of Terms of the Notes--provides important information concerning
the amounts and the payment terms of each class of notes
. Structural Summary--gives a brief introduction to the key structural
features of the trust
. Risk Factors--describes briefly some of the risks to investors in the
notes
We include cross-references in this prospectus supplement and in the
attached prospectus to captions in these materials where you can find further
related discussions. The Table of Contents in this prospectus supplement and
the Table of Contents included in the attached prospectus provide the page
numbers on which those captions are located.
We are not offering the notes in any state where the offer of the notes is
not permitted.
S-3
<PAGE>
Summary of Terms of the Notes
The following summary is a short description of the main terms of the
offering of the notes. For that reason, this summary does not contain all of
the information that may be important to you. To fully understand the terms of
the offering of the notes, you will need to read both this prospectus
supplement and the attached prospectus, each in its entirety.
Issuer
AmSouth Auto Trust 2000-1, a common law trust formed under New York law,
will use the proceeds from the issuance and sale of the securities to purchase
a pool of motor vehicle retail installment sale contracts secured by new and
used automobiles and light-duty trucks, which constitute the receivables.
AmSouth Bank acquired the receivables directly from dealers. AmSouth Bank will
service the receivables. The trust will rely upon collections on the
receivables and the funds on deposit in certain accounts to make payments on
the notes. The trust will be solely liable for payments on the notes.
Offered Securities
The following securities are being offered by this prospectus supplement:
. $230,000,000 Class A-1 % asset backed notes
. $240,000,000 Class A-2 % asset backed notes
. $315,000,000 Class A-3 % asset backed notes
. $103,640,000 Class A-4 % asset backed notes
. $28,510,000 Class B % asset backed notes
. $14,260,000 Class C % asset backed notes
The trust is also issuing certificates representing the equity interest in
the trust. The seller is not offering the certificates by this prospectus
supplement. Any information in this prospectus supplement relating to the
certificates is presented solely to provide you with a better understanding of
the notes.
Minimum Denominations
The notes will be issued in minimum denominations of $1,000.
Trustees
Notes The Chase Manhattan Bank, a New York corporation, as indenture
trustee.
Certificates
The Bank of New York Trust Company of Florida, National Association,
a national banking association, as owner trustee.
Closing Date
The trust expects to issue the notes on or about October , 2000.
Distribution Dates
On the 15th day of each month or, if the 15th day is not a business day,
the next business day, the trust will pay interest and principal on the notes.
First Distribution Date
The first distribution date will be November 15, 2000.
Record Dates
On each distribution date, the trust will pay interest and principal to the
holders of the notes as of the related record date. The record dates for the
notes will be the day immediately preceding the distribution date. If
definitive notes have been issued, the record date for the notes will be the
last day of the month preceding the distribution date.
S-4
<PAGE>
Final Scheduled Distribution Dates
The trust is required to pay the outstanding principal amount of each class
of notes, to the extent not previously paid, in full on the respective final
scheduled distribution date for that class of notes specified on the cover page
of this prospectus supplement or, if such date is not a business day, the next
succeeding business day.
Interest Rates
The trust will pay interest on each class of notes at the rates specified
on the cover of this prospectus supplement.
Interest Accrual
Class A-1 Notes
"Actual/360", accrued from distribution date to distribution
date.
Other Notes "30/360", accrued from the 15th day of the previous month to the
15th day of the current month.
This means that, if there are no outstanding shortfalls in the payment of
interest, the interest due on each distribution date for each class of notes
will be the product of:
. the applicable outstanding principal balance;
. the applicable interest rate; and
. 30 (or, in the case of the first distribution date, ) divided by
360 for all classes of notes except for the Class A-1 notes, and for the
Class A-1 Notes, the actual number of days in the interest accrual period
(in the case of the first distribution date, days) divided by 360.
For a more detailed description of the payment of interest, you should
refer to the sections of this prospectus supplement entitled "Description of
the Notes--Payments of Interest".
Sequential Principal Payments
The trust will pay principal sequentially to the earliest maturing class of
notes then outstanding until such class is paid in full.
For a more detailed description of the payment of principal, you should
refer to the sections of this prospectus supplement entitled "Description of
the Notes--Payments of Principal".
Optional Redemption
The servicer has the option to purchase the receivables on any distribution
date on which the aggregate principal balance of the receivables is 5% or less
of the aggregate principal balance of the receivables at the cut- off date at a
price equal to the outstanding principal balance of the receivables plus
accrued and unpaid interest thereon; provided that this amount is sufficient to
repay all outstanding principal and accrued and unpaid interest on the notes.
The trust will apply such payment to the redemption of the notes in full.
It is expected that at the time this redemption option becomes available to
the servicer only the Class A-4 notes, the Class B notes and the Class C notes
will be outstanding.
Subordination
The Class B notes are subordinated to the Class A notes and the Class C
notes are subordinated to the Class A notes and Class B notes. See "Description
of the Sale and Servicing Agreement--Distributions--Priority of Payments" in
this prospectus supplement.
Material Federal Income Tax Consequences
Mayer, Brown & Platt, special federal tax counsel to the seller, is of the
opinion that, for United States federal income tax purposes, the notes will be
treated as debt. Mayer, Brown & Platt is also of the opinion that the trust
will be disregarded as a separate entity for United
S-5
<PAGE>
States federal income tax purposes and will not be subject to United States
federal income tax. Mayer, Brown & Platt is also of the opinion that the
certificates represent direct ownership in the trust's assets for United States
federal income tax purposes.
We suggest that you and your tax advisors review the information under the
caption "Material Federal Income Tax Consequences" in this prospectus
supplement and the prospectus.
If you purchase the notes, you agree by your purchase that you will treat
the notes as indebtedness.
ERISA Considerations
Subject to the restrictions discussed in "ERISA Considerations", the notes
may be purchased by employee benefit plans and accounts if one or more
administrative exemptions apply.
See "ERISA Considerations" in this prospectus supplement and the
prospectus.
Legal Investment
The Class A-1 notes will be eligible securities for purchase by money
market funds under Rule 2a-7 under the Investment Company Act of 1940, as
amended.
No Listing of the Securities
The securities will not be listed on any national securities exchange. See
"Risk Factors--The absence of a secondary market could limit your ability to
resell your securities." in the prospectus.
Registration, Clearance and Settlement
DTC/Clearstream/Euroclear.
Risk Factors
You should consider the principal risks of an investment in the notes set
forth under the caption "Risk Factors" in this prospectus supplement and the
prospectus.
Ratings
It is a condition to the issuance of the notes that the:
. Class A-1 notes be rated in the highest short-term rating category by at
least two nationally recognized rating agencies;
. Class A-2 notes, Class A-3 notes and Class A-4 notes be rated in the
highest long-term rating category by at least two nationally recognized
rating agencies;
. Class B notes be rated "A" or its equivalent by at least two nationally
recognized rating agencies; and
. Class C notes be rated "BBB" or its equivalent by at least two nationally
recognized rating agencies.
A rating is not a recommendation to purchase, hold or sell the offered
notes, inasmuch as such rating does not comment as to the market price or
suitability for a particular investor. The ratings of the offered notes address
the likelihood of the payment of principal and interest on the notes according
to their terms. A rating agency rating the notes may lower or withdraw its
rating in the future, at its discretion.
CUSIP Numbers
. Class A-1 notes:
. Class A-2 notes:
. Class A-3 notes:
. Class A-4 notes:
. Class B notes:
. Class C notes:
Investor Information
The mailing address of AmSouth Auto Receivables LLC is 1900 Fifth Avenue
North, AmSouth Sonat Tower, Birmingham, Alabama 35203. You may request copies
of the transaction documents relating to the trust by calling (205) 326-5807.
S-6
<PAGE>
Structural Summary
This summary briefly describes certain major structural components of the
trust. To fully understand the terms of the trust, you will need to read both
this prospectus supplement and the prospectus, each in its entirety.
Transfer of Receivables and Application of Proceeds
AmSouth Auto Receivables LLC, the seller, will purchase from AmSouth Bank
certain motor vehicle retail installment sale contracts secured by new or used
automobiles or light-duty trucks originated by participating dealers, which
constitute the receivables, and thereafter will sell the receivables with an
aggregate principal balance of $950,415,639 as of the cut-off date to AmSouth
Auto Trust 2000-1 on the closing date.
The following chart represents the application of proceeds from investors
and the transfer of the receivables:
[ORGANIZATION CHART APPEARS HERE]
Cut-off Date
The cut-off date for the pool of receivables will be the close of business
on September 30, 2000.
Property of the Trust
The property of the trust will include the following:
. the receivables and the collections on the receivables after the cut-off
date;
. security interests in the vehicles financed by the receivables;
. the collection account and note distribution account--including any
investment income from eligible investments on deposit in those accounts;
. rights to proceeds under insurance policies that cover the obligors under
the receivables or the vehicles financed by the receivables;
. remedies for breaches of representations and warranties made by the
dealers that originated the receivables; and
. other rights under documents relating to the receivables.
The Receivables
The receivables are amounts owed by individuals under retail installment
sale contracts to purchase new or used automobiles, including passenger cars,
minivans, sport utility vehicles and light-duty trucks. The receivables were
originated by dealers, underwritten by AmSouth Bank using its own underwriting
criteria, and purchased from the dealers by AmSouth Bank pursuant to dealer
agreements.
S-7
<PAGE>
The receivables will have the following characteristics as of the cut-off
date:
<TABLE>
<S> <C>
. Aggregate Principal Balance.............................. $950,415,639
. Number of Receivables.................................... 73,293
. Average Principal Balance................................ $12,967
(Range).................................................... $1,001 to $55,279
. Average Original Amount Financed......................... $17,056
(Range).................................................... $2,402 to $60,000
. Weighted Average Contract Rate........................... 9.44%
(Range).................................................... 8.00% to 11.00%
. Weighted Average Original Term........................... 61.4 months
(Range).................................................... 18 to 72 months
. Weighted Average Remaining Term.......................... 49.4 months
(Range).................................................... 6 to 71 months
</TABLE>
Servicer of the Receivables
AmSouth Bank will be the servicer of the receivables. The trust will pay
the servicer a servicing fee on each distribution date equal to the sum of (1)
one-twelfth of 1% of the principal balance of the receivables at the beginning
of the previous month and (2) a supplemental servicing fee equal to any late,
prepayment and other administrative fees and expenses collected during each
month.
Priority of Distributions
From collections on the receivables during the prior calendar month and in
the event of a shortfall in meeting the payments described in clauses (1)
through (6), and, on the final scheduled distribution date for the Class C
notes, clause (8), amounts withdrawn from the reserve account, the trust will
pay the following amounts on each distribution date in the following order of
priority:
(1) to the servicer, the servicing fee and all unpaid servicing fees
from prior collection periods;
(2) to Class A noteholders, the accrued Class A note interest;
(3) to the principal distribution account, the first priority principal
distribution amount, which will generally be the amount, if any, equal to
the excess of (a) the principal balances of the Class A notes over (b) the
principal balance of the receivables;
(4) to the Class B noteholders, the accrued Class B note interest;
(5) to the principal distribution account, the second priority
principal distribution amount, which will generally be the amount, if any,
equal to the excess of (a) the principal balances of the Class A notes and
Class B notes over (b) the principal balance of the receivables, less the
amounts previously deposited to the principal distribution account in
accordance with clause (3) above;
(6) to the Class C noteholders, the accrued Class C note interest;
(7) to the reserve account, the amount, if any, necessary to cause the
amount on deposit in the reserve account to equal the required balance;
(8) to the principal distribution account, generally, an amount equal
to the greater of (a) the sum of the principal balance of the Class A-1
notes and (b) the excess of (i) the sum of the principal balances of the
notes over (ii) the principal balance of the receivables less the specified
overcollateralization amount, provided that this amount will be reduced by
any amounts previously deposited to the principal distribution account in
accordance with clauses (3) and (5) above; and
(9) to the certificateholders, any amounts remaining in the collection
account.
S-8
<PAGE>
Distributions from the Principal Distribution Account
From deposits made to the principal distribution account, the trust will
generally pay principal on the notes in the following order of priority:
. to the Class A-1 notes until they are paid in full;
. to the Class A-2 notes until they are paid in full;
. to the Class A-3 notes until they are paid in full;
. to the Class A-4 notes until they are paid in full;
. to the Class B notes until they are paid in full;
. to the Class C notes until they are paid in full;
. to the certificateholders, any funds remaining.
For a more detailed description of the priority of distributions and the
allocation of funds on each distribution date, you should refer to "Description
of the Sale and Servicing Agreement--Distributions--Priority of Payments" in
this prospectus supplement.
Change in Priority of Distribution upon Certain Events of Default
The order of priority for distributions will change following the
occurrence of:
. a default for five days or more in the payment of interest on the
controlling class of notes which has resulted in an acceleration of the
notes,
. a default in the payment of principal on any note when due which has
resulted in an acceleration of the notes,
. an insolvency or a bankruptcy with respect to the trust which has
resulted in an acceleration of the notes, or
. any other event of default which results in the liquidation of the trust.
Following the occurrence of the preceding events, the trust will make no
distributions of principal or interest on the Class B notes until payment in
full of principal and interest on the Class A notes and will make no
distributions of principal or interest on the Class C notes until payment in
full of principal and interest on the Class A notes and the Class B notes. In
addition, payments of principal on the Class A notes will be made first to the
Class A-1 notes until the Class A-1 notes are repaid in full, and then pro rata
to the Class A-2, Class A-3 and Class A-4 notes.
Following the occurrence of any other event of default which has resulted
in an acceleration of the notes but has not yet resulted in a liquidation of
the trust, no change will be made in the priority of payments on the Class A
notes, the Class B notes and the Class C notes on each distribution date until
a liquidation, if any, of the property of the trust.
For a more detailed description of the events of default and the rights of
investors in such circumstances, you should refer to "Description of the
Notes--The Indenture-- Events of Default" and "Description of the Notes--The
Indenture--Rights Upon Event of Default" in this prospectus supplement. For a
more detailed description of the priority of distributions and allocation of
funds following an event of default, you should refer to "Description of the
Notes--The Indenture--Priority of Payments May Change Upon an Event of Default"
in this prospectus supplement.
Credit Enhancement
The credit enhancement provides protection for the Class A notes, the Class
B notes and the Class C notes against losses and delays in payment. Losses on
the receivables or other shortfalls of cash flow will be covered by payments on
other receivables to the extent of any overcollateralization, by withdrawals
from the reserve account and by allocation of available cash flow to the more
senior classes of notes prior to more subordinate classes.
S-9
<PAGE>
The credit enhancement for the notes will be as follows:
Class A Subordination of the Class B notes and the Class C notes; the
notes reserve account and overcollateralization;
Class B notes Subordination of the Class C notes; the reserve account; and
overcollateralization; and
Class C notes The reserve account; and overcollateralization.
Subordination of Principal and Interest
As long as the Class A notes remain outstanding:
. payments of interest on the Class B notes and the Class C notes will be
subordinated to payments of interest on the Class A notes and, in certain
circumstances, allocations to principal; and
. payments of principal on the Class B notes and the Class C notes will be
subordinated to payments of interest and principal on the Class A notes.
As long as the Class A notes or Class B notes remain outstanding:
. payments of interest on the Class C notes will be subordinated to
payments of interest on the Class A notes and the Class B notes and, in
certain circumstances, allocations to principal; and
. payments of principal on the Class C notes will be subordinated to
payments of interest and principal on the Class A notes and the Class B
notes.
For a more detailed discussion of the subordination of the notes and the
priority of distributions, including changes after certain events of default,
you should refer to "Description of the Notes--The Indenture" and "Description
of the Sale and Servicing Agreement--Distributions--Priority of Payments" in
this prospectus supplement.
Reserve Account
On the closing date, the seller will deposit $7,128,117.29 to the reserve
account for the benefit of the trust.
On or before each distribution date, if collections on the receivables are
insufficient to meet the first six clauses, and on the final scheduled
distribution date for the Class C notes, clause (8), listed in "Priority of
Distributions" above, the servicer will instruct the indenture trustee to
withdraw from the reserve account and deposit in the collection account, to the
extent of the funds in the reserve account, the amounts necessary to make
distributions of interest, the first priority principal distribution amount,
the second priority distribution amount and, on the final scheduled
distribution date for any class of notes, its outstanding principal balance.
The balance required to be on deposit in the reserve account will be the
lesser of $7,128,117.29 and the outstanding principal balance of the notes.
On each distribution date, the trust will distribute funds on deposit in
the reserve account in excess of the required balance in accordance with the
priority of payments.
On each distribution date, the trust will deposit into the reserve account,
to the extent necessary to cause the amount on deposit in the reserve account
to equal the required balance, any collections on the receivables remaining
after the first six items listed in "Priority of Distributions" above are
satisfied.
For a more detailed description of the deposits to and withdrawals from the
reserve account, you should refer to "Description of the Sale and Servicing
Agreement--Reserve Account" in this prospectus supplement.
Overcollateralization
The overcollateralization amount represents the amount by which the
principal balance of the receivables exceeds the
S-10
<PAGE>
principal balance of the notes. Initially, the receivables balance will exceed
the principal balance of the notes by approximately 2.00% of the receivables
balance. The application of funds according to clause (8) of "Priority of
Distributions" above is expected to result in the payment of more principal on
the notes in initial months than the amount of principal paid on the
receivables in the related period. As the principal balance of the notes is
paid down to a target overcollateralization level further below the receivables
balance, additional credit enhancement is created.
The target level for the overcollateralization amount is structured as a
dynamic formula. The target level for the overcollateralization amount on each
distribution date will be the excess of:
(A) the lesser of
(1) the greatest of:
. $7,128,117.29;
. 3.25% of the outstanding principal balance of the receivables;
and
. the aggregate principal balance of the receivables that are
delinquent 90 days or more and have not yet been liquidated; and
(2) the outstanding principal balance of the notes;
over
(B) the balance required to be on deposit in the reserve account.
For a more detailed description of the application of funds and the
calculation of the overcollateralization amount, you should refer to
"Description of the Sale and Servicing Agreement--Distributions--Priority of
Payments" in this prospectus supplement.
S-11
<PAGE>
Risk Factors
An investment in the notes involves significant risks. Before you decide to
invest in the notes, we recommend that you carefully consider the following
risk factors and the risk factors specified under the heading "Risk Factors"
beginning on page 4 of the prospectus, which are the principal risks of an
investment in the notes.
Your yield to maturity may be The pre-tax yield to maturity is
reduced by prepayments uncertain and will depend on a number of
factors, including the following:
. The rate of return of principal
is uncertain. The amount of
distributions of principal on
the notes and the time when you
receive those distributions
depends on the amount and the
times at which borrowers make
principal payments on the
receivables. The rate of
prepayments of the receivables
may be influenced by a variety
of economic, social and other
factors. In addition, AmSouth
Bank, the seller or the servicer
may be obligated to repurchase
receivables from the trust if a
representation, warranty or
covenant is breached. A higher
than anticipated rate of
prepayments of the receivables
will reduce the aggregate
principal balance of the notes
more quickly than expected and
thereby reduce anticipated
aggregate interest payments on
the notes.
. You may be unable to reinvest
distributions in comparable
investments. You alone will bear
any reinvestment risks resulting
from a faster or slower
incidence of repayment of the
notes. Such reinvestment risks
include the risk that interest
rates may be lower at the time
you received payments from the
trust than interest rates would
otherwise have been had such
prepayments not been made or had
such prepayments been made at a
different time.
. An early termination will
shorten the life of your
investment, which may reduce
your yield to maturity. If the
receivables are sold upon
exercise of the servicer's
optional termination, you will
receive the principal amount of
your notes plus accrued interest
through the related interest
period. Because your notes will
no
S-12
<PAGE>
longer be outstanding, you will
not receive the additional
interest payments that you would
have received had the notes
remained outstanding. If you
bought your notes at a premium,
your yield to maturity will be
lower than it would have been if
the optional termination had not
been exercised.
You should consider that in the case of
notes purchased at a discount, a slower
than anticipated rate of principal
payments on the receivables could occur
and could result in an actual yield that
is less than the anticipated yield.
You should also consider that in the case
of notes purchased at a premium, a faster
than anticipated rate of principal
payments on the receivables could occur
and could result in an actual yield that
is less than the anticipated yield.
If you own Class B notes or Class The Class B notes bear greater risk than
C notes, you are subject to the Class A notes because payments of
greater credit risk because the interest and principal on the Class B
Class B notes are subordinate to notes are subordinate, to the extent
the Class A notes, and the Class described below, to payments of interest
C notes are subordinate to the and principal on the Class A notes. The
Class A notes and the Class B Class C notes bear greater credit risk
notes than the Class A notes and the Class B
notes because payments of interest and
principal on the Class C notes are
subordinated, to the extent described
below, to payments of interest and
principal on the Class A notes and the
Class B notes.
Interest payments on the Class B notes on
each distribution date will be
subordinated to servicing fees due to the
servicer, interest payments on the Class A
notes and an allocation of principal
payments to the Class A notes to the
extent the sum of the principal balances
of the Class A notes exceeds the
receivables balance. Interest payments on
the Class C notes on each distribution
date will be subordinated to the servicing
fees due to the servicer, interest
payments on the Class A notes, allocation
of principal payments to the Class A notes
to the extent the sum of the principal
balances of the Class A notes exceeds the
receivables balance, interest payments on
the Class B notes and an allocation of
principal payments to the Class A notes
and Class B notes to the extent the sum of
the principal balances of the Class A
notes and the Class B notes exceeds the
receivables balance, after giving effect
to the allocation described previously in
this sentence.
S-13
<PAGE>
Principal payments on the Class B notes
will be fully subordinated to principal
payments on the Class A notes. No
principal will be paid on the Class B
notes until the Class A notes have been
paid in full. Principal payments on the
Class C notes will be fully subordinated
to principal payments on the Class A
notes and the Class B notes. No principal
will be paid on the Class C notes until
the Class A notes and the Class B notes
have been paid in full.
For a more detailed description of such
principal payment circumstances, see
"Description of the Sale and Servicing
Agreement--Distributions--Priority of
Payments" in this prospectus supplement.
The payment sequence changes, however,
following some events of default under
the indenture.
Payment priorities and Based on the priorities described in this
subordination features increase prospectus supplement under "Description
risk of loss or delay in payment of the Notes--Payment of Principal",
to some classes of notes classes of notes that receive payments,
particularly principal payments, prior to
other classes will be repaid more rapidly
than the other classes, and payments to
these other classes may be delayed if
collections and amounts on deposit in the
reserve account are inadequate to pay all
amounts payable on all classes of notes
on any distribution date. In addition,
classes of notes that receive payments,
particularly principal payments, at lower
priorities than other classes will be
outstanding longer and therefore will be
exposed to the risk of losses on the
receivables during periods after the
other classes that have been receiving
most or all amounts payable on their
notes have been repaid, and after which a
disproportionate amount of credit
enhancement may have been applied and not
replenished. As discussed below under "--
The occurrence of an event of default
under the indenture may delay payments on
the Class B notes and the Class C notes",
the subordination of certain classes of
notes will increase after an event of
default occurs, resulting in an even more
pronounced effect on payments.
As a result, the yields of the later
maturing classes of Class A notes will be
sensitive, and the yields of the Class B
notes and Class C notes will be very
sensitive, to losses on the receivables
and the timing of such losses. If the
actual rate and amount of losses exceed
your expectations, and if amounts in the
reserve account are insufficient to cover
the resulting shortfalls, the yield to
maturity on your notes may be lower than
anticipated, and you could suffer a loss.
S-14
<PAGE>
Your notes may not be repaid on It is expected that final payment of each
their final scheduled distribution class of notes will occur on or prior to
date the respective final scheduled
distribution dates. Failure to make final
payment of any class of notes on or prior
to the respective final scheduled
distribution dates would constitute an
event of default under the indenture.
However, no assurance can be given that
sufficient funds will be available to pay
each class of notes in full on or prior
to the final scheduled distribution date.
If sufficient funds are not available,
final payment of any class of notes could
occur later than the final scheduled
distribution date for that class. See
"Description of the Notes--The
Indenture--Rights upon Event of Default"
in this prospectus supplement.
You may suffer losses because you Because the trust has pledged the
have limited control over actions property of the trust to the indenture
of the trust and conflicts between trustee to secure payment on the notes,
classes of notes may occur the indenture trustee may, and at the
direction of the required percentage of
the controlling class--which will be the
Class A notes for so long as any Class A
notes are outstanding, the Class B notes
after the Class A notes have been paid in
full, and the Class C notes after the
Class B notes have been paid in full--
will, take one or more of the other
actions specified in the indenture
relating to the property of the trust,
including a sale of the receivables. In
addition, the holders of a majority of
the Class A notes, under some
circumstances, has the right to waive
events of servicing termination or
terminate the servicer without
consideration of the effect such waiver
or termination would have on the holders
of Class B notes or Class C notes. The
holders of Class B notes will not have
the ability to waive events of servicing
termination or to remove the servicer
until the Class A notes have been paid in
full. The holders of Class C notes will
not have the ability to waive any such
events or to remove the servicer until
the Class B notes have been paid in full.
See "Description of the Transfer and
Servicing Agreements--Defaults by the
Servicer" in the prospectus and "--Rights
Upon an Event of Servicing Termination"
and "--Waiver of Past Events of Servicing
Termination" in this prospectus
supplement.
The failure to pay interest on the The indenture provides that failure to
subordinated classes of notes is pay interest when due on the outstanding
not an event of default subordinated class or classes of notes--
for example, for so long as any of the
Class A notes are outstanding, the Class
B
S-15
<PAGE>
and Class C notes, or after the Class A
notes have been paid in full but the
Class B notes are still outstanding, the
Class C notes--will not be an event of
default under the indenture. Under these
circumstances, the holders of the
subordinated notes will not have any
right to declare an event of default, to
cause the maturity of the notes to be
accelerated or to direct or consent to
any action under the indenture.
Prepayments, potential losses and An event of default under the indenture
change in order of priority of may result in payments on the notes being
principal payments may result from accelerated. As a result:
an event of default under the
indenture
. you may suffer losses on your
notes if the assets of the trust
are insufficient to pay the
amounts owed on the notes;
. payments on your notes may be
delayed until more senior
classes of notes are repaid; and
. your notes may be repaid earlier
than as scheduled, which may
require you to reinvest your
principal at a lower rate of
return.
The occurrence of an event of The trust will not make any distributions
default under the indenture may of principal or interest on a subordinate
delay payments on the Class B class of notes until payment in full of
notes and the Class C notes principal and interest on the senior
classes of notes following:
. an event of default under the
indenture relating to the
payment of principal on any note
or the payment of interest on
the controlling class of notes
which has resulted in
acceleration of the notes;
. an event of default under the
indenture relating to an
insolvency event or a bankruptcy
with respect to the trust which
has resulted in an acceleration
of the notes; or
. a liquidation of the trust
assets following any event of
default under the indenture.
This may result in a delay or default in
making payments on the Class B notes or
the Class C notes.
Subordinated noteholders may not
be able to direct the indenture If an event of default occurs under the
trustee upon an event of default indenture, only the holders of the
under the indenture controlling class of notes may waive such
event of default, accelerate the maturity
S-16
<PAGE>
dates of the notes or direct or consent
to any action under the indenture. The
holders of any outstanding subordinated
class or classes of notes will not have
any rights to direct or to consent to any
action until each of the more senior
class or classes of notes have been
repaid in full.
The indenture trustee may sell the If the final scheduled distribution dates
receivables in an event of default of the notes are accelerated following an
event of default under the indenture, the
indenture trustee may, under some
circumstances, sell the receivables and
prepay the Class A notes, the Class B
notes and the Class C notes. Upon a sale
of the receivables following an event of
default:
. the Class A-2, Class A-3 and
Class A-4 noteholders will not
receive any payments of
principal until the Class A-1
notes has been paid in full; and
. no amounts will be distributed
to the Class B noteholders until
interest and principal due on
the Class A notes has been paid
in full; and
. no amounts will be distributed
to the Class C noteholders until
all interest and principal due
on the Class A notes and Class B
notes has been paid in full.
So long as the Class A notes are the
controlling class, the holders of the
Class B notes and Class C notes will have
the right to vote on the sale of the
receivables following an event of default
and acceleration in only limited
circumstances.
So long as the Class B notes are the
controlling class, the holders of the
Class C notes will not have any right to
vote on waivers of an event of default or
to direct the indenture trustee to
accelerate the notes following an event
of default and will have the right to
vote on the sale of the receivables
following an event of default and
acceleration in only limited
circumstances.
See "Description of the Notes--The
Indenture--Rights Upon Event of Default"
in this prospectus supplement.
You may experience reduced returns We cannot assure you that the historical
and delays on your securities levels of delinquencies and losses
resulting from changes in experienced by AmSouth Bank on its loan
delinquency levels and losses portfolio will be indicative of the
performance of the receivables or that
similar levels
S-17
<PAGE>
will be experienced in the future.
Delinquencies and losses could increase
significantly for various reasons,
including changes in the local, regional
or national economies or due to other
events.
Newly originated loans may be more Defaults on automobile loans tend to
likely to default, which may cause occur at higher rates during the early
you to suffer losses years of the automobile loans. By
percentage of principal balance,
approximately 65.29% of the automobile
loans will have been originated within 12
months prior to the cut-off date. As a
result, the pool of receivables held by
the trust may experience higher rates of
default than a pool of receivables that
had been outstanding for a longer period
of time.
The concentration of the Economic conditions in the states where
receivables in specific geographic obligors reside may affect the
areas may increase your risk of delinquency, loan loss and repossession
loss experience of the issuer with respect to
the receivables.
As of the cut-off date, the billing
addresses of the obligors of the
receivables were recorded as being in the
following states:
<TABLE>
<CAPTION>
Percentage of
Initial Pool
Balance
<S> <C>
Alabama.................................... 29.72%
Florida.................................... 24.17%
Georgia.................................... 17.86%
Mississippi................................ 7.32%
Tennessee.................................. 6.94%
Michigan................................... 4.47%
</TABLE>
No other state, by billing addresses,
constituted more than 4% of the balance
of the receivables as of the cut-off
date.
Economic conditions in any state or
region may decline over time and from
time to time. Because of the
concentration of the obligors in certain
states, any adverse economic conditions
in those states may have a greater effect
on the performance of the securities than
if the concentration did not exist.
S-18
<PAGE>
Capitalized Terms
The capitalized terms used in this prospectus supplement, unless defined
elsewhere in this prospectus supplement, have the meanings set forth in the
Glossary of Terms starting on page 48 of this prospectus supplement.
The Trust
Limited Purpose and Assets
AmSouth Auto Trust 2000-1, is a common law trust formed under the laws of
the State of New York by a trust agreement dated as of October 1, 2000 between
AmSouth Auto Receivables LLC, as depositor, and The Bank of New York Trust
Company of Florida, National Association, as owner trustee. The trust will not
engage in any activity other than:
. acquiring, holding and managing the assets of the trust, including the
receivables, and the proceeds of those assets;
. issuing the notes and certificates;
. making payments on the notes and certificates; and
. engaging in other activities that are necessary, suitable or
convenient to accomplish any of the other purposes listed above or are
in any way connected with those activities.
If the protection provided (a) to the holders of record of the Class A
notes by the subordination of the Class B notes and Class C notes, (b) to the
holders of record of the Class B notes by the subordination of the Class C
notes and (c) to the noteholders by the Reserve Account and
overcollateralization is insufficient, the trust would have to look principally
to the obligors on the receivables and the proceeds from the repossession and
sale of the financed vehicles which secure defaulted receivables. In that
event, various factors, such as the trust not having perfected security
interests in the financed vehicles securing the receivables in all states, may
affect the servicer's ability to repossess and sell the collateral securing the
receivables, and thus may reduce the proceeds which the trust can distribute to
the noteholders.
See "Description of the Sale and Servicing Agreement--Distributions" and
"--Reserve Account" in this prospectus supplement and "Material Legal Aspects
of the Receivables" in the prospectus.
The trust's principal offices are in New York, in care of The Bank of New
York Trust Company of Florida, National Association, as owner trustee, at the
address listed below under "--The Owner Trustee".
Capitalization of the Trust
The trust will be capitalized by the issuance of the notes. The proceeds
from the issuance of the notes will be used:
. to purchase the receivables from the seller under a sale and servicing
agreement to be dated as of October 1, 2000 among the trust, the
seller and AmSouth Bank, as the servicer; and
. to fund the initial deposit to the Reserve Account.
S-19
<PAGE>
The following table illustrates the capitalization of the issuer as of the
cut-off date, as if the issuance and sale of the notes and certificates had
taken place on such date:
<TABLE>
<S> <C>
Class A-1 notes $230,000,000
Class A-2 notes $240,000,000
Class A-3 notes $315,000,000
Class A-4 notes $103,640,000
Class B notes $ 28,510,000
Class C notes $ 14,260,000
Overcollateralization $ 19,005,639
Certificates N/A
------------
Total $950,415,639
============
</TABLE>
The Owner Trustee
The Bank of New York Trust Company of Florida, National Association, is the
owner trustee under the trust agreement. The Bank of New York Trust Company of
Florida, National Association is a national banking association and its
principal offices are located at 10161 Centurion Parkway, Jacksonville, Florida
32256. The owner trustee's liability in connection with the issuance and sale
of the notes is limited solely to the express obligations of the owner trustee
set forth in the trust agreement. The seller and its affiliates may maintain
normal commercial banking relations with the owner trustee and its affiliates.
The Trust Property
The notes will be collateralized by the trust property. The "trust
property" will include the receivables, which were originated by dealers and
purchased by AmSouth Bank pursuant to dealer agreements with those dealers. On
the closing date, the seller will buy the receivables from AmSouth Bank and the
seller will sell the receivables to the trust. AmSouth Bank, as servicer, will
service the receivables. The trust property also includes:
. all monies received under the receivables after the cut-off date;
. security interests in the financed vehicles and any other property
securing the receivables;
. the rights of AmSouth Bank to receive proceeds from claims under
insurance policies relating to the related obligors and financed
vehicles or from claims under any lender's single interest insurance
policy naming AmSouth Bank as the insured;
. the rights of AmSouth Bank to refunds for the costs of extended
service contracts and to refunds of unearned premiums with respect to
credit life and credit accident and health insurance policies covering
the financed vehicles or the retail purchasers of, or other persons
owing payments on, the financed vehicles;
. such amounts as from time to time may be held in the Collection
Account and the note distribution account--including investment
earnings--established and maintained by the servicer pursuant to the
sale and servicing agreement;
. the rights of the trust under the sale and servicing agreement and the
other transaction documents, including the right to cause AmSouth Bank
to repurchase receivables because of a breach of representation or
warranty relating to the receivables;
S-20
<PAGE>
. all right, title and interest of AmSouth Bank, other than with respect
to any dealer commission, with respect to the receivables under the
related dealer agreements;
. all proceeds of any and all of the foregoing.
The Reserve Account will be established and maintained by the Seller in the
name of the indenture trustee for the benefit of the noteholders, the trust and
certificateholders pursuant to the sale and servicing agreement.
The Receivables Pool
Pool Composition
The receivables were selected from AmSouth Bank's portfolio by several
criteria, including, as of the cut-off date, the following:
. each receivable was originated in the United States of America;
. each receivable is a simple interest receivable, as described in the
prospectus;
. each receivable provides for level monthly payments which fully
amortize the amount financed, except for the last payment, which may
be slightly different from the level payment;
. each receivable has an original principal balance less than or equal
to $60,000;
. each receivable has a contract rate of no less than 8.00% and no more
than 11.00%;
. each receivable has a scheduled maturity of not later than August 30,
2006;
. each receivable has an original term to maturity of not more than 72
months and not less than 18 months and each receivable has a remaining
term to maturity of 6 months or more as of the cut-off date;
. approximately 51.7% of the initial Pool Balance was secured by new
financed vehicles, and approximately 48.3% of the initial Pool Balance
was secured by used financed vehicles;
. each receivable has an outstanding principal balance greater than or
equal to $1,001;
. no obligor on any receivable was noted in the related records of
AmSouth Bank as being the subject of any pending bankruptcy or
insolvency proceeding; and
. each receivable is not more than 29 days contractually past due as of
the cut-off date.
AmSouth Bank considers an account past due if any portion of the payment
due on a due date is not received by the succeeding due date for that account.
No selection procedures believed by AmSouth Bank to be materially adverse
to the noteholders were used in selecting the receivables.
The composition, distribution by remaining term, distribution by contract
rate, geographic distribution and distribution by principal balance, in each
case of the receivables, as of the cut-off date are set forth in the tables
below. The percentages in the following tables may not add to 100.00% due to
rounding.
S-21
<PAGE>
Composition of the Receivables as of the Cut-off Date
<TABLE>
<CAPTION>
Total
---------------
<S> <C>
Aggregate Principal Balance..................................... $950,415,639
Number of Receivables........................................... 73,293
Average Principal Balance....................................... $12,967
Weighted Average Contract Rate.................................. 9.44%
Contract Rate (Range)........................................... 8.00% to 11.00%
Weighted Average Original Term.................................. 61.4 months
Original Term (Range)........................................... 18 to 72 months
Weighted Average Remaining Term................................. 49.4 months
Remaining Term (Range).......................................... 6 to 71 months
</TABLE>
Distribution by Remaining Term of the Receivables as of the Cut-off Date
<TABLE>
<CAPTION>
Aggregate Percentage of
Remaining Term Number of Principal Initial Pool
(Range) Receivables Balance Balance
-------------- ----------- ------------ -------------
<S> <C> <C> <C>
6 to 12 months........................ 3,131 $ 9,776,867 1.03%
13 to 24 months........................ 8,024 47,961,483 5.05
25 to 36 months........................ 13,215 123,548,589 13.00
37 to 48 months........................ 15,553 193,925,975 20.40
49 to 60 months........................ 24,598 399,077,515 41.99
61 to 71 months........................ 8,772 176,125,210 18.53
------ ------------ ------
Total................................ 73,293 $950,415,639 100.00%
====== ============ ======
</TABLE>
Distribution by Contract Rate of the Receivables as of the Cut-off Date
<TABLE>
<CAPTION>
Aggregate Percentage of
Contract Number of Principal Initial Pool
ateR(Range) Receivables Balance Balance
------------ ----------- ------------ -------------
<S> <C> <C> <C>
8.00% to 8.49%.......................... 10,380 $130,441,403 13.72%
8.50% to 8.99%.......................... 19,136 240,192,456 25.27
9.00% to 9.49%.......................... 8,569 113,778,406 11.97
9.50% to 9.99%.......................... 17,010 218,487,346 22.99
10.00% to 10.49%........................ 5,794 79,763,854 8.39
10.50% to 11.00%........................ 12,404 167,752,174 17.65
------ ------------ ------
Total................................. 73,293 $950,415,639 100.00%
====== ============ ======
</TABLE>
Geographic Distribution of the Receivables as of the Cut-off Date
<TABLE>
<CAPTION>
Aggregate Percentage of
Number of Principal Initial Pool
State Receivables Balance Balance
----- ----------- ------------ -------------
<S> <C> <C> <C>
Alabama.................................. 24,446 $282,507,486 29.72%
Florida.................................. 17,172 229,678,479 24.17
Georgia.................................. 12,754 169,752,368 17.86
Mississippi.............................. 4,771 69,586,897 7.32
Tennessee................................ 4,682 65,922,280 6.94
Michigan................................. 3,247 42,477,130 4.47
Other.................................... 6,221 90,490,999 9.52
------ ------------ ------
Total.................................. 73,293 $950,415,639 100.00%
====== ============ ======
</TABLE>
S-22
<PAGE>
. Numbers by state are based on billing address of the obligors as of
the cut-off date, which may differ from the state of origination of
the receivable.
. ""Other'' includes 43 other states and the District of Columbia none
of which have a concentration of receivables in excess of 4.00% of the
aggregate principal balance.
Distribution by Principal Balance of the Receivables as of the Cut-off Date
<TABLE>
<CAPTION>
Remaining Aggregate Percentage of
Principal Number of Principal Initial Pool
alanceB(Range) Receivables Balance Balance
--------------- ----------- ------------ -------------
<S> <C> <C> <C>
$1,001 to $4,999........................ 7,177 $ 25,080,581 2.64%
$5,000 to $9,999........................ 19,588 150,611,819 15.85
$10,000 to $14,999...................... 21,645 269,286,902 28.33
$15,000 to $19,999...................... 14,498 249,814,962 26.28
$20,000 to $29,999...................... 9,281 217,937,072 22.93
$30,000 to $39,999...................... 1,010 33,428,704 3.52
$40,000 and greater..................... 94 4,255,599 0.45
------ ------------ ------
Total................................. 73,293 $950,415,639 100.00%
====== ============ ======
</TABLE>
The servicer may accede to an obligor's request to pay scheduled payments
in advance, in which event the obligor will not be required to make another
regularly scheduled payment until the time a scheduled payment not paid in
advance is due. The amount of any payment made in advance will be treated as a
principal prepayment and will be distributed as part of the collections for the
month following the Collection Period in which the prepayment was made. See
"Maturity and Prepayment Considerations" in this prospectus supplement and the
prospectus.
Weighted Average Life of the Notes
Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The model used in this prospectus, the absolute
prepayment model, or ABS, represents an assumed rate of prepayment each month
relative to the original number of receivables in a pool of receivables. ABS
further assumes that all the receivables are the same size and amortize at the
same rate and that each receivable in each month of its life will either be
paid as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the receivables to be
transferred to the trust.
As the rate of payment of principal of the notes will depend on the rate of
payment, including prepayments, of the principal balance of the receivables,
final payment of a class of notes could occur significantly earlier than the
Final Scheduled Distribution Date for such class of notes. Reinvestment risk
associated with early payment of the notes will be borne exclusively by the
noteholders.
The table captioned "Percentage of Initial Note Principal Balance at
Various ABS Percentages" has been prepared on the basis of the characteristics
of the receivables. The ABS Table assumes that:
. the receivables prepay in full at the specified constant ABS
percentage monthly, with no defaults, losses or repurchases,
S-23
<PAGE>
. each scheduled monthly payment on the receivables is made on the last
day of each month and each month has 30 days,
. payments on the notes are made on each Distribution Date--and each
such date is assumed to be the 15th day of each applicable month,
. the balance in the Reserve Account on each Distribution Date is equal
to the Specified Reserve Account Balance,
. the servicer exercises its option to purchase the receivables,
. the cut-off date is September 30, 2000, and
. the closing date is October 20, 2000.
The ABS Table sets forth the percent of the initial principal amount of
each class of notes and the corresponding weighted average lives thereof at
various constant ABS percentages.
The ABS Table also assumes that the receivables have been aggregated into
twelve hypothetical pools with all of the receivables within each such pool
having the following characteristics and that the level scheduled monthly
payment for each of the twelve pools, which is based on its aggregate principal
balance and original term to maturity and remaining term to maturity as of the
cut-off date, will be such that each pool will fully amortize by the end of its
remaining term to maturity.
Hypothetical Receivables Pools
<TABLE>
<CAPTION>
Original
Aggregate Term to Remaining Term
Principal Contract Maturity (in to Maturity
Pool Balance Rate months) (in months)
---- ------------ -------- ------------ --------------
<S> <C> <C> <C> <C>
1 ............................ $ 13,509,196 8.515% 34 27
2............................. $ 33,479,302 8.536% 48 37
3............................. $248,690,222 8.554% 60 46
4............................. $ 74,955,139 8.578% 69 55
5............................. $ 7,331,254 9.528% 34 29
6............................. $ 19,506,201 9.551% 48 39
7............................. $118,497,875 9.554% 69 57
8............................. $186,930,422 9.574% 60 48
9............................. $118,984,400 10.574% 69 59
10............................ $ 10,436,816 10.590% 48 40
11............................ $ 2,644,279 10.593% 34 29
12............................ $115,450,533 10.599% 60 48
</TABLE>
The actual characteristics and performance of the receivables that are to
be transferred to the trust will differ from the assumptions used in
constructing the ABS Table. The assumptions used are hypothetical and have been
provided only to give a general sense of how the principal cash flows might
behave under varying prepayment scenarios. For example, it is very unlikely
that the receivables will prepay at a constant level of ABS until maturity or
that all of the receivables will prepay at the same level of ABS. Moreover, the
diverse terms of receivables within each of the twelve hypothetical pools could
produce slower or faster principal distributions than indicated in the ABS
Table at the various constant percentages of ABS specified, even if the
original and remaining terms to maturity of the receivables are as assumed. Any
difference between such assumptions and the actual characteristics and
performance of the receivables to be transferred to the trust, or actual
prepayment experience, will affect the percentages of initial balances
outstanding over time and the weighted average lives of each class of notes.
S-24
<PAGE>
Percent of Initial Note Principal Balance at Various ABS Percentages
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes
--------------------------- ---------------------------
Distribution Date 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
----------------- ---- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date............ 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/15/2000.............. 89.80 87.34 84.50 82.59 100.00 100.00 100.00 100.00
12/15/2000.............. 79.99 75.15 69.59 65.83 100.00 100.00 100.00 100.00
01/15/2001.............. 70.22 63.11 54.92 49.38 100.00 100.00 100.00 100.00
02/15/2001.............. 60.49 51.18 40.47 33.23 100.00 100.00 100.00 100.00
03/15/2001.............. 50.75 39.34 26.23 17.36 100.00 100.00 100.00 100.00
04/15/2001.............. 41.07 27.66 12.23 1.81 100.00 100.00 100.00 100.00
05/15/2001.............. 31.42 16.10 -- -- 100.00 100.00 100.00 92.58
06/15/2001.............. 21.81 4.67 -- -- 100.00 100.00 91.59 79.17
07/15/2001.............. 12.22 -- -- -- 100.00 99.96 79.72 66.05
08/15/2001.............. 2.67 -- -- -- 100.00 90.05 68.06 53.20
09/15/2001.............. -- -- -- -- 100.00 80.27 56.62 40.63
10/15/2001.............. -- -- -- -- 92.50 70.59 45.39 28.35
11/15/2001.............. -- -- -- -- 84.20 61.03 34.38 16.36
12/15/2001.............. -- -- -- -- 75.92 51.59 23.59 4.67
01/15/2002.............. -- -- -- -- 67.67 42.26 13.03 --
02/15/2002.............. -- -- -- -- 59.45 33.06 2.69 --
03/15/2002.............. -- -- -- -- 51.25 23.97 -- --
04/15/2002.............. -- -- -- -- 43.08 15.01 -- --
05/15/2002.............. -- -- -- -- 34.93 6.17 -- --
06/15/2002.............. -- -- -- -- 26.81 -- -- --
07/15/2002.............. -- -- -- -- 18.72 -- -- --
08/15/2002.............. -- -- -- -- 10.66 -- -- --
09/15/2002.............. -- -- -- -- 2.63 -- -- --
10/15/2002.............. -- -- -- -- -- -- -- --
11/15/2002.............. -- -- -- -- -- -- -- --
12/15/2002.............. -- -- -- -- -- -- -- --
01/15/2003.............. -- -- -- -- -- -- -- --
02/15/2003.............. -- -- -- -- -- -- -- --
03/15/2003.............. -- -- -- -- -- -- -- --
04/15/2003.............. -- -- -- -- -- -- -- --
05/15/2003.............. -- -- -- -- -- -- -- --
06/15/2003.............. -- -- -- -- -- -- -- --
07/15/2003.............. -- -- -- -- -- -- -- --
08/15/2003.............. -- -- -- -- -- -- -- --
09/15/2003.............. -- -- -- -- -- -- -- --
10/15/2003.............. -- -- -- -- -- -- -- --
11/15/2003.............. -- -- -- -- -- -- -- --
12/15/2003.............. -- -- -- -- -- -- -- --
01/15/2004.............. -- -- -- -- -- -- -- --
02/15/2004.............. -- -- -- -- -- -- -- --
03/15/2004.............. -- -- -- -- -- -- -- --
04/15/2004.............. -- -- -- -- -- -- -- --
05/15/2004.............. -- -- -- -- -- -- -- --
06/15/2004.............. -- -- -- -- -- -- -- --
07/15/2004.............. -- -- -- -- -- -- -- --
08/15/2004.............. -- -- -- -- -- -- -- --
09/15/2004.............. -- -- -- -- -- -- -- --
10/15/2004.............. -- -- -- -- -- -- -- --
Weighted Average Life
(years)................ 0.45 0.37 0.31 0.28 1.46 1.21 1.00 0.89
</TABLE>
The "Weighted Average Life" of a note is determined by (1) multiplying the
amount of each principal payment of such note by the number of years from the
date of the issuance of such note to the Distribution Date on which such
principal payment is made, (2) adding the results and (3) dividing the sum by
the initial principal balance of such note.
The ABS Table has been prepared based on the assumptions described in this
section, including the assumptions regarding the characteristics and
performance of the receivables, and should be read in conjunction with those
assumptions. The actual characteristics and performance of the receivables to
be transferred to the trust may differ from the assumptions.
S-25
<PAGE>
Percent of Initial Note Principal Balance at Various ABS Percentages
<TABLE>
<CAPTION>
Class A-3 Notes Class A-4 Notes
--------------------------- ---------------------------
Distribution Date 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
----------------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date............ 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/15/2000.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/15/2000.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
01/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
02/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
03/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
04/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
05/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
06/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
07/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
08/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
09/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
10/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
01/15/2002.............. 100.00 100.00 100.00 94.87 100.00 100.00 100.00 100.00
02/15/2002.............. 100.00 100.00 100.00 86.41 100.00 100.00 100.00 100.00
03/15/2002.............. 100.00 100.00 94.35 78.19 100.00 100.00 100.00 100.00
04/15/2002.............. 100.00 100.00 86.83 70.20 100.00 100.00 100.00 100.00
05/15/2002.............. 100.00 100.00 79.49 62.45 100.00 100.00 100.00 100.00
06/15/2002.............. 100.00 98.06 72.33 54.93 100.00 100.00 100.00 100.00
07/15/2002.............. 100.00 91.52 65.36 47.66 100.00 100.00 100.00 100.00
08/15/2002.............. 100.00 85.08 58.57 40.64 100.00 100.00 100.00 100.00
09/15/2002.............. 100.00 78.74 51.97 33.87 100.00 100.00 100.00 100.00
10/15/2002.............. 95.90 72.50 45.56 27.35 100.00 100.00 100.00 100.00
11/15/2002.............. 89.83 66.36 39.35 21.01 100.00 100.00 100.00 100.00
12/15/2002.............. 83.78 60.33 33.33 14.80 100.00 100.00 100.00 100.00
01/15/2003.............. 77.75 54.40 27.51 8.86 100.00 100.00 100.00 100.00
02/15/2003.............. 71.90 48.69 21.94 3.27 100.00 100.00 100.00 100.00
03/15/2003.............. 66.06 43.09 16.43 -- 100.00 100.00 100.00 93.75
04/15/2003.............. 60.35 37.68 11.19 -- 100.00 100.00 100.00 78.56
05/15/2003.............. 54.67 32.37 6.16 -- 100.00 100.00 100.00 64.19
06/15/2003.............. 49.01 27.18 1.33 -- 100.00 100.00 100.00 50.66
07/15/2003.............. 43.38 22.05 -- -- 100.00 100.00 90.03 37.98
08/15/2003.............. 37.77 16.90 -- -- 100.00 100.00 76.66 26.15
09/15/2003.............. 32.19 11.87 -- -- 100.00 100.00 63.95 15.19
10/15/2003.............. 26.64 6.96 -- -- 100.00 100.00 51.91 5.10
11/15/2003.............. 21.04 2.16 -- -- 100.00 100.00 40.54 --
12/15/2003.............. 15.62 -- -- -- 100.00 92.92 30.17 --
01/15/2004.............. 10.22 -- -- -- 100.00 79.62 20.45 --
02/15/2004.............. 5.00 -- -- -- 100.00 67.00 11.57 --
03/15/2004.............. -- -- -- -- 99.67 54.89 -- --
04/15/2004.............. -- -- -- -- 84.21 43.13 -- --
05/15/2004.............. -- -- -- -- 68.83 31.72 -- --
06/15/2004.............. -- -- -- -- 53.55 20.67 -- --
07/15/2004.............. -- -- -- -- 38.35 9.98 -- --
08/15/2004.............. -- -- -- -- 23.24 -- -- --
09/15/2004.............. -- -- -- -- 12.81 -- -- --
10/15/2004.............. -- -- -- -- -- -- -- --
Weighted Average Life
(years)................ 2.69 2.37 2.00 1.77 3.72 3.49 3.06 2.71
</TABLE>
The "Weighted Average Life" of a note is determined by (1) multiplying the
amount of each principal payment of such note by the number of years from the
date of the issuance of such note to the Distribution Date on which such
principal payment is made, (2) adding the results and (3) dividing the sum by
the initial principal balance of such note.
The ABS Table has been prepared based on the assumptions described in this
section, including the assumptions regarding the characteristics and
performance of the receivables, and should be read in conjunction with those
assumptions. The actual characteristics and performance of the receivables to
be transferred to the trust may differ from the assumptions.
S-26
<PAGE>
Percent of Initial Note Principal Balance at Various ABS Percentages
<TABLE>
<CAPTION>
Class B Notes Class C Notes
--------------------------- ---------------------------
Distribution Date 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
----------------- ---- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date............ 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/15/2000.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/15/2000.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
01/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
02/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
03/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
04/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
05/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
06/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
07/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
08/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
09/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
10/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/15/2001.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
01/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
02/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
03/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
04/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
05/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
06/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
07/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
08/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
09/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
10/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/15/2002.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
01/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
02/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
03/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
04/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
05/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
06/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
07/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
08/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
09/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
10/15/2003.............. 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/15/2003.............. 100.00 100.00 100.00 -- 100.00 100.00 100.00 --
12/15/2003.............. 100.00 100.00 100.00 -- 100.00 100.00 100.00 --
01/15/2004.............. 100.00 100.00 100.00 -- 100.00 100.00 100.00 --
02/15/2004.............. 100.00 100.00 100.00 -- 100.00 100.00 100.00 --
03/15/2004.............. 100.00 100.00 -- -- 100.00 100.00 -- --
04/15/2004.............. 100.00 100.00 -- -- 100.00 100.00 -- --
05/15/2004.............. 100.00 100.00 -- -- 100.00 100.00 -- --
06/15/2004.............. 100.00 100.00 -- -- 100.00 100.00 -- --
07/15/2004.............. 100.00 100.00 -- -- 100.00 100.00 -- --
08/15/2004.............. 100.00 -- -- -- 100.00 -- -- --
09/15/2004.............. 100.00 -- -- -- 100.00 -- -- --
10/15/2004.............. -- -- -- -- -- -- -- --
Weighted Average Life
(years)................ 3.99 3.82 3.40 3.07 3.99 3.82 3.40 3.07
</TABLE>
The "Weighted Average Life" of a note is determined by (1) multiplying the
amount of each principal payment of such note by the number of years from the
date of the issuance of such note to the Distribution Date on which such
principal payment is made, (2) adding the results and (3) dividing the sum by
the initial principal balance of such note.
The ABS Table has been prepared based on the assumptions described in this
section, including the assumptions regarding the characteristics and
performance of the receivables, and should be read in conjunction with those
assumptions. The actual characteristics and performance of the receivables to
be transferred to the trust may differ from the assumptions.
S-27
<PAGE>
The Servicer
AmSouth Bank will service the receivables pursuant to the sale and
servicing agreement. Information regarding AmSouth Bank may be found in
"Description of AmSouth Bank" in the prospectus. Information regarding AmSouth
Bank's servicing procedures may be found in "AmSouth Bank's Origination and
Servicing Procedures" in the prospectus.
Size of Servicing Portfolio
As of June 30, 2000, AmSouth Bank serviced 361,352 retail installments sale
contracts installment loans, consisting of new and used automobile, including
passenger car, minivan, sport/utility vehicles and light-duty truck
receivables, representing an outstanding balance of approximately $4,345
million.
Delinquencies, Loss and Repossession Experience
Set forth below is information concerning the historical delinquency, loss
and repossession experience of AmSouth Bank pertaining to retail installment
sales contracts secured by new and used automobiles, including passenger cars,
minivans, sport/utility vehicles and light-duty trucks indirectly originated by
AmSouth Bank through dealers and serviced by AmSouth Bank. The information
includes current and historical information on receivables originated by First
American Bank prior to AmSouth Bank's acquisition of First American Bank on
October 1, 1999. Prior to October 1, 1999, these receivables were serviced by
First American Bank. The tables also include information on receivables
previously sold by AmSouth Bank which AmSouth Bank continues to service.
The data presented in the following tables are for illustrative purposes
only. There is no assurance that delinquency, loss and repossession experience
of the trust with respect to the receivables to be transferred to it, will be
similar to that set forth below. The percentages in the tables below have not
been adjusted to eliminate the effect of the growth of AmSouth Bank's
portfolio. Accordingly, the delinquency, loss and repossession percentages may
be lower than those shown if a group of receivables were isolated at a period
in time and the delinquency, loss and repossession data showed the activity
only for that isolated group of receivables over the periods indicated.
AmSouth Bank
Delinquency Experience
<TABLE>
<CAPTION>
As of September 30, At December 31,
---------------------- ----------------------------------------------
2000 1999 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Number of Contracts
Outstanding at end of
Period................. 368,041 313,998 327,821 247,895 182,893 179,425
Delinquencies as a
Percent of Number of
Contracts Outstanding
at end of Period
30-59 Days............. 2.10% 1.43% 1.87% 1.79% 1.85% 2.08%
60-89 Days............. 0.59% 0.42% 0.53% 0.48% 0.37% 0.49%
90 Days and Over....... 0.24% 0.19% 0.23% 0.29% 0.24% 0.33%
---------- ---------- ---------- ---------- ---------- ----------
Total Delinquencies as a
Percent of Contracts
Outstanding at end of
Period................. 2.92% 2.04% 2.63% 2.56% 2.46% 2.91%
========== ========== ========== ========== ========== ==========
Portfolio Outstanding at
end of Period--$'s in
Thousands.............. $4,409,102 $3,736,350 $3,901,896 $2,737,539 $1,852,776 $1,826,937
Delinquencies as a
Percent of Portfolio
Outstanding at end of
Period
30-59 Days............. 1.95% 1.25% 1.68% 1.56% 1.65% 1.93%
60-89 Days............. 0.53% 0.38% 0.47% 0.41% 0.35% 0.45%
90 Days and Over....... 0.21% 0.16% 0.20% 0.26% 0.22% 0.29%
---------- ---------- ---------- ---------- ---------- ----------
Total Delinquencies as a
Percent of Portfolio
Outstanding at end of
Period................. 2.68% 1.80% 2.36% 2.23% 2.22% 2.68%
========== ========== ========== ========== ========== ==========
</TABLE>
. The period of delinquency is based on the number of days scheduled
payments are contractually past due, and includes receivables that
have not been charged-off.
S-28
<PAGE>
AmSouth Bank
Repossession and Charge-Off Experience
<TABLE>
<CAPTION>
During Nine Months
Ended September 30, During Fiscal Year Ended December 31,
---------------------- ----------------------------------------------
2000 1999 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Average Portfolio
Outstanding During
Period--$'s in
Thousands.............. $4,246,788 $3,277,905 $3,422,620 $2,169,953 $1,822,760 $1,736,818
Average Number of
Contracts Outstanding
During Period.......... 354,637 283,219 293,225 205,431 179,992 172,900
Number of Repossessions
During Period.......... 5,566 5,378 7,702 4,308 2,719 2,405
Repossessions as a
Percent of Average
Number of Contracts
Outstanding During
Period (Annualized).... 2.09% 2.53% 2.63% 2.10% 1.51% 1.39%
Gross Charge-Offs--$'s
in Thousands........... $ 50,717 $ 32,253 $ 47,146 $ 27,181 $ 28,801 $ 31,657
Recoveries--$'s in
Thousands.............. $ 21,736 $ 13,562 $ 18,819 $ 15,246 $ 16,338 $ 12,825
Net Charge-Offs--$'s in
Thousands.............. $ 28,981 $ 18,691 $ 28,327 $ 11,935 $ 12,463 $ 18,832
Net Charge-Offs as a
Percent of Average
Gross Portfolio
Outstanding
(Annualized)........... 0.91% 0.76% 0.83% 0.55% 0.68% 1.08%
</TABLE>
. "Gross Charge-Offs" represents the outstanding balance of contracts
charged-off that are determined to be uncollectible.
. "Recoveries" represent amounts received on contracts charged off in
period or any prior net of recovery expenses.
. "Net Charge-Offs" are "Gross Charge-Offs" less "Recoveries".
The increase in delinquency from September 1999 to September 2000 is
primarily the result of the slowing portfolio growth and increasing seasoning
of the portfolio. The September 1999 delinquency percentage benefited greatly
from strong growth in the portfolio and the fact that a substantial portion of
the portfolio constituted recent originations which had not seasoned enough to
reflect delinquencies. By September 2000, portfolio growth had slowed
considerably and the 1998 and 1999 originations had further seasoned leading to
an increase in delinquency percentages.
Net charge-offs as a percentage of outstandings declined between 1996 and
1998. This reflects the introduction of the currently used credit policies and
practices and the portfolio growth that commenced in the second half of 1998.
Net charge-off percentages increased in 1999 due to the additional losses
incurred in the First American Bank portfolio stemming from operational and
integration issues that First American Bank had with regard to its own
acquisitions. Net charge-off percentages for the nine months ending in
September 2000 are higher than the corresponding numbers for 1999 because of
the seasoning of the portfolio and the increase in charge-offs on the 1998 and
1999 originations due to their becoming more seasoned, as described above.
Going forward AmSouth Bank expects portfolio growth to be very modest.
AmSouth Bank therefore expects that delinquency and net charge-off percentages
will increase marginally in the future.
Delinquencies and net losses are affected by a number of social and
economic factors, including changes in interest rates and unemployment levels
in the economy, and there can be no assurance as to the level of future total
delinquencies or the severity of future net charge-offs. As a result, the
delinquency and net charge-off experience of the receivables may differ from
those shown in the tables.
S-29
<PAGE>
How You Can Compute Your Portion of the
Amount Outstanding on the Notes
The servicer will provide to you in each report which it delivers to you a
factor which you can use to compute your portion of the principal amount
outstanding on the notes.
How the Servicer Computes the Factor For Your Class of Notes. The servicer
will compute a separate factor for each class of notes. The factor for each
class of notes will be a seven-digit decimal which the servicer will compute
with respect to such class of notes indicating the remaining outstanding
principal amount of such class of notes, as of the applicable Distribution
Date. The servicer will compute the factor after giving effect to payments to
be made on such Distribution Date, as a fraction of the initial outstanding
principal amount of such class of notes.
Your Portion of the Outstanding Amount of the Notes. For each note you
own, your portion of that class of notes is the product of:
. the original denomination of your note; and
. the factor relating to your class of notes computed by the servicer in
the manner described above.
The Factors Described Above Will Decline as the Trust Makes Payments on
the Notes
Each of the factors described above will initially be 1.0000000. They will
then decline to reflect reductions in the outstanding principal amount of the
applicable class of notes. These reductions over time will be as a result of
scheduled payments, prepayments, purchases of the receivables by AmSouth Bank,
the seller or the servicer and liquidations of the receivables.
Maturity and Prepayment Considerations
Information regarding certain maturity and prepayment considerations with
respect to the notes is set forth under "Maturity and Prepayment
Considerations" in the prospectus. In addition, no principal payments will be
made at any time, including upon the occurrence and during the continuation of
an Event of Default under the indenture:
. on the Class A-2 notes, the Class A-3 notes and the Class A-4 notes
until the Class A-1 notes have been paid in full, and thereafter
principal payments will be made on the Class A-2 notes, the Class A-3
notes and the Class A-3 notes, ratably until the Class A notes have
been paid in full;
. on the Class B notes until the Class A notes have been paid in full;
or
. on the Class C notes until the Class A notes and the Class B notes
have been paid in full.
As the rate of payment on principal of each class of notes depends on the
rate of payment, including prepayments, of the principal balance of the
receivables, final payment of any class of notes could occur significantly
earlier than the respective Final Scheduled Distribution Dates.
See "Risk Factors--Your yield to maturity may be reduced by prepayments",
"Risk Factors--Your notes may not be repaid on their final scheduled
distribution date" and "Risk Factors--Payment priorities and subordination
features increase risk of loss or delay in payment to some classes of notes"
for a discussion of Maturity and Prepayment Considerations.
Also see "The Receivables Pool" in this prospectus supplement and
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
the Receivables" in the prospectus.
S-30
<PAGE>
Use of Proceeds
The net proceeds from the sale of the notes will be applied by the seller
first, to deposit approximately $7,128,117.29 into the Reserve Account, and
second, to purchase the receivables and the other trust property from AmSouth
Bank.
Description of the Notes
The trust will issue the notes under an indenture to be dated as of October
1, 2000, between the trust and The Chase Manhattan Bank, as indenture trustee.
We will file a copy of the indenture with the Securities and Exchange
Commission after the trust issues the notes. The following information
summarizes all material provisions of the notes and the indenture. The
following summary supplements the description of the general terms and
provisions of the notes of any given series and the related indenture set forth
in the prospectus, to which description reference is hereby made. See
"Description of the Securities" and "Description of the Indenture" in the
prospectus.
Payments of Interest
Interest on the principal amounts of the notes will accrue at the
respective per annum interest rates for the various classes of notes set forth
on the cover of this prospectus supplement and will be payable to the
noteholders on each Distribution Date. The trust will make payments to the
noteholders as of each Record Date.
Calculation of Interest. Interest will accrue during each interest period
and will be calculated on the various classes of notes as follows:
. Actual/360. Interest on the Class A-1 notes will be calculated on the
basis of actual days elapsed and a 360-day year.
. 30/360. Interest on the Class A-2 notes, the Class A-3 notes, the
Class A-4 notes, the Class B notes and the Class C notes will be
calculated on the basis of a 360-day year of twelve 30-day months.
. Unpaid Interest Accrues. Interest accrued as of any Distribution Date
but not paid on such Distribution Date will be due on the next
Distribution Date, together with interest on such amount at the
applicable interest rate (to the extent lawful).
The Trust Will Pay Interest Pro Rata to Class A Noteholders if it Does Not
Have Enough Funds Available to Pay All Interest Due. The amount available for
interest payments on the Class A notes could be less than the amount of
interest payable on the Class A notes on any Distribution Date. In that event,
the Class A-1 noteholders, the Class A-2 noteholders, the Class A-3 noteholders
and the Class A-4 noteholders will receive their ratable share of the aggregate
amount available to be distributed in respect of interest on the Class A notes.
Each such class' ratable share of the amount available to pay interest will be
based on the amount of interest due on such class relative to the total amount
of interest due to the Class A noteholders.
Interest Paid on the Class B notes and the Class C notes is Subordinate to
Interest Paid on the Class A notes. Interest on the Class B notes will not be
paid on any Distribution Date until interest payments on the Class A notes have
been paid in full and the First Priority Principal Distribution Amount, if any,
has been allocated. If the amount available for interest payments on the Class
B notes is less than the amount of interest payable on the Class B notes on any
Distribution Date, each of the holders of the Class B notes will receive their
ratable share--based upon the total
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amount of interest due to such Class B noteholders--of the aggregate amount
available to be distributed in respect of interest on the Class B notes.
Interest on the Class C notes will not be paid on any Distribution Date until
interest payments on the Class A notes have been paid in full, the First
Priority Principal Distribution Amount, if any, has been allocated, interest
payments on the Class B notes have been paid in full and the Second Priority
Principal Distribution Amount, if any, has been allocated. If the amount
available for interest payments on the Class C notes is less than the amount of
interest payable on the Class C notes on any Distribution Date, each of the
holders of the Class C notes will receive their ratable share--based upon the
total amount of interest due to such Class C noteholders--of the aggregate
amount available to be distributed in respect of interest on the Class C notes.
See "Description of the Sale and Servicing Agreement--Distributions" and "--
Reserve Account" in this prospectus supplement.
Event of Default Regarding the Payment of Interest. An Event of Default
under the indenture will occur if the full amount of interest due on the
Controlling Class of notes is not paid within five days of the related
Distribution Date. The failure to pay interest on any other class of notes
within five days of the related Distribution Date will not be an Event of
Default.
See "Description of the Notes--The Indenture--Events of Default" and "--
Rights upon an Event of Default" in this prospectus supplement.
Payments of Principal
The trust will generally make principal payments to the noteholders on each
Distribution Date in an amount equal to the Principal Distribution Amount. The
"Principal Distribution Amount" with respect to any Distribution Date equals
the sum of:
. the First Priority Principal Distribution Amount;
. the Second Priority Principal Distribution Amount; and
. the Regular Principal Distribution Amount.
The trust will pay principal on the notes from funds on deposit in the
Collection Account including amounts, if any, from the Reserve Account, in
accordance with the priorities described in "Description of the Sale and
Servicing Agreement--Distributions" in this prospectus supplement.
Priority of Principal Repayments. Principal payments on the notes will
generally be made sequentially on each Distribution Date, in the following
order of priority:
. to the Class A-1 notes until paid in full;
. to the Class A-2 notes, until paid in full;
. to the Class A-3 Notes until paid in full;
. to the Class A-4 Notes until paid in full;
. to the Class B notes until paid in full; and
. to the Class C notes until paid in full.
Notes Might Not Be Repaid on Their Final Scheduled Distribution Dates. The
principal amounts of any class of notes to the extent not previously paid will
be due on the Final Scheduled Distribution Date relating to that class of
notes. Those dates are listed on the cover of this prospectus supplement. The
actual date on which the aggregate outstanding principal amount of any
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class of notes is paid may be earlier or later than the Final Scheduled
Distribution Dates relating to that class of notes based on a variety of
factors, including those described under "Maturity and Prepayment
Considerations" in this prospectus supplement and in the prospectus.
Event of Default Regarding the Payment of Principal. An Event of Default
under the indenture will occur if any principal payment on any note is not made
when that payment is due and payable. See "The Indenture--Events of Defaults"
and "--Rights Upon Event of Default" in this prospectus supplement.
Optional Redemption
All outstanding notes will be redeemed in whole, but not in part, on any
Distribution Date on which the servicer exercises its option to purchase the
receivables. The servicer may purchase the receivables when the Pool Balance
will have declined to 5% or less of the initial Pool Balance, as described in
the prospectus under "Description of the Sale and Servicing Agreement--
Termination." The redemption price for the receivables will be equal to the
aggregate outstanding principal amount of the receivables plus accrued and
unpaid interest on the receivables; provided that the redemption price is
sufficient to repay all outstanding principal and accrued and unpaid interest
on the notes.
The Indenture
Events of Default. The occurrence of any one of the following events shall
be an event of default under the indenture:
. a default in the payment of any interest on any note of the
Controlling Class when the same becomes due and payable, and such
default shall continue for a period of five days;
. default in the payment of the principal of or any installment of the
principal of any note when the same becomes due and payable;
. default in the observance or performance of any material covenant or
agreement of the trust made in the indenture--other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere specifically dealt with in the indenture--or any
representation or warranty of issuer made in the indenture or in any
certificate or other writing delivered pursuant to the indenture or in
connection with the indenture proving to have been incorrect in any
material respect as of the time when the same shall have been made,
and such default shall continue or not be cured, or the circumstance
or condition in respect of which such misrepresentation or warranty
was incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days--or for such longer period as provided in the
indenture; or
. the bankruptcy of the trust or the occurrence of other circumstances
relating to the bankruptcy or insolvency of the trust, as described in
the indenture.
The amount of principal required to be paid to noteholders under the indenture,
however, generally will be limited to amounts available to be deposited in the
Principal Distribution Account. Thus, the failure to pay principal on a class
of notes generally will not result in the occurrence of an Event of Default
until the Final Scheduled Distribution Date for that class of notes.
Rights Upon Event of Default. Upon the occurrence and continuation of any
Event of Default, the indenture trustee or the holders of a majority in
principal amount of the Controlling Class may declare the principal of such
notes to be immediately due and payable. Such declaration may be
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rescinded by the holders of a majority in principal amount of the Controlling
Class then outstanding if both of the following occur:
. the issuer has paid or deposited with the indenture trustee enough
money to pay:
. all payments of principal of and interest on all notes and all
other amounts that would then be due if the Event of Default
causing the acceleration of maturity had not occurred; and
. all sums paid or advanced by the indenture trustee and the
reasonable compensation, expenses, disbursements and advances of
the indenture trustee and its agents and counsel; and
. all Events of Default, other than the nonpayment of the principal of
the notes that has become due solely by the acceleration, have been
cured or waived.
Any such rescission could be treated, for federal income tax purposes, as a
constructive exchange of such notes by the noteholders for deemed new notes
upon which gain or loss would be recognized.
If an Event of Default has occurred, the indenture trustee may institute
proceedings to collect amounts due or foreclose on trust property, exercise
remedies as a secured party or sell the receivables. Upon the occurrence of an
Event of Default relating to the payment of principal of any note or a default
for five days or more in the payment of interest of any note of the Controlling
Class, in each case resulting in acceleration of the notes, the indenture
trustee may sell the receivables without obtaining the consent of the
noteholders or may elect to have the trust maintain possession of the
receivables and apply collections as received. However, the indenture trustee
is prohibited from selling the related receivables following an Event of
Default relating to the bankruptcy or occurrence of other circumstances of
insolvency of the trust, unless
. the holders of 100% of the Controlling Class of notes consent to such
sale--excluding notes held by the seller, the servicer or their
affiliates,
. the proceeds of such sale are sufficient to pay in full the principal
of and the accrued interest on the outstanding notes at the date of
such sale, or
. the indenture trustee determines that the proceeds of the receivables
would not be sufficient on an ongoing basis to make all payments on
the notes as such payments would have become due if such obligations
had not been declared due and payable, and such indenture trustee
obtains the consent of the holders of 66 2/3% of the aggregate
outstanding amount of the Controlling Class of notes.
In addition, if the Event of Default relates to a default by the trust in
observing or performing any material covenant or agreement--other than an Event
of Default relating to non-payment of interest or principal, insolvency or any
other event which is otherwise specifically dealt with by the indenture--the
indenture trustee is prohibited from selling the receivables unless the holders
of all outstanding notes consent to such sale or the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on the
outstanding notes.
If an Event of Default occurs and is continuing, the indenture trustee will
be under no obligation to exercise any of the rights or powers under such
indenture at the request or direction of any of the holders of any notes, if
the indenture trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which might be incurred by it in
complying with such request. Subject to the provisions for indemnification and
certain limitations contained in the indenture, the holders of a majority in
principal amount of the Controlling Class of notes will have the right to
direct the time, method and place of conducting any proceeding or any remedy
available to the indenture trustee, and the holders of a majority in principal
amount of the Controlling Class may,
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in certain cases, waive any Event of Default, except a default in the payment
of principal or interest or a default in respect of a covenant or provision of
such indenture that cannot be modified without the waiver or consent of the
holders of all of the outstanding notes of the related trust. Any such waiver
could be treated, for federal income tax purposes, as a constructive exchange
of such notes by the related noteholders for deemed new notes upon which gain
or loss would be recognized.
Appointment of Additional Indenture Trustees. Under the Trust Indenture Act
of 1939, the indenture trustee may be deemed to have a conflict of interest and
be required to resign as trustee for either the Class A notes, the Class B
notes or the Class C notes if an Event of Default occurs under the indenture.
In these circumstances, the indenture will provide for a successor trustee to
be appointed for one or all of the Class A notes, Class B notes and Class C
notes, in order that there be separate trustees for each of the Class A notes,
the Class B notes and the Class C notes. In general, so long as any amounts
remain unpaid with respect to the Class A notes:
. only the indenture trustee for the Class A noteholders will have the
right to exercise remedies under the indenture; and
. only the Class A noteholders will have the right to direct or consent
to any action to be taken, including sale of the receivables.
In any case, the Class B noteholders will be entitled to their respective
shares of any proceeds of enforcement, subject to the subordination of the
Class B notes to the Class A notes as described in this prospectus supplement.
When the Class A notes are repaid in full, all rights to exercise remedies
under the indenture will transfer to the trustee for the Class B notes. The
Class C noteholders will be entitled to their respective shares of any proceeds
of enforcement, subject to the subordination of the Class C notes to the Class
A notes and the Class B notes as described in this prospectus supplement. When
the Class A notes and the Class B notes are repaid in full, all rights to
exercise remedies under the indenture will transfer to the trustee for the
Class C notes.
If the indenture trustee relating to any class of notes resigns, its
resignation will become effective only after a successor indenture trustee for
that class of notes is appointed and the successor accepts the appointment.
Priority of Payments May Change Upon an Event of Default. Following the
occurrence and during the continuation of an Event of Default described in the
first, second and fourth bullet described in "--Events of Default" which has
resulted in an acceleration of the notes, and upon the liquidation of the
receivables after any Event of Default, the priority of payments changes. In
particular, payments on the notes will generally be made sequentially on each
Distribution Date, in the following order of priority:
. interest on the Class A notes, ratably;
. to the principal amount of the Class A-1 notes until such principal
amount is paid in full;
. to the principal amount of the Class A-2 notes, Class A-3 notes and
Class A-4 notes, ratably, until such principal amount is paid in full;
. interest on the Class B notes;
. to the principal amount of the Class B notes until such principal
amount is paid in full;
. interest on the Class C notes; and
. to the principal amount of the Class C notes until such principal
amount is paid in full.
Following the occurrence of any other Event of Default which has resulted
in an acceleration of the notes, the trust will continue to pay interest and
principal on the Class A notes, the Class B notes
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and the Class C notes on each Distribution Date in the manner set forth in
"Description of the Sale and Servicing Agreement--Priority of Payments," until
a liquidation, if any, of the receivables.
The Indenture Trustee
The Chase Manhattan Bank is the indenture trustee under the indenture. The
Chase Manhattan Bank is a bank holding company incorporated in the State of New
York and its principal offices are located at 450 West 33rd Street, 14th Floor,
New York, New York 10001.
Description of the Sale and Servicing Agreement
We have summarized below the material terms of the sale and servicing
agreement. We have filed a form of the sale and servicing agreement as an
exhibit to the registration statement. We will file a copy of the actual sale
and servicing agreement with the SEC after we issue the notes. This summary is
not a complete description of all of the provisions of the sale and servicing
agreement. It is subject to all of the provisions of the sale and servicing
agreement.
Sale and Assignment of the Receivables
You can find information about the transfer of the receivables from AmSouth
Bank to the seller and from the seller to the trust on the closing date in the
prospectus under "Description of the Transfer and Servicing Agreement--Sale and
Assignment of the Receivables".
Accounts
In general, the servicer will be permitted to retain collections on the
receivables until the Business Day preceding any Distribution Date. However,
the servicer will be required to remit collections received with respect to the
receivables no later than the second Business Day after receipt to the
Collection Account if there is an Event of Servicing Termination, if AmSouth
Bank is no longer the servicer or if one of the other conditions set forth in
the sale and servicing agreement is not met. See "Transfer and Servicing
Agreements--Payments on the Receivables" in the prospectus. In addition to the
Collection Account referred to under "Description of the Sale and Servicing
Agreement--The Collection Account and Eligible Investments":
. the servicer will establish the Collection Account, the Note
Distribution Account and the Principal Distribution Account; and
. the seller will establish and will maintain with the indenture trustee
the Reserve Account, in the name of the indenture trustee on behalf of
the noteholders, the trust and the certificateholders.
Servicing Compensation and Expenses
The servicer will be entitled to receive a servicing fee for each
Collection Period in an amount equal to the sum of (1) the product of one-
twelfth of 1% per annum and the Pool Balance as of the first day of the
Collection Period and (2) a supplemental servicing fee equal to any late,
prepayment and other administrative fees and expenses collected during each
month. The servicing fee, together with any portion of the servicing fee that
remains unpaid from prior Distribution Dates, will be payable on each
Distribution Date from funds on deposit in the Collection Account with respect
to the Collection Period preceding such Distribution Date, including funds, if
any, deposited into the Collection Account from the Reserve Account. See
"Description of the Sale and Servicing Agreement--Servicing Fee" in the
prospectus.
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Rights Upon an Event of Servicing Termination
If an Event of Servicing Termination occurs, the indenture trustee or
holders of not less than a majority of the principal amount of the Controlling
Class may remove the servicer without the consent of any of the other
noteholders.
Waiver of Past Events of Servicing Termination
If an Event of Servicing Termination occurs, a majority of the principal
amount of the Controlling Class, subject to the exceptions provided in the sale
and servicing agreement, may waive any Event of Servicing Termination except
for a failure to make any required deposits to or payments from any account,
without the consent of any of the other noteholders.
Distributions
Deposits to the Collection Account and Determination of Available
Collections. On or before each Distribution Date, the servicer will cause all
collections on receivables and other amounts constituting the Available
Collections to be deposited into the Collection Account. On or before each
Distribution Date, the servicer will notify the indenture trustee to withdraw
from the Reserve Account and deposit into the Collection Account the Reserve
Account Excess Amount. See "Description of the Sale and Servicing Agreement--
Collections" in the prospectus.
In addition, the servicer will notify the indenture trustee to withdraw
from the Reserve Account and deposit in the Collection Account an amount equal
to the lesser of:
. the amount, if any, by which (a) the Total Required Payment exceeds
(b) the Available Funds for such Distribution Date; and
. the amount of cash or other immediately available funds in the Reserve
Account on such Distribution Date--after giving effect to any
withdrawals from the Reserve Account relating to the Reserve Account
Excess Amount for that Distribution Date.
On each Determination Date, the servicer will determine the amount in the
Collection Account for distribution on the related Distribution Date and will
notify the indenture trustee in writing. Payments to noteholders will be made
on each Distribution Date in accordance with that determination.
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Sources of Funds Available for
Distribution on Any Distribution Date
[SOURCE OF FUNDS CHART]
Priority of Payments. On each Distribution Date, except as set forth above
under "Description of the Notes--The Indenture--Priority of Payments May Change
Upon an Event of Default", the servicer will instruct the indenture trustee to
make the following deposits and distributions, to the extent of funds then on
deposit in the Collection Account with respect to the Collection Period
preceding such Distribution Date--including funds, if any, deposited into the
Collection Account from the Reserve Account--in the following order of
priority:
(1) to the servicer, the Servicing Fee and all unpaid Servicing Fees from
prior Collection Periods;
(2) to the Class A noteholders:
(a) the aggregate amount of interest accrued for the related Interest
Period on each of the Class A Notes at their respective interest
rates on the principal outstanding as of the previous Distribution
Date after giving effect to all payments of principal to the Class
A noteholders on the preceding Distribution Date; and
(b) the excess, if any, of the amount of interest payable to the Class
A noteholders on prior Distribution Dates over the amounts
actually paid to the Class A noteholders on those prior
Distribution Dates, plus interest on any such shortfall to the
extent permitted by law;
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(3) to the Principal Distribution Account, the First Priority Principal
Distribution Amount, if any;
(4) to the Class B noteholders:
(a) the aggregate amount of interest accrued for the related Interest
Period on the Class B Notes at the interest rate on such notes on
the principal outstanding as of the previous Distribution Date
after giving effect to all payments of principal to the Class B
noteholders on the preceding Distribution Date; and
(b) the excess, if any, of the amount of interest payable to the Class
B noteholders on prior Distribution Dates over the amounts
actually paid to the Class B noteholders on those prior
Distribution Dates, plus interest on any such shortfall to the
extent permitted by law;
(5) to the Principal Distribution Account, the Second Priority Principal
Distribution Amount, if any;
(6) to the Class C Noteholders:
(a) the aggregate amount of interest accrued for the related Interest
Period on the Class C notes at the interest rate on such notes on
the principal outstanding as of the previous Distribution Date
after giving effect to all payments of principal to the Class C
Noteholders on the preceding Distribution Date; and
(b) the excess, if any, of the amount of interest payable to the Class
C Noteholders on prior Distribution Dates over the amounts
actually paid to the Class C Noteholders on those prior
Distribution Dates, plus interest on any such shortfall to the
extent permitted by law;
(7) to the Reserve Account, the amount required to reinstate the amount in
the Reserve Account up to the Specified Reserve Balance;
(8) to the Principal Distribution Account, the Regular Principal
Distribution Amount; and
(9) to the certificateholders, any funds remaining on deposit in the
Collection Account with respect to the Collection Period preceding
such Distribution Date.
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Distribution of Funds on Deposit When No Event of Default
Resulting in Acceleration Has Occurred
[DISTRIBUTION OF FUNDS CHART]
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Overview of How the Trust Distributes Principal. In general, the trust will
make principal distributions on the notes under the following circumstances:
. as the Pool Balance decreases as a result of principal payments on the
receivables, purchases of receivables by the seller or the servicer,
receipt of Liquidation Proceeds allocable to principal and receivables
becoming defaulted receivables, to the extent that the Pool Balance is
less than the aggregate outstanding principal balance on the notes
plus the required amount of overcollateralization; and
. on the respective Final Scheduled Distribution Dates of each class of
the notes to the extent that the outstanding principal amounts on the
applicable notes were not previously repaid.
The Trust Will Make Principal Payments to Maintain Overcollateralization as
the Pool Balance Decreases. The trust will make principal distributions on
Distribution Dates which are not Final Scheduled Distribution Dates in order to
maintain a desired level of overcollateralization. The trust will generally pay
principal on the most senior class of notes outstanding at any time that the
aggregate outstanding principal balance of the notes exceeds the Pool Balance
minus the Specified Overcollateralization Amount.
Required Principal Distributions Made as a Result of Notes Reaching Their
Final Scheduled Distribution Dates May Delay Interest Payments on Subordinate
Classes of Notes. The principal amounts on the notes are generally expected to
be repaid prior to the applicable Final Scheduled Distribution Date. However,
if the principal amount on any class of notes has not been fully repaid prior
to its Final Scheduled Distribution Date, any remaining principal amounts on
that class of notes will be immediately due on that date, and will be payable
before any payments of principal or interest are made to more junior classes of
notes. Interest on more junior classes of notes may therefore be delayed as a
result.
A substantial amount payable on a Final Scheduled Distribution Date would
generally occur as a result of slower-than-expected payments on the
receivables, including:
. a larger than expected number of late payments on the receivables; or
. slower than expected prepayments on the receivables.
Higher-Priority Principal Payments Made as a Result of Losses or
Prepayments May Delay Interest Payments on Class B Notes and Class C Notes. The
trust will pay principal on the most senior classes of notes prior to the
payment of interest on subordinate notes in cases where the Pool Balance has
decreased to a level which is less than the aggregate outstanding principal
balance of the senior class of notes.
. To the extent that the Pool Balance has decreased to a level which is
less than the aggregate outstanding principal balance on the Class A
notes, a First Priority Principal Distribution Amount will be payable
prior to the payment of interest on the Class B notes and the Class C
notes.
. To the extent that the Pool Balance has decreased to a level which is
less than the aggregate outstanding principal balance on the Class A
notes and Class B notes, a Second Priority Principal Distribution
Amount will be payable prior to the payment of interest on the Class C
notes.
Because of the prioritization of the above amounts, the occurrence of any
of the following events may result in insufficient funds for the trust to make
payments of interest on subordinate classes of notes on a timely basis:
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. substantial losses suffered by the trust as a result of defaults which
are not covered by sufficient Liquidation Proceeds allocable to
principal or by sufficient credit enhancement; or
. delayed collections on the receivables resulting from either:
. a larger-than-expected number of late payments on the receivables;
or
. slower-than-expected prepayments on the receivables; or
. reduction of the Pool Balance to zero through a sale of receivables
following an Event of Default.
Priority in Which the Trust Distributes Amounts in the Principal
Distribution Account. The servicer will instruct the indenture trustee to pay
out all amounts on deposit in the Principal Distribution Account on each
Distribution Date to the notes in the order of priority set forth in "The
Notes--Payments of Principal". Any funds remaining in the Principal
Distribution Account will be distributed to the certificateholder.
Reserve Account
The seller will establish the Reserve Account in the name of the indenture
trustee for the benefit of the noteholders, the trust and the
cetificateholders. To the extent that amounts on deposit in the Reserve Account
are depleted, the noteholders will have no recourse to the assets of the seller
or servicer as a source of payment.
Deposits to the Reserve Account. The Reserve Account will be funded by a
deposit by the seller on the closing date in the amount of $7,128,117.29. The
amount on deposit in the Reserve Account may increase from time to time up to
the Specified Reserve Balance by deposits of funds withdrawn from the
Collection Account after payment of the Total Required Payment.
As of any Distribution Date, the amount of funds actually on deposit in the
Reserve Account may, in certain circumstances, be less than the Specified
Reserve Balance. On each Distribution Date, the trust will, to the extent
available, deposit the amount, if any, necessary to cause the balance of funds
on deposit in the Reserve Account to equal the Specified Reserve Balance to the
extent set forth above under "--Priority of Payments."
Withdrawals From the Reserve Account. The amount on deposit in the Reserve
Account may decrease:
. on each Distribution Date by withdrawal of the Reserve Account Excess
Amount, if any, with respect to such Distribution Date; and
. on each Distribution Date by withdrawal of any shortfall between the
Total Required Payment and Available Funds on such Distribution Date.
In addition, the indenture trustee will, if instructed by the servicer,
withdraw amounts from the Reserve Account on any Distribution Date to the
extent that such amounts together with the Available Funds for such
Distribution Date would be sufficient to pay the sum of the Servicing Fee and
all outstanding notes in full.
Investment. Amounts on deposit in the Reserve Account will be invested by
the indenture trustee at the direction of the seller in Eligible Investments
and investment earnings--net of losses and investment expenses--therefrom will
be deposited into the Reserve Account. Eligible Investments are generally
limited to obligations or securities that mature on or before the next
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Distribution Date. However, to the extent each rating agency rating the notes
confirms that such actions will not adversely affect its ratings of the notes,
funds in the Reserve Account may be invested in securities that will not mature
prior to the next Distribution Date with respect to such notes and will not be
sold to meet any shortfalls.
Funds in the Reserve Account Will be Limited. Amounts on deposit in the
Reserve Account from time to time are available to:
. enhance the likelihood that you will receive the amounts due on your
notes; and
. decrease the likelihood that you will experience losses on your notes.
However, the amounts on deposit in the Reserve Account are limited to the
Specified Reserve Balance. If the amount required to be withdrawn from the
Reserve Account to cover shortfalls in funds on deposit in the Collection
Account exceeds the amount on deposit in the Reserve Account, a temporary
shortfall in the amounts distributed to the noteholders could result. In
addition, depletion of the Reserve Account ultimately could result in losses on
your notes.
After making distributions which are ranked senior in priority, the trust
will deposit amounts to the Reserve Account in order to maintain the Specified
Reserve Balance.
After the payment in full, or the provision for such payment of all accrued
and unpaid interest on the notes and the outstanding principal amount of the
notes, any funds remaining on deposit in the Reserve Account, subject to
certain limitations, will be paid to the seller.
Material Legal Aspects of the Receivables
Information regarding the material legal aspects of the receivables is set
forth under "Material Legal Aspects of the Receivables" in the prospectus.
Legal Investment
The Class A-1 notes will be eligible for purchase by money market funds
under Rule 2a-7 under the Investment Company Act of 1940, as amended.
Material Federal Income Tax Consequences
The issuer will be a Tax Non-Entity for United Stated federal income tax
purposes. Mayer, Brown & Platt, special federal tax counsel, is of the opinion
that:
. based on the terms of the notes and the transactions relating to the
receivables as set forth herein, the notes will be treated as debt for
United States federal income tax purposes;
. based on the applicable provisions of the trust agreement and related
documents, the trust will be disregarded as a separate entity for
United States federal income tax purposes and will not be subject to
United States federal income tax; and
. based on the applicable provisions of the trust agreement and related
documents, the Tax Non-Entity Certificates represent direct ownership
of the trust's assets for United States federal income tax purposes.
The notes will not be issued at original issue discount. See "Material Federal
Income Tax Consequences" in the prospectus.
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State Tax Matters
Because of the variation in each state's and locality's tax laws, it is
impossible to predict the tax classification of the trust or the tax
consequences to the trust or to the holders of notes in all of the state and
local taxing jurisdictions in which they may be subject to taxation.
Balch & Bingham LLP, special Alabama tax counsel, will deliver its opinion
to the effect that (1) if the characterization of the notes as debt held by
persons other than AmSouth Auto Receivables LLC, AmSouth Bank or any of their
affiliates is recognized for federal income tax purposes, the notes will also
be recognized as debt for Alabama state income tax purposes, (2) if the trust
will not be classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes, the trust will not be
taxable as a corporation for Alabama state income tax purposes, and (3) based
on a private letter ruling obtained by AmSouth Bank from the Alabama Department
of Revenue, the trust will not be subject to the Alabama state business
privilege tax or corporate shares tax. If the trust were subject to the Alabama
corporate income tax or to the Alabama state business privilege tax and
corporate shares tax, any such taxes could materially reduce cash available to
make payments on the notes.
The federal and state tax discussions set forth above are included for
general information only and may not be applicable depending upon a
noteholder's particular tax situation. We suggest that prospective investors
should consult their tax advisors with respect to the tax consequences to them
of the purchase, ownership and disposition of the notes, including the tax
consequences under state, local, foreign and other tax laws and the possible
effects of changes in federal or other tax laws.
ERISA Considerations
The Notes
Subject to the following discussion, the notes may generally be acquired by
pension, profit-sharing or other retirement plans and accounts subject to ERISA
or Section 4975 of the Code, and by entities that are deemed to hold assets of
any of the foregoing. We refer to each of these as a "Plan".
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from
engaging in certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code with
respect to the Plan. A violation of these "prohibited transaction" rules may
generate excise tax and other liabilities under ERISA and the Code for such
person. Certain transactions involving the issuer might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Plan that
purchased notes if assets of the issuer were deemed to be assets of the Plan.
ERISA also imposes certain duties on persons who are fiduciaries of ERISA Plans
and prohibits certain transactions between an ERISA Plan and "parties in
interest" with respect to such ERISA Plans. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of an ERISA Plan is considered to be a fiduciary of such ERISA Plan,
subject to certain exceptions that are not relevant for this discussion.
Under a regulation issued by the United States Department of Labor, the
assets of the issuer would be treated as plan assets of a Plan for the purposes
of ERISA and the Code only if the Plan acquired an "equity interest" in the
issuer and none of the exceptions contained in the regulation was
S-44
<PAGE>
applicable. An equity interest is defined under the regulation as an interest
other than an instrument which is treated as indebtedness under applicable
local law and which has no substantial equity features. Although there is
little guidance on how this definition applies, the issuer believes that, at
the time of their issuance, the notes should be treated as indebtedness without
substantial equity features for purposes of the Regulation. This determination
is based in part upon the traditional debt features of the notes, including the
reasonable expectation of purchasers of the notes that they will be repaid when
due, as well as the absence of conversion rights, warrants and other typical
equity features. It should be noted that the debt treatment of the notes for
ERISA purposes could change subsequent to their issuance (i.e., they could be
treated as equity) if the Issuer incurs losses or the rating of the notes
changes. The issuer has not obtained an opinion of counsel regarding the debt
treatment of the notes under local law.
Aside from the plan asset issues, the acquisition or holding of the notes
by or on behalf of a Plan could give rise to a prohibited transaction if the
seller, the servicer, the owner trustee, the indenture trustee, other persons
providing services in connection with the issuer, or any of their respective
affiliates, is a "disqualified person" or "party in interest" with respect to
that Plan. Certain exemptions from the prohibited transaction rules might
apply, however, depending in part upon the type of Plan fiduciary making the
decision to acquire the notes and the circumstances under which such decision
is made. Included among these exceptions are Prohibited Transaction Exemption
90-1, regarding investments by insurance company separate accounts; PTE 96-23,
regarding transactions effected by "in-house asset managers"; PTE 95-60,
regarding investments by insurance company general accounts; PTE 91-38,
regarding investments by bank collective investment funds; and PTE 84-14,
regarding transactions effected by a "qualified professional asset manager."
Even if the conditions specified in one or more of these exemptions are met,
the scope of the relief provided by these exemptions might not cover all acts
which might be construed as prohibited transactions. There can be no assurance
that any of these, or any other exemption, will be available with respect to
any particular transaction involving the notes.
Purchasers of notes using the assets of government plans, as defined in
Section 3(32) of ERISA, and certain church plans, as defined in Section 3(33)
of ERISA, which are not subject to Title I of ERISA, should consider applicable
state or other laws, which may be substantially similar to ERISA or the Code.
By acquiring a note, each purchaser and transferee will be deemed to
represent, warrant and covenant that either (a) it is not acquiring the note
with the assets of a Plan or a governmental plan subject to applicable law that
is substantially similar to the fiduciary responsibility provisions of ERISA or
Section 4975 of the Code or (b) the acquisition and holding of the note by the
purchaser or transferee, throughout the period that it holds that note, is and
will be eligible for, and satisfies and will satisfy all of the requirements
of, PTE 90-1, PTE 96-23, PTE 95-60, PTE 91-38, PTE 84-14 or another applicable
prohibited transaction exemption or, in the case of a governmental plan, will
not violate any applicable law that is substantially similar to ERISA or
Section 4975 of the Code. Each investor in a note will be deemed to represent,
warrant and covenant that it will not sell, pledge or otherwise transfer the
note in violation of the foregoing.
Independent Review and Consultation with Counsel
Any person proposing to purchase notes with the assets of any employee
benefit plan or other retirement account or arrangement should consult with its
counsel with respect to, among other things, the potential applicability of
ERISA and the Code to such investments and whether the requirements discussed
above have been satisfied. Moreover, each fiduciary of an employee benefit plan
or other retirement arrangement should determine whether, under the general
fiduciary standards of investment prudence and diversification, an investment
in the notes is appropriate for the prospective investor, taking into account
the overall investment policy of the plan, the composition of the plan's
investment portfolio, and the risk/return characteristics of the notes.
S-45
<PAGE>
Underwriting
Subject to the terms and conditions set forth in the underwriting agreement
relating to the notes, the seller has agreed to sell to the underwriters named
below, and each of the underwriters has severally agreed to purchase, the
amount of notes set forth below, subject to the satisfaction of certain
conditions precedent.
<TABLE>
<CAPTION>
Principal Principal Principal Principal Principal Principal
Amount of Amount of Amount of Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3 Class A-4 Class B Class C
Underwriter notes notes notes notes notes notes
----------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Goldman, Sachs & Co..... $ $ $ $ $ $
Bear, Stearns & Co.
Inc....................
Salomon Smith Barney....
-------- --------- --------- --------- --------- ---------
Total................. $ $ $ $ $ $
======== ========= ========= ========= ========= =========
</TABLE>
The seller has been advised by the underwriters that they propose initially
to offer the notes to the pubic at the prices set forth in this prospectus
supplement. After the initial public offering of the notes, the public offering
prices may change.
The underwriting discounts and commissions, the selling concessions that
the underwriters of the notes may allow to certain dealers, and the discounts
that such dealers may reallow to certain other dealers, expressed as a
percentage of the principal amount of each class of notes and as an aggregate
dollar amount, shall be as follows:
<TABLE>
<CAPTION>
Underwriting Net Proceeds to Selling
Discount and the Seller Concessions not Reallowance not
Commissions (1)(2) to exceed to exceed
------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class A-1 notes... % % % %
Class A-2 notes... % % % %
Class A-3 notes... % % % %
Class A-4 notes... % % % %
Class B notes..... % % % %
Class C notes..... % % % %
Total............. $ $
</TABLE>
--------
(1) Plus accrued interest, if any, from October , 2000.
(2) Before deducting other expenses estimated at $ .
Until the distribution of the notes is completed, rules of the SEC may
limit the ability of the underwriters and certain selling group members to bid
for and purchase the notes. As an exception to these rules, the underwriter is
permitted to engage in certain transactions that stabilize the prices of the
notes. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of such notes.
In connection with the offering, the underwriters may purchase and sell the
notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
notes than they are required to purchase in the offering. "Naked" short sales
are any sales in excess of the amount of notes the underwriters are purchasing.
The underwriters must close out any naked short position by purchasing notes in
the open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the price of
the notes in the open market after pricing that could adversely affect
investors who purchase in the offering. Stabilizing transactions consist of
various bids for or purchases of the notes made by the underwriters in the open
market prior to the completion of the offering.
S-46
<PAGE>
The underwriters may also impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased notes sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of the
notes, and together with the imposition of the penalty bid, may stabilize,
maintain or otherwise affect the market price of the notes. As a result, the
price of the notes may be higher than the price that otherwise might exist in
the open market.
Neither the seller nor the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the notes. In addition, neither the
seller nor the underwriters make any representation that the underwriters will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
The notes are new issues of securities and there currently is no secondary
market for the notes. The underwriters for the notes expect to make a market in
such securities but will not be obliged to do so. There is no assurance that a
secondary market for the offered notes will develop. If a secondary market for
the notes does develop, it might end at any time or it might not be
sufficiently liquid to enable you to resell any of your notes.
In the ordinary course of business, the underwriters and their affiliates
have engaged and may engage in investment banking and commercial banking
transactions with AmSouth Bank and its affiliates.
Funds on deposit in the Collection Account, Note Distribution Account and
the Reserve Account may be invested in Eligible Investments acquired from or
issued by the underwriters.
AmSouth Bank and the seller have agreed to indemnify the underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or contribute to payments which the underwriters may be required to make
in respect thereof. In the opinion of the SEC, such indemnification is against
public policy as expressed in the Securities Act and may, therefore, be
unenforceable.
Legal Matters
Certain legal matters with respect to the notes will be passed upon for the
seller by Mayer, Brown & Platt. Certain legal matters with respect to the notes
will be passed upon for the underwriters by Stroock & Stroock & Lavan LLP.
S-47
<PAGE>
Glossary of Terms
"ABS" means the Absolute Prepayment Model, which we use to measure
prepayments on Receivables.
"Available Collections" shall mean, for any Distribution Date, the sum of
the following amounts with respect to the Collection Period preceding such
Distribution Date:
. all payments collected with respect to the receivables;
. all Liquidation Proceeds attributable to receivables which became
Defaulted Receivables during such Collection Period in accordance with
the Servicer's customary servicing procedures, and all recoveries in
respect of Defaulted Receivables which were written off in prior
Collection Periods;
. the purchase amount received with respect to each receivable that
became a purchased receivable during such Collection Period; and
. partial prepayments of any refunded item included in the principal
balance of a receivable, such as extended warranty protection plan
costs, or physical damage, credit life, disability insurance premiums;
provided, however, that in calculating the Available Collections the
following will be excluded: (1) all payments and proceeds, including
Liquidation Proceeds, of any receivables the purchase amount of which
has been included in the Available Collections in a prior Collection
Period and (2) amounts consisting of any late, prepayment and other
administrative fees and expenses payable to the servicer as part of
the Servicing Fee.
"Available Funds" shall mean, for any Distribution Date, the sum of the
Available Collections for such Distribution Date and the Reserve Account Excess
Amount for such Distribution Date.
"Business Day" means a day that is not a Saturday or a Sunday and that in
the States of New York, Alabama and the State in which the corporate trust
office of the owner trustee or the indenture trustee is located is neither a
legal holiday nor a day on which banking institutions are authorized by law,
regulation or executive order to be closed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means an account, held in the name of the indenture
trustee, into which the servicer is required to deposit collections on the
receivables.
"Collection Period" means each calendar month during the term of the sale
and servicing agreement. With respect to any Determination Date or Distribution
Date, the "related Collection Period" means the Collection Period preceding the
month in which such Determination Date or Distribution Date occurs.
"Controlling Class" shall mean, with respect to any outstanding notes, the
Class A notes (voting together as a single class) as long as any Class A notes
are outstanding, and thereafter the Class B notes as long as any Class B notes
are outstanding, and thereafter the Class C notes as long as any Class C notes
are outstanding--excluding notes held by the seller, the servicer or their
affiliates.
"Defaulted Receivable" means, with respect to any Collection Period, a
receivable (other than a receivable repurchased by AmSouth Bank, the seller or
the servicer) which the servicer has determined to charge off during such
Collection Period in accordance with its customary servicing practices (and, in
no event later than 120 days after a receivable shall have become delinquent);
S-48
<PAGE>
provided that any receivable which AmSouth Bank, the seller or the servicer is
obligated to repurchase or purchase shall be deemed to have become a Defaulted
Receivable during a Collection Period if AmSouth Bank, the seller or the
servicer fails to deposit the purchase amount on the related determination date
when due.
"Determination Date" means, with respect to any Collection Period, the
Business Day preceding the related Distribution Date by two Business Days.
"Distribution Date" means the date on which the trust will pay interest and
principal on the notes, which will be the fifteenth day of each month or, if
any such day is not a Business Day, on the next Business Day. The first
Distribution Date will be November 15, 2000.
"Eligible Investments" shall mean any one or more of the following types of
investments:
. direct obligations of, and obligations fully guaranteed as to timely
payment by, the United States of America;
. demand deposits, time deposits or certificates of deposit of any
depository institution (including any affiliate of the seller,
indenture trustee or owner trustee) or trust company incorporated
under the laws of the United States of America or any state thereof or
the District of Columbia (or any domestic branch of a foreign bank)
and subject to supervision and examination by Federal or state banking
or depository institution authorities (including depository receipts
issued by any such institution or trust company as custodian with
respect to any obligation referred to in the first bullet point above
or a portion of such obligation for the benefit of the holders of such
depository receipts); provided that at the time of the investment or
contractual commitment to invest therein (which shall be deemed to be
made again each time funds are reinvested following each Distribution
Date), the commercial paper or other short-term senior unsecured debt
obligations (other than such obligations the rating of which is based
on the credit of a Person other than such depository institution or
trust company) of such depository institution or trust company shall
have a credit rating from Standard & Poor's of A-1+ and from Moody's
of P-1;
. commercial paper (including commercial paper of any affiliate of
seller) having, at the time of the investment or contractual
commitment to invest therein, a rating from Standard & Poor's of A-1+
and from Moody's of P-1;
. investments in money market funds (including funds for which the
indenture trustee or owner trustee or any of their respective
affiliates is investment manager or advisor) having a rating from
Standard & Poor's of AAA-m or AAAm-G and from Moody's of Aaa;
. bankers' acceptances issued by any depository institution or trust
company referred to in the second bullet point above;
. repurchase obligations with respect to any security that is a direct
obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America,
in either case entered into with a depository institution or trust
company (acting as principal) referred to in the second bullet point
above; and
. any other investment with respect to which each rating agency has
provided written notice that such investment would not cause such
rating agency to downgrade or withdraw its then current rating of any
class of notes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
S-49
<PAGE>
"Event of Default" means an event of default under the indenture, as
described in "The Notes--The Indenture--Events of Default".
"Event of Servicing Termination" consists of any of the events specified
under "Description of the Transfer and Servicing Agreements--Defaults by the
Servicer" in the prospectus.
"Final Scheduled Distribution Date" for each class of notes means the
respective dates set forth on the cover page of this prospectus supplement or,
if such date is not a Business Day, the next succeeding Business Day.
"First Priority Principal Distribution Amount" shall mean, with respect to
any Distribution Date, an amount equal to the excess, if any, of
. the aggregate outstanding principal amount of the Class A notes as of
the preceding Distribution Date (after giving effect to any principal
payments made on the Class A notes on such preceding Distribution
Date); over
. the Pool Balance at the end of the Collection Period preceding such
Distribution Date; provided, however, that the First Priority
Principal Distribution Amount shall not exceed the sum of the
aggregate outstanding principal amount of all of the notes on such
Distribution Date (prior to giving effect to any principal payments
made on the notes on such Distribution Date); and provided, further,
that the First Priority Principal Distribution Amount on and after the
Final Scheduled Distribution Date of a class of Class A notes shall
not be less than the amount that is necessary to reduce the
outstanding principal amount of such class of Class A notes and all
earlier maturing classes of Class A notes to zero.
"Interest Period" shall mean, with respect to any Distribution Date (a)
with respect to the Class A-1 notes from and including the closing date, in the
case of the first Distribution Date, or from and including the most recent
Distribution Date on which interest has been paid to but excluding the
following Distribution Date and (b) with respect to each class of notes other
than the Class A-1 notes from and including the closing date--in the case of
the first Distribution Date--or from and including the fifteenth day of the
calendar month preceding each Distribution Date to but excluding the fifteenth
day of the following calendar month.
"Liquidation Proceeds" means, with respect to any receivable that has
become a Defaulted Receivable, (a) insurance proceeds received by the servicer
with respect to any insurance policies relating to the related financed vehicle
or obligor, (b) amounts received by the servicer in connection with such
Defaulted Receivable pursuant to the exercise of rights under that receivable
and (c) the monies collected by the servicer (from whatever source, including
proceeds of a sale of the financed vehicle, a deficiency balance recovered
after the charge-off of the related receivable or as a result of any recourse
against the related dealer) on such Defaulted Receivable net of any expenses
incurred by the servicer in connection therewith and any payments required by
law to be remitted to the related obligor.
"Note Distribution Account" means the account designated as such,
established and maintained as such pursuant to the sale and servicing
agreement.
"Pool Balance" will represent the aggregate principal balance of the
receivables at the end of the preceding Collection Period, or in the case of
the first Collection Period, the cut-off date, after giving effect to all
payments received from obligors, Liquidation Proceeds and purchase amounts to
be remitted by AmSouth Bank or the seller, as the case may be, all for such
Collection Period and all realized losses during such Collection Period.
S-50
<PAGE>
"Principal Distribution Account" shall mean the administrative subaccount
of the Note Distribution Account established and maintained as such pursuant to
the sale and servicing agreement.
"Principal Distribution Amount" for a Distribution Date will be the sum of
the First Priority Principal Distribution Amount, the Second Priority Principal
Distribution Amount and the Regular Principal Distribution Amount with respect
to such Distribution Date:
"Record Date" with respect to any Distribution Date means the day
immediately preceding the Distribution Date or, if the notes are issued as
definitive notes, the last day of the preceding month.
"Regular Principal Distribution Amount" shall mean, with respect to any
Distribution Date, an amount not less than zero equal to (x) the greater of (i)
aggregate outstanding principal amount of the Class A-1 notes as of the
preceding Distribution Date (after giving effect to any principal payments made
on the Class A-1 notes on such preceding Distribution Date) or the closing
date, as the case may be; and (ii) the excess, if any, of (a) the sum of the
aggregate outstanding principal amount of all the notes as of the preceding
Distribution Date (after giving effect to any principal payments made on the
notes on such preceding Distribution Date) or the closing date, as the case may
be, over (b) the Pool Balance at the end of the Collection Period preceding
such Distribution Date less the Specified Overcollateralization Amount with
respect to such Distribution Date, minus (y) the sum of the First Priority
Principal Distribution Amount, if any, and the Second Priority Principal
Distribution Amount, if any, each with respect to such Distribution Date;
provided, however, that the Regular Principal Distribution Amount shall not
exceed the sum of the aggregate outstanding principal amount of all of the
notes on such Distribution Date (after giving effect to any principal payments
made on the notes on such Distribution Date in respect of the First Priority
Principal Distribution Amount, if any, and the Second Priority Principal
Distribution Amount, if any); and provided, further, that the Regular Principal
Distribution Amount on or after the Class C Final Scheduled Distribution Date
shall not be less than the amount that is necessary to reduce the outstanding
principal amount of the Class C notes to zero;
"Reserve Account" means the account which the seller will establish in the
name of the indenture trustee for the benefit of the noteholders, the trust and
the certificateholders into which the seller will deposit funds on the closing
date and as to which the indenture trustee, as instructed by the servicer
pursuant to the provisions of the transaction documents will make the other
deposits and withdrawals specified in the prospectus and this prospectus
supplement.
"Reserve Account Excess Amount", with respect to any Distribution Date,
means an amount equal to the excess, if any, of:
. the amount of cash or other immediately available funds in the Reserve
Account on that Distribution Date, prior to giving effect to any
withdrawals from and deposits to the Reserve Account relating to that
Distribution Date, over
. the Specified Reserve Balance with respect to that Distribution Date.
"Reserve Account Transfer Amount" means, with respect to any Distribution
Date, an amount equal to the lesser of (a) the amount of cash or other
immediately available funds on deposit in the Reserve Account on such
Distribution Date--after giving effect to any withdrawal of the Reserve Account
Excess Amount on such Distribution Date, but before giving effect to any other
withdrawals therefrom relating to such Distribution Date--and (b) the amount,
if any, by which (1) the Total Required Payments for such Distribution Date
exceeds (2) the Available Funds for such Distribution Date.
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<PAGE>
"Second Priority Principal Distribution Amount" shall mean, with respect to
any Distribution Date, an amount not less than zero equal to (i) the excess, if
any, of (a) the sum of the aggregate outstanding principal amount of the Class
A Notes and Class B Notes as of the preceding Distribution Date (after giving
effect to any principal payments made on the Class A Notes and Class B Notes on
such preceding Distribution Date) over (b) the Pool Balance at the end of the
Collection Period preceding such Distribution Date, minus (ii) the First
Priority Principal Distribution Amount, if any, with respect to such
Distribution Date; provided, however, that the Second Priority Principal
Distribution Amount shall not exceed the aggregate outstanding principal amount
of the Notes on such Distribution Date--after giving effect to any principal
payments made on the Notes on such Distribution Date in respect of the First
Priority Principal Distribution Amount, if any; and provided, further that the
Second Priority Principal Distribution Amount on or after the Class B Final
Scheduled Distribution Date shall not be less than the amount that is necessary
to reduce the outstanding principal amount of the Class B Notes to zero.
"Servicing Fee" means, for each Collection Period, an amount equal to the
sum of (1) the product of one-twelfth of 1% per annum and the Pool Balance as
of the first day of that Collection Period and (2) a supplemental servicing fee
equal to any late, prepayment and other administrative fees and expenses
collected during that Collection Period.
"Specified Credit Enhancement Amount" means, for any Distribution Date, the
greatest of (i) $7,128,117.29, (ii) 3.25% of the Pool Balance at the end of the
related Collection Period, and (iii) the aggregate principal balance of the
Receivables that are delinquent 90 or more days and are not Defaulted
Receivables at the end of the Collection Period preceding such Distribution
Date; provided, however, that the Specified Credit Enhancement Amount with
respect to any Distribution Date shall not exceed the sum of the aggregate
outstanding principal amount of all the notes as of the preceding Distribution
Date--after giving effect to any principal payments made on the notes on such
preceding Distribution Date.
"Specified Overcollateralization Amount" means, for any Distribution Date,
the excess, if any, of (a) the Specified Credit Enhancement Amount with respect
to such Distribution Date, over (b) the Specified Reserve Balance with respect
to such Distribution Date.
"Specified Reserve Balance" means, for any Distribution Date, the lesser of
$7,128,117.29 and the aggregate outstanding principal amount of the notes--
after giving effect to any distributions on the notes and certificates on such
Distribution Date.
"Tax Non-Entity" means a trust in which all of the certificates in that
trust are owned by the seller, and the seller and the servicer agree to treat
the trust as a division of the seller and hence disregarded as a separate
entity for purposes of federal, state and local income and franchise taxes.
"Tax Non-Entity Certificates" means certificates issued by a Tax Non-
Entity. References to a holder of these certificates shall be to the beneficial
owner thereof.
"Total Distribution Amount" means, for each Distribution Date, the sum of:
the Available Funds and the Reserve Account Transfer Amount, in each case in
respect of such Distribution Date.
"Total Required Payment" shall mean, with respect to any Distribution Date,
the sum of the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods, the accrued and unpaid interest on the Class A notes, the
First Priority Principal Distribution Amount, the accrued and unpaid interest
on the Class B notes, the Second Priority Principal Distribution Amount, and
the accrued and unpaid interest on the Class C notes and on and after the Class
C Final Scheduled Distribution Date, an amount that is necessary to reduce the
outstanding principal amount of the Class C notes to zero;
S-52
<PAGE>
provided, however, that following the occurrence and during the continuation of
an Event of Default which has resulted in an acceleration of the notes, on any
Distribution Date until the Distribution Date
on which the outstanding principal amount of all the notes has been paid in
full, the Total Required Payment shall mean the sum of the Servicing Fee and
all unpaid Servicing Fees from prior Collection Periods, the accrued and unpaid
interest on the Class A notes, the Class B notes and the Class C notes and the
amount necessary to reduce the outstanding principal amount of all the notes to
zero.
S-53
<PAGE>
AmSouth Auto Asset Backed Securities
AmSouth Auto Receivables LLC
Seller
AmSouth Bank
Servicer
The Issuers:
You should
consider . may periodically issue asset-backed notes and/or certificates
carefully in one or more series with one or more classes; and
the risk
factors . will own:
beginning
on page 4 . motor vehicle retail installment sales contracts and
in this installment loans secured by new and used automobiles
prospectus and/or trucks;
and the
risk . collections on the receivables;
factors in
the . liens on the financed vehicles and the rights to receive
prospectus proceeds from claims on insurance policies;
supplement.
. funds in the accounts of the issuer; and
The notes
and the . any credit enhancements issued in favor of the issuer.
certificates
will The Securities:
represent
obligations . will represent indebtedness of the issuer that issued those
of or securities, in the case of the notes, or beneficial interests
interests in the trust that issued those securities, in the case of the
in, the certificates;
issuer
only and . will be paid only from the assets of the issuer that issued
are not those securities;
guaranteed
by, . will represent the right to payments in the amounts and at
AmSouth the times described in the accompanying prospectus
Bank, supplement;
AmSouth
Auto . may benefit from one or more forms of credit enhancement; and
Receivables
LLC or any . will be issued as part of a designated series, which may
of their include one or more classes of notes and one or more classes
other of certificates.
affiliates,
and
neither
the
securities
nor the
underlying
receivables
are
insured or
guaranteed
by any
governmental
entity.
This
prospectus
may be
used to
offer and
sell
securities
only if
accompanied
by a
prospectus
supplement
for the
related
issuer.
Neither the SEC nor any state securities commission has approved or
disapproved these securities or determined whether this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is October 9, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Overview of the Information in This Prospectus and the Prospectus
Supplement............................................................... 3
Risk Factors.............................................................. 4
Description of the Issuers................................................ 12
Description of the Trustee................................................ 13
Description of the Receivables............................................ 13
AmSouth Bank's Origination and Servicing Procedures....................... 15
Prefunding Arrangement.................................................... 19
Maturity and Prepayment Considerations.................................... 20
Pool Factor and Pool Information.......................................... 21
Use of Proceeds........................................................... 21
Description of the Seller................................................. 21
Description of AmSouth Bank............................................... 21
Description of the Securities............................................. 22
The Notes............................................................... 22
The Certificates........................................................ 23
Ratings of the Securities............................................... 24
Revolving Period and Amortization Period................................ 24
Book-Entry Registration................................................. 25
Global Clearance, Settlement and Tax Documentation Procedures........... 28
Definitive Securities................................................... 32
List of Securityholders................................................. 33
Statements to Securityholders........................................... 33
Description of the Transfer and Servicing Agreements...................... 34
Sale and Assignment of the Receivables.................................. 34
The Collection Account and Eligible Investments......................... 36
Other Accounts.......................................................... 36
Payments on Receivables................................................. 36
Payments and Distributions on the Securities............................ 37
Credit and Cash Flow Enhancement........................................ 38
Insurance on Financed Motor Vehicles.................................... 38
Servicer Reports........................................................ 38
Purchase of Receivables by the Servicer................................. 39
Servicing Fee........................................................... 39
Waivers and Extensions.................................................. 39
Advances................................................................ 39
Realization Upon Defaulted Receivables.................................. 40
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Evidence as to Compliance................................................ 40
Material Matters Regarding the Servicer.................................. 40
Defaults by the Servicer................................................. 41
Rights Upon Default by the Servicer...................................... 41
Amendment................................................................ 42
Termination.............................................................. 42
The Trustee and Indenture Trustee........................................ 43
Description of the Administration Agreement.............................. 44
Description of the Indenture............................................... 44
Modification of Indenture................................................ 44
Events of Default Under the Indenture; Rights Upon Event of Default...... 45
Material Covenants....................................................... 46
Annual Compliance Statement.............................................. 47
Indenture Trustee's Annual Report........................................ 47
Satisfaction and Discharge of Indenture.................................. 48
The Indenture Trustee.................................................... 48
Material Legal Aspects of the Receivables.................................. 48
Security Interests in the Financed Motor Vehicles........................ 49
Repossession............................................................. 51
Notice of Sale; Redemption Rights........................................ 51
Deficiency Judgments and Excess Proceeds................................. 51
Consumer Protection Laws................................................. 52
Certain Matters Relating to Conservatorship and Receivership............. 53
Repurchase Obligation.................................................... 55
Other Limitations........................................................ 55
Material Federal Income Tax Consequences................................... 56
State and Local Tax Consequences........................................... 68
ERISA Considerations....................................................... 69
Underwriting............................................................... 69
Forward-Looking Statements................................................. 71
Ratings of the Securities.................................................. 71
Reports to Securityholders................................................. 71
Where You Can Find More Information........................................ 71
Incorporation By Reference................................................. 72
Legal Matters.............................................................. 72
Glossary................................................................... 73
</TABLE>
2
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Overview of the Information in This Prospectus
and the Prospectus Supplement
We provide information about your securities in two separate documents: (a)
this prospectus, which provides general information, some of which may not
apply to a particular series of notes or certificates, including your series;
and (b) the prospectus supplement, which describes the specific terms of your
series, including information about:
. the type of securities offered;
. the timing and amount of interest and principal payments;
. the receivables underlying your securities;
. the credit enhancement for each class;
. the credit ratings; and
. the method for selling the securities.
Whenever information in the prospectus supplement is more specific than the
information in this prospectus, you should rely on the information in the
prospectus supplement.
You should rely only on the information provided in this prospectus and the
prospectus supplement, including the information incorporated by reference. We
have not authorized anyone to provide you with different information. We are
not offering the securities in any jurisdiction where the offer is not
permitted.
We include cross-references in this prospectus and in the prospectus
supplement to captions in these materials where you can find further related
discussions. The table of contents in this prospectus and the table of contents
included in the prospectus supplement provide the pages on which these captions
are located.
To understand the structure of these securities, you must read carefully
this prospectus and the prospectus supplement in their entirety.
3
<PAGE>
Risk Factors
You should carefully consider the following risks and the risks described
under "Risk Factors" in the prospectus supplement, which are the principal
risks of an investment in the securities, before making an investment decision.
In particular, distributions on your securities will depend on payments
received on, and other recoveries with respect to, the receivables. Therefore,
you should carefully consider the risk factors relating to the receivables and
the financed vehicles.
Your investment could be materially and adversely affected if any of the
following risks are realized.
You must rely for Your securities are either secured by or
repayment only upon the represent beneficial ownership interests solely
issuer's assets which may in the assets of the related issuer. Your
not be sufficient to make securities will not represent an interest in or
full payments on your obligation of us, AmSouth Bank or any other
securities. person. We, AmSouth Bank or another entity may
have a limited obligation to repurchase some
receivables under some circumstances as described
in the prospectus supplement. Distributions on
any class of securities will depend solely on the
amount and timing of payments and other
collections in respect of the related receivables
and any credit enhancement for the securities
specified in the prospectus supplement. We cannot
assure you that these amounts, together with
other payments and collections in respect of the
related receivables, will be sufficient to make
full and timely distributions on your securities.
The securities and the receivables will not be
insured or guaranteed, in whole or in part, by
the United States or any governmental entity or
by any provider of credit enhancement unless
specified in the prospectus supplement.
You may experience reduced You may receive payment of principal on the
returns on your securities securities earlier than you expected for the
resulting from reasons set forth below. You may not be able to
prepayments. reinvest the principal paid to you earlier than
you expected at a rate of return that is equal to
or greater than the rate of return on your
securities. Prepayments on the receivables by the
related obligors and purchases of the receivables
by AmSouth Bank, the seller or the servicer will
shorten the life of the securities to an extent
that cannot be fully predicted. Any reinvestment
risks resulting from a faster or slower incidence
of prepayment of receivables will be borne
entirely by you.
All of the receivables may be prepaid at any
time, although some may require the obligor to
pay a prepayment penalty. The rate of prepayments
on the receivables may be influenced by a variety
of economic, social and other factors, including:
. other events which have the same effect as
prepayments in full of receivables,
including liquidations due to default, as
well as receipts of proceeds from insurance
policies and repurchases of receivables;
. repurchases of receivables by, AmSouth Bank
as servicer or the seller, as a result of
breaches of
4
<PAGE>
representations and warranties, and/or
breaches of particular covenants;
. the application of any remaining amounts on
deposit in any prefunding accounts not
applied to the purchase of additional
receivables; and
. the purchase by the seller, the servicer or
another entity of the receivables pursuant
to its optional purchase right when the
aggregate principal balance thereof is at
or below the percentage specified in the
prospectus supplement of the initial
aggregate principal balance of the
receivables.
The rate of prepayments of receivables cannot be
predicted and therefore, no assurance can be
given as to the level of prepayments that an
investor will experience.
The issuer's interest in The servicer will maintain possession of the
the receivables could be original contracts for each of the receivables.
defeated because the If the servicer sells or pledges and delivers the
contracts will not be original contracts for the receivables to another
delivered to the issuer. party, in violation of its obligations under the
agreements for the securities, this party could
acquire an interest in the receivable having a
priority over the issuer's interest. Furthermore,
if the servicer becomes insolvent, competing
claims to ownership or security interests in the
receivables could arise. These claims, even if
unsuccessful, could result in delays in payments
on the securities. If successful, the attempt
could result in losses or delays in payment to
you or an acceleration of the repayment of the
securities.
The issuer's security Upon the origination of a receivable, AmSouth
interest in the financed Bank or its predecessor in interest or affiliate,
vehicles will not be noted as applicable, takes a security interest in the
on the certificates of financed vehicle by placing a lien on the title
title, which may cause to the financed vehicle. In connection with each
losses. sale of receivables to the seller, AmSouth Bank
or its affiliate, as applicable, will assign its
security interests in the financed vehicles to
the seller, who will further assign them to the
issuer. The lien certificates or certificates of
title relating to the financed vehicles will not
be amended or reissued to identify the issuer as
the new secured party. In the absence of an
amendment or reissuance, the issuer may not have
a perfected security interest in the financed
vehicles securing the receivables in some states.
AmSouth Bank will be obligated to repurchase any
receivable sold to the issuer which did not have
a perfected security interest in the name of
AmSouth Bank or an affiliate, as applicable, in
the financed vehicle. The servicer will purchase
any receivable sold to the issuer as to which it
failed to maintain a perfected security interest
in the financed vehicle securing the receivable.
All of these purchases and repurchases are
limited to breaches that materially and adversely
affect the receivable subject to the expiration
of the applicable cure period. If the issuer has
failed to obtain or maintain a perfected security
interest in a financed vehicle, its
5
<PAGE>
security interest would be subordinate to, among
others, a bankruptcy trustee of the obligor, a
subsequent purchaser of the financed vehicle or a
holder of a perfected security interest in the
financed vehicle or a bankruptcy trustee of such
holder. If the issuer elects to attempt to
repossess the related financed vehicle, it might
not be able to realize any liquidation proceeds
on the financed vehicle and, as a result, you may
suffer a loss.
Receivables that fail to Federal and state consumer protection laws
comply with consumer regulate the creation, collection and enforcement
protection laws may result of consumer loans such as the receivables. These
in losses on your laws impose specific statutory liabilities upon
investment. creditors who fail to comply with their
provisions. These laws may also make an assignee
of a loan, such as the issuer, liable to the
obligor for any violation by the lender. In some
cases, this liability could affect an assignee's
ability to enforce its rights related to secured
loans such as the receivables. To the extent
specified in this prospectus and in the
prospectus supplement, AmSouth Bank will be
obligated to repurchase any receivable that fails
to comply with these legal requirements from the
issuer. If AmSouth Bank fails to repurchase that
receivable, you might experience delays and/or
reductions in payments on your securities. See
"Material Legal Aspects of the Receivables--
Consumer Protection Laws."
Bankruptcy of the seller The seller intends that its sale of the
could result in delays in receivables to the issuer will be a valid sale
payments or losses on your and assignment of the receivables to the issuer.
securities. If the seller were to become a debtor in a
bankruptcy case and a creditor or trustee-in-
bankruptcy of the seller or the seller itself
were to take the position that the sale of
receivables by the seller to the issuer should
instead be treated as a pledge of the receivables
to secure a borrowing of the seller, delays in
payments of collections on the receivables to
securityholders could occur. If a court ruled in
favor of any such trustee, debtor or creditor,
reductions in the amounts of such payments could
result. If the transfer of receivables by the
seller to the issuer is treated as a pledge
instead of a sale, a tax or governmental lien on
the property of the seller arising before the
transfer of the receivables to the issuer may
have priority over the issuer's interest in those
receivables. If the transactions are treated as a
sale, the receivables would not be part of the
seller's bankruptcy estate and would not be
available to the seller's creditors.
AmSouth Bank's insolvency AmSouth Bank and the seller intend that the
could reduce or delay transfer of receivables from AmSouth Bank to the
payments on your seller be treated as a sale. If AmSouth Bank were
securities. to become insolvent, the FDIA, as amended by
FIRREA, gives certain powers to the FDIC, if it
were approved as receiver. FDIC staff positions
taken prior to the passage of FIRREA do not
suggest that the FDIC would interrupt the timely
transfer to an issuer of payments collected on
the receivables.
6
<PAGE>
Under FIRREA, if the transfer of the receivables
to the issuer were characterized as a loan
secured by a pledge of receivables rather than a
sale, that issuer's security interest in the
receivables should be respected by the FDIC if:
. AmSouth Bank's transfer of the receivables
is the grant of a valid security interest
in the receivables to that issuer;
. AmSouth Bank becomes insolvent and the FDIC
is appointed conservator or receiver of
AmSouth Bank and
. the security interest:
(1) is validly perfected before AmSouth
Bank's insolvency, and
(2) was not taken in contemplation of
AmSouth Bank's insolvency or with the
intent to hinder, delay or defraud
the seller or its creditors.
In addition, effective as of September 11, 2000,
a regulation promulgated by the FDIC will
provide, among other things, that the FDIC will
not seek to recharacterize a transfer of
receivables as a secured loan if such transfer
satisfies the conditions for sale accounting
under GAAP and satisfies certain other
requirements of the regulation.
If the FDIC were to assert a different position,
or the new FDIC regulation were inapplicable, you
might experience delays and/or reductions in
payments on your securities. In addition, the
FDIC might have the right to repay the securities
early and for an amount which may be greater or
less than their principal balance. For example,
under the FDIA, the FDIC could--
. require the issuer or the indenture trustee
to go through an administrative claims
procedure to establish its right to those
payments;
. request a stay of proceedings with respect
to AmSouth Bank; or
. reject AmSouth Bank's sales contract and
limit the issuer's resulting claim to
actual direct compensatory damages.
See "Material Legal Aspects of the Receivables--
Other Limitations."
AmSouth Bank and the AmSouth Bank, the seller and their affiliates are
seller have limited generally not obligated to make any payments to
obligations to an issuer you on your securities. AmSouth Bank, the seller
and will not make payments and their affiliates do not guarantee payments on
on the securities. the receivables or your securities. However,
AmSouth Bank will make representations and
warranties about the characteristics of the
receivables.
If AmSouth Bank breaches a representation or
warranty for a receivable, AmSouth Bank may be
required to repurchase that
7
<PAGE>
receivable. If AmSouth Bank fails to repurchase
that receivable, you might experience delays
and/or reductions in payments on your securities.
See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of the
Receivables."
In addition, in some circumstances, the servicer
may be required to purchase receivables. If the
servicer fails to purchase receivables, you might
experience delays and/or reductions in payments
on your securities. See "Description of the
Transfer and Servicing Agreements--Servicing
Procedures."
Interests of other persons Due to, among other things, liens for repairs of
in the receivables and a financed vehicle or for unpaid taxes of an
financed vehicles could be obligor, the issuer could lose the priority of
superior to the issuer's its security interest in a financed vehicle.
interest, which may result Neither AmSouth Bank nor the servicer will have
in reduced payments on any obligation to repurchase or purchase,
your securities. respectively, a receivable if these liens result
in the loss of the priority of the security
interest in the financed vehicle after the
issuance of securities by the issuer. Generally,
no action will be taken to perfect the rights of
the issuer in proceeds of any insurance policies
covering individual financed vehicles or
obligors. Therefore, the rights of a third party
with an interest in the proceeds could prevail
against the rights of the issuer prior to the
time the proceeds are deposited by the servicer
into an account controlled by the trustee or
indenture trustee. See "Material Legal Aspects of
the Receivables--Security Interests in the
Financed Motor Vehicles."
Commingling of assets by Unless otherwise provided in the prospectus
the servicer could reduce supplement, the servicer will be required to
or delay payments on the deposit all collections and proceeds of the
securities. receivables collected during each collection
period into the collection account within three
business days of receipt. However, in the event
that
. there exists no servicer default under the
transaction documents,
. the credit enhancement provider, if any,
consents, and
. each other condition to making monthly or
less frequent deposits as may be required
by the applicable rating agencies are
satisfied,
the servicer will not be required to deposit
collections into the collection account until on
or before the business day on which the funds are
needed to make the required distributions to
securityholders. If such requirements are
satisfied, the servicer will also deposit the
aggregate purchase price of any receivables
purchased by it into the collection account on
the same date. Until these funds have been
deposited into the collection account, the
servicer may invest these funds at its own risk
and for its own benefit and will not segregate
them from its own funds. If the servicer were
unable to remit such
8
<PAGE>
funds, the securityholders might incur a loss. To
the extent set forth in the prospectus
supplement, the servicer may, in order to satisfy
the requirements described above, obtain a letter
of credit or other security for the benefit of
the related issuer to secure timely remittances
of collections on the receivables and payment of
the aggregate purchase price of the receivables
purchased by the servicer.
Extensions and deferrals In some circumstances, the servicer may permit an
of payments on receivables extension on or deferral of payments due on
could increase the average receivables on a case-by-case basis. In addition,
life of the securities. the servicer may from time to time solicit or
offer obligors an opportunity to defer payments.
Any of these deferrals or extensions may extend
the maturity of the receivables and increase the
weighted average life of the securities. The
weighted average life and yield on your
securities may be adversely affected by
extensions and deferrals on the receivables.
However, unless otherwise provided in the
prospectus supplement, the servicer must purchase
the receivable from the issuer if any payment
deferral of a receivable extends the term of the
receivable beyond the latest final scheduled
distribution date for any class of related
securities.
If AmSouth Bank is no If AmSouth Bank is removed as servicer or is no
longer the servicer, you longer able to act as the servicer, there may be
may experience delays in delays in processing payments or losses on the
payment or losses on your receivables because of the disruption of
securities. transferring servicing to the successor servicer,
or because the successor servicer is not as
experienced in servicing as AmSouth Bank. This
might cause you to experience delays in payments
or losses on your securities.
A class of securities will Payments of interest and/or principal on the
be subject to greater securities of any class of securities may be
credit risk if it is subordinated in priority of payment to interest
subordinated to another and/or principal due on one or more other classes
class of securities. of securities in the same series. As a result, if
your class of securities is subordinated, you
will not receive any distributions on a
distribution date until the full amount of
interest and/or principal of senior classes has
been allocated to those senior securities. In
addition, a subordinate class of securities of a
series may not be entitled to vote on matters
while any senior classes remain outstanding. The
prospectus supplement will describe the extent of
any subordination.
The application of the In some circumstances, the Soldiers' and Sailors'
Soldier's and Sailor's Civil Relief Act of 1940, as amended and similar
Civil Relief Act may lead state legislation may limit the interest payable
to delays in payment or on a receivable during an obligor's active
losses on your securities. military duty. This legislation could adversely
affect the ability of the servicer to collect
full amounts of interest on these receivables as
well as to foreclose on an affected receivable
during the obligor's period of active military
duty. This legislation may thus cause delays and
losses in payments to holders of the securities.
9
<PAGE>
The absence of a secondary Unless otherwise specified in the prospectus
market could limit your supplement, the securities will not be listed on
ability to resell your any securities exchange. As a result, if you want
securities. to sell your securities you must locate a
purchaser that is willing to purchase those
securities. The underwriters intend to make a
secondary market for the securities. The
underwriters will do so by offering to buy the
securities from investors that wish to sell.
However, the underwriters will not be obligated
to make offers to buy the securities and may stop
making offers at any time. In addition, the
prices offered, if any, may not reflect prices
that other potential purchasers would be willing
to pay, were they to be given the opportunity.
There have been times in the past where there
have been very few buyers of asset backed
securities, and there may be these times again in
the future. As a result, you may not be able to
sell your securities when you want to do so or
you may not be able to obtain the price that you
wish to receive.
You may not be able to Unless otherwise specified in the prospectus
exercise your rights as a supplement, each class of securities of a given
securityholder directly. series will be initially represented by one or
more certificates registered in the name of Cede
& Co., or any other nominee for The Depository
Trust Company set forth in prospectus supplement,
and will not be registered in the names of the
holders of the securities of such series or their
nominees. Unless otherwise specified in the
prospectus supplement, persons acquiring
beneficial ownership interests in any series of
securities may hold their interests through The
Depository Trust Company in the United States or
Clearstream Bank, societe anonyme or the
Euroclear System in Europe. Because of this,
unless and until definitive securities for such
series are issued, holders of such securities
will not be recognized by the issuer or any
applicable trustee or indenture trustee as
certificateholders, noteholders or
securityholders, as the case may be. Hence, until
definitive securities are issued, holders of such
securities will only be able to exercise the
rights of securityholders indirectly through The
Depository Trust Company and its participating
organizations. See "Description of the
Securities--Book-Entry Registration."
The securities may not be The securities are not a suitable investment if
a suitable investment for you require a regular or predictable schedule of
you. payments or payment on any specific date. The
securities are complex investments that should be
considered only by investors who, either alone or
with their financial, tax and legal advisors,
have the expertise to analyze the prepayment,
reinvestment, default and market risk, the tax
consequences of an investment, and the
interaction of these factors.
The ratings for the We will issue a class of securities under this
securities are limited in prospectus only if that class receives the rating
scope, may not continue to specified in the prospectus supplement. The
be issued and do not rating considers only the likelihood that the
consider the suitability issuer will pay interest on time and will
of the securities for you. ultimately pay principal in full or make full
distributions of certificate balance. A security
10
<PAGE>
rating is not a recommendation to buy, sell or
hold the securities. The rating agencies may
revise or withdraw the ratings at any time.
Ratings on the securities do not address the
timing of distributions of principal on the
securities prior to the applicable final
scheduled distribution date. The ratings do not
consider the prices of the securities or their
suitability to a particular investor. If a rating
agency changes its rating or withdraws a rating,
no one has an obligation to provide additional
credit enhancement or to restore the original
rating.
11
<PAGE>
Capitalized Terms
The capitalized terms used in this prospectus, unless defined elsewhere in
this prospectus, have the meanings set forth in the glossary starting on page
73.
Description of the Issuers
With respect to each series of securities the seller, AmSouth Auto
Receivables LLC, a wholly-owned special purpose, bankruptcy remote subsidiary
of AmSouth Bank, will establish a separate issuer that will issue the
securities of that series. Each issuer will be either a limited liability
company formed pursuant to a limited liability agreement or a trust formed
pursuant to a trust agreement between the seller and the trustee specified in
the prospectus supplement for that trust. The issuer will be formed in
accordance with the laws of Delaware or New York, as specified in the
prospectus supplement. The seller will sell and assign the receivables and
other specified issuer property to the issuer in exchange for those
securities.
The issuer may issue asset-backed notes and may, if a trust, issue asset-
backed certificates, in one or more classes, in amounts, at prices and on
terms to be determined at the time of sale and to be set forth in the
prospectus supplement. The notes and certificates of a series are collectively
referred to as securities. Any notes that are issued will represent
indebtedness of the issuer and will be issued and secured pursuant to an
indenture between the issuer and the indenture trustee specified in the
prospectus supplement. Any certificates that are issued will represent
beneficial interests in that trust.
To the extent specified in the prospectus supplement, the property of each
issuer will include:
. a pool of fixed rate motor vehicle installment sales contracts and
installment loans made by AmSouth Bank, its predecessors in interest, or
an affiliate or through a dealer that sold a motor vehicle, all of which
are secured by new and/or used automobiles and/or trucks;
. the seller's right to all documents and information contained in the
receivables files;
. collections and all other amounts due under the receivables after the
cut-off date specified in the prospectus supplement;
. security interests in the new and used automobiles and/or trucks
financed by the receivables;
. any of AmSouth's rights to receive proceeds from claims on credit life,
disability, theft and physical damage insurance policies covering the
financed vehicles or the obligors under the receivables;
. some of AmSouth Bank's rights relating to the receivables under
agreements between AmSouth Bank and the dealers that sold the financed
vehicles;
. all amounts on deposit in the applicable issuer accounts, including the
related collection account and any other account identified in the
applicable prospectus supplement, including all Eligible Investments
credited thereto (but excluding any investment income from Eligible
Investments which is to be paid to the servicer of the receivables or as
otherwise specified in the prospectus supplement);
. the rights of the issuer under the sale and servicing agreement;
. the rights under any credit enhancement to the extent specified in the
prospectus supplement;
. any other property specified in the prospectus supplement; and
. all proceeds of the foregoing.
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<PAGE>
To the extent specified in the prospectus supplement, an insurance policy,
reserve fund, spread account or other form of credit enhancement may be a part
of the property of any given issuer or may be held by the trustee or the
indenture trustee for the benefit of holders of the related securities. To the
extent specified in the prospectus supplement, an interest rate or currency
swap or other hedge agreement may also be a part of the property of any given
issuer or may be held by the trustee or the indenture trustee for the benefit
of holders of the related securities.
If so provided in the prospectus supplement, the property of an issuer may
also include a pre-funding account, into which the seller will deposit cash and
which will be used by the issuer to purchase receivables from AmSouth Bank
during a specified period. Any receivables so conveyed to an issuer will also
be assets of the issuer.
Prior to formation, each issuer will have no assets or obligations. After
formation, each issuer will not engage in any activity other than acquiring and
holding the related receivables, issuing the related securities, distributing
payments in respect thereof and any other activities described in this
prospectus, in the prospectus supplement and in the trust agreement or limited
liability company agreement of the issuer, as applicable. Each issuer will not
acquire any receivables or assets other than the Issuer Property.
Description of the Trustee
The trustee for any issuer that is a trust will be specified in the
prospectus supplement. The trustee's liability in connection with the issuance
and sale of the related securities is limited solely to the express obligations
of the trustee set forth in the related trust agreement. The trustee may resign
at any time, in which event the administrator, or the servicer, will be
obligated to appoint a successor trustee. The servicer or administrator of each
trust may also remove the trustee if:
. the trustee ceases to be eligible to continue as trustee under the
related trust agreement, or
. the trustee becomes insolvent.
In either of these circumstances, the servicer or administrator must
appoint a successor trustee. If the trustee resigns or is removed, the
resignation or removal and appointment of a successor trustee will not become
effective until the successor trustee accepts its appointment.
The principal offices of each trust and the related trustee will be
specified in the applicable prospectus supplement.
Description of the Receivables
The Receivables
The receivables consist of motor vehicle retail installment sales contracts
and installment loans. These contracts and loans are secured by new and used
automobiles and/or trucks manufactured by a number of automobile manufacturers.
The receivables to be transferred to any issuer have been or will be originated
by participating dealers or will be originated by AmSouth Bank or an affiliate
directly lending to borrowers. In addition, some of the receivables may have
been originated by First American National Bank or purchased by AmSouth Bank.
See "AmSouth Bank's Origination and Servicing Procedures."
Historically, a substantial portion of the AmSouth Bank's portfolio of
motor vehicle loans are located in Alabama, Mississippi, Florida, Georgia and
Tennessee and that area of the country generally.
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The Receivables Pool
The receivables to be purchased by each issuer, also known as the
receivables pool, will be selected by the seller based upon the satisfaction of
several criteria, including that each receivable:
. is secured by a financed motor vehicle that contractually was required
to be insured at the inception of the loan and, as of the related cut-
off date, has not been repossessed without reinstatement;
. has not been identified on the computer files of AmSouth Bank as
relating to an obligor who was the subject of a bankruptcy proceeding as
of the related cut-off date;
. provides for fully amortizing level scheduled monthly payments, except
for the first and last payment, which may be minimally different from
the level payments, and for the accrual of interest according to either
the Simple Interest Method or the Scheduled Interest Method;
. not be 30 days or more delinquent on the related cut-off date; and
. satisfies any additional criteria specified in the prospectus
supplement.
The seller will not use any selection procedures in selecting the receivables
for each receivables pool that are materially adverse to the securityholders of
that series.
The seller will sell or transfer receivables having an aggregate principal
balance specified in the prospectus supplement as of the cut-off date to the
applicable issuer. The purchase price paid by each issuer for each receivable
included in the Issuer Property of the issuer will either reflect the principal
balance of the receivable as of the cut-off date calculated under the Scheduled
Interest Method or Simple Interest Method or another method as specified in the
prospectus supplement.
Additional information with respect to the receivables pool securing each
series of securities will be set forth in the prospectus supplement including,
to the extent appropriate, the composition of the receivables, the distribution
by annual percentage rate, the distribution by the states where the receivables
were originated and the portion of the receivables pool secured by new vehicles
and used vehicles.
Calculation Methods
Each of the receivables included in the Issuer Property of an issuer will
be a fixed rate contract where the allocation of each payment between interest
and principal is calculated using either the Scheduled Interest Method or the
Simple Interest Method.
"Simple Interest Receivables" means receivables pursuant to which the
payments due from the obligors during any month are allocated between finance
charges, principal and other charges based on the actual date on which a
payment is received. For these receivables, interest accrued as of the actual
payment date is paid first, and then the remaining payment is applied to the
unpaid principal balance and then to other charges. Accordingly, if an obligor
pays the fixed monthly installment in advance of the due date, the portion of
the payment allocable to interest for that period since the preceding payment
will be less than it would be if the payment were made on the due date, and the
portion of the payment allocable to reduce the principal balance will be
correspondingly greater. Conversely, if an obligor pays the fixed monthly
installment after its due date, the portion of the payment allocable to
interest for the period since the preceding payment will be greater than it
would be if the payment were made on the due date, and the portion of the
payment allocable to reduce the principal balance will be correspondingly
smaller. When necessary, an adjustment is made at the maturity of the
receivable to the scheduled final payment to reflect the larger or smaller, as
the case may be, allocations of payments to interest or principal under the
receivable as a result of early or late payments, as the case may be. Late
payments, or early payments, on a Simple Interest Receivable may result in the
obligor making a greater--or smaller--number of payments than
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originally scheduled. The amount of additional payments required to pay the
outstanding principal balance in full generally will not exceed the amount of
an originally scheduled payment. If an obligor elects to prepay a Simple
Interest Receivable in full, the obligor will not receive a rebate attributable
to unearned finance charges. Instead, the obligor is required to pay finance
charges only to, but not including, the date of prepayment. The amount of
finance charges on a Simple Interest Receivable that would have accrued from
and after the date of prepayment if all monthly payments had been made as
scheduled will generally be greater than the rebate on a Scheduled Interest
Receivable that provides for a Rule of 78s rebate, and will generally be equal
to the rebate on a Scheduled Interest Receivable that provides for an actuarial
rebate, as is described in the following paragraph.
"Scheduled Interest Receivables" means receivables pursuant to which the
payments due from the obligors during any month are allocated between finance
charges and principal on a scheduled basis, without regard to the period of
time which has elapsed since the preceding payment was made, using the
actuarial method or the method known as the Rule of 78s or sum-of-the-digits
method. If an obligor elects to prepay a Scheduled Interest Receivable in full,
the obligor is entitled to a rebate of the portion of the Scheduled Payments
attributable to unearned finance charges. The amount of the rebate is
determined with reference to the receivable type and applicable state law. With
minor variations based on state law, actuarial rebates are calculated on the
basis of a constant interest rate. Rebates calculated on a Rule of 78s or sum-
of-the-digits basis are smaller than the corresponding rebates under the
actuarial method. Scheduled Interest Receivables provide for Rule of 78s
rebates except in states that require the actuarial method. Distributions to
noteholders and certificateholders will not be affected by Rule of 78s rebates,
because all allocations on Scheduled Interest Receivables are made using the
actuarial method. The portion of a pool of receivables which consists of
Scheduled Interest Receivables will be specified in the accompanying prospectus
supplement.
Amsouth Bank's Origination and Servicing Procedures
The following is a description of the origination, underwriting and
servicing of AmSouth Bank's portfolio of motor vehicle loans as of the date of
this prospectus. The prospectus supplement will describe any material changes
to this information with respect to the origination, underwriting and servicing
of the pool of receivables transferred to the related issuer.
Origination
AmSouth Bank, its predecessors in interest, and affiliates, or
collectively, the originators, may originate receivables in any of the
following ways:
. making a direct loan to an obligor either through the originator
directly or through a dealer that performs certain ministerial loan
processing functions on behalf of the originator,
. purchasing a retail installment sales contract from a dealer pursuant to
a dealer agreement between the originator and the dealer,
. purchasing/originating a receivable pursuant to a flow agreement with a
third party, or
. bulk purchases of receivable portfolios from third parties.
The originators establish and maintain relationships with dealers. AmSouth
Bank and its affiliates select dealers based upon the dealer's commercial
reputation, the prior experience of the dealer or the dealer's predecessor
organization and, in some cases, a financial review of the dealer. Each dealer
from whom an originator purchases a receivable or that performs certain
ministerial loan processing functions for direct loans generally must execute a
dealer agreement with the originator that, among other things, sets out the
guidelines and procedures of the purchasing and origination process. AmSouth
Bank and its affiliates enter into dealer agreements primarily with dealers
that are
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franchised to sell new motor vehicles and also with some dealers that sell used
motor vehicles. In addition to purchasing receivables from dealers, AmSouth
Bank or its affiliates may also extend loans and lines of credit to some
dealers for, among other things, inventory financing and other commercial
purposes. AmSouth Bank and its affiliates only extends loans or lines of credit
to dealers based upon a financial review, and these dealers are evaluated
through periodic financial reviews and formalized credit review procedures.
These dealer agreements provide for the repurchase by the dealer of any
receivable for its outstanding principal balance, plus accrued but unpaid
interest, if any representations or warranties made by the dealer relating to
the receivable are breached. The representations and warranties typically
relate to the origination of the receivable and the security interest in the
related financed vehicle and not to the collectibility of the receivable or the
creditworthiness of the obligor thereunder. The originators offer risk-based
pricing programs to dealers to cover various levels of obligor risk.
Each originator also may establish and maintain relationships with third
parties who will refer individual receivable applications to such originator or
sell individual receivables to the originator from time to time. Each of these
parties must execute a flow agreement with such originator which sets out,
among other things, the guidelines and procedures of the purchasing process.
Such flow agreements provide for the repurchase by the flow party of any
receivable if any representations or warranties made by the flow party relating
to the receivable are breached.
Underwriting
Receivables that are directly originated by AmSouth Bank and its affiliates
or purchased from a dealer pursuant to a dealer agreement will have been
originated in accordance with AmSouth Bank's established underwriting policies
and procedures. Receivables purchased from a third party pursuant to a flow
agreement or in a bulk will have been originated in accordance with the
underwriting standards of the third party. In the case of receivables purchased
in bulk or for flow agreement receivables purchase, as specified in the
prospectus supplement, the receivables will either be re-underwritten pursuant
to AmSouth Bank's underwriting standards or AmSouth Bank's underwriting
standards will be used solely to assist in the determination of the purchase
price AmSouth Bank or its affiliate is willing to pay for a third parties'
portfolio of receivables.
AmSouth Bank's policies and procedures are intended to assess the
applicant's ability and willingness to repay the amounts due on the receivable
and to establish the adequacy of the financed vehicle as collateral. The
underwriting policies and procedures are intended to guide and complement, but
not replace, the judgment of the credit underwriter in reviewing a credit
application. Exceptions to underwriting guidelines are permitted within certain
established parameters.
The credit underwriting process requires applicants to complete an
application which generally includes such information as the applicant's
income, residential status, liabilities, credit and employment history and
other personal information. Upon receipt of an application, the application is
reviewed for completeness and a credit report is obtained from an independent
credit bureau, which the Bank reviews to determine the applicant's current
credit status and past credit performance. Where necessary, more than one
independent credit report may be obtained. AmSouth Bank may also conduct an
additional investigation, which may consist of some or all of the following
steps: requiring written proof of employment and income, direct telephone
verification of an applicant's employment, and discussions with the originating
dealer to resolve concerns about the applicant's creditworthiness.
Credit scoring systems are used to assist in the processing of the
applications including the Fair, Isaac Auto Enhanced bureau score and a custom
built scorecard derived from the Fair, Isaac Auto Enhanced bureau. The credit
scores are used to increase the productivity of the underwriters, automatically
approve and decline applications, recommend, approve or reject decisions and to
route
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applications to more experienced underwriters. Applications identified by score
as less creditworthy may either be automatically declined or routed to more
experienced underwriters for their concurrence before an approval is rendered.
Conversely, applications identified by score as creditworthy may either be
automatically approved or routed to underwriters for their concurrence before
an acceptance is rendered. Applications scoring below the established score
guidelines, are usually declined. Only if these are strong mitigating factors
they are referred to senior management for approval.
In making credit decisions and determining the amount and terms of
financing that will be offered, credit underwriters rely on credit scores
derived from the proprietary score card and the credit bureau reports, as well
as the relationships among the applicant's income, debt and expenses generally
and debt and expenses related to the proposed receivable and the age and value
of the motor vehicle. The applicant's creditworthiness may be further evaluated
through verification of employment and/or income of the applicant.
Additionally, other factors deemed appropriate by the credit underwriter may be
evaluated and/or verified prior to making the credit decision.
AmSouth Bank generally will not finance more than approximately 120% of the
"value" of the vehicle. For new motor vehicles, "value" is determined by the
lesser of purchase price or manufacturer's invoice and includes dealer
installed options. For used motor vehicles, "value" is the "clean" wholesale
value reported by normally accepted used car guides. A vehicle more than seven
years old is considered an exception. All overrides are monitored for
performance and reported to management on a regular basis.
Credit decisions are communicated to the dealers. In the case of a declined
application, AmSouth Bank's practice is to explain the reason for the
declination to the dealer and send a declination letter to the applicant.
The standard maximum term for a receivable depends on the age of the
financed vehicle and the loan-to-value ratio. The maximum term for a new
vehicle is 72 months and the maximum term for a vehicle that is seven or more
years old is 30 months.
Exceptions to the above credit parameters are made at the discretion of the
credit underwriter and/or credit manager with the appropriate decision
authority. In considering any exception, AmSouth Bank looks for compensating
factors in the borrower's credit such as a higher credit score or lower advance
rate than would otherwise be required to approve such loan if the borrower had
otherwise satisfied each of the underwriting criteria. AmSouth Bank's
exceptions policy is designed to ensure that the credit quality of the loan
subject to any such exception is consistent with the credit quality of AmSouth
Bank's other loans. Underwriters are assigned specific dollar and decision
authority based on experience, performance results and position. The greater
the deviation from established policy, the higher the level of authority
required. The underwriters are limited in the number of policy rule exceptions
they may make.
Subsequent Receivables
Subsequent receivables may be originated at a later date using credit
criteria different from those which were applied to any initial receivables and
may be of a different credit quality.
Servicing Procedures
AmSouth Bank or another entity specified in the prospectus supplement will
be responsible, as the servicer, for managing, administering, servicing and
making collections efforts on the Receivables held by each issuer. The servicer
is permitted to delegate any and all of its servicing duties to any of its
affiliates or other third parties, provided that the servicer will remain
obligated and liable for servicing the receivables as if the servicer alone
were servicing the receivables.
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The servicer places great emphasis on the collection of delinquent
accounts. The commencement of such efforts are governed by an obligor's payment
history profile. AmSouth Bank's practice is to begin collection activities with
respect to delinquent receivables on the fifth day following the due date for
high risk loans, and the sixteenth date after the due date for low risk loans.
During this period collection personnel are connected with delinquent obligors
using predictive dialers, which organize obligors into calling queues based on
outstanding loan balances, risk grades and past history of delinquency.
Collection personnel make a follow up call at a minimum of once each seven day
period. On the 11th day after the due date, a late notice is mailed to the
obligor, and a late fee ranging from $15 to $25 is assessed, based upon a fixed
percentage of the monthly payment.
Receivables that are 45 days delinquent for high risk loans and 60 days
delinquent for low risk loans are assigned to personnel in the loss prevention
unit. If attempts to contact the delinquent obligor fail, the collection
officer may attempt to contact the obligor's references. Repossession
procedures begin when all other collection efforts are exhausted.
AmSouth Bank follows specific procedures with respect to repossessions and
uses local unaffiliated independent bonded and insured contractors to perform
repossessions. Once a motor vehicle is repossessed, a notice of repossession is
sent to the obligor, detailing the requirements that must be met for the
obligor to redeem the financed vehicle. Motor vehicles that remain unredeemed
beyond the required state law notice period are remarketed through various
channels, including auction sales, consignment sales and direct sales to
dealers.
Receivables that are more than 120 days delinquent or that have been
assigned for repossession are charged-off at the end of the month in which they
reach this level of delinquency.
Any deficiencies remaining after the full write-off or repossession and
sale of the related motor vehicle are pursued by AmSouth Bank when and to the
extent practical and legally permitted. Collection personnel continue to
contact the obligors to establish repayment schedules, and may refer the
account to local counsel with instructions to file suit and obtain a judgement
or refer the account to a collection agency, until the account is paid in full
or the obligor files for bankruptcy.
Extensions
AmSouth Bank has specific procedures with respect to contract extensions.
Extensions may be granted to a current or delinquent customer to cure a short
term cash flow problem and an extension fee may be charged. Extensions are
granted on an individual basis and are reported and monitored closely.
Generally, the extension policy requires that:
. at least nine monthly payments must have been made on the account;
. only one extension may be granted during any 12 month period;
. only two extensions may be granted during any five year period; and
. the request for an extension must be based upon a legitimate non-
recurring reason.
AmSouth Bank may, from time to time, also solicit or offer holiday
extensions to obligors who meet well-defined eligibility criteria, without any
penalty or processing fees. AmSouth Bank does not anticipate initiating more
than two such holiday extensions per year.
AmSouth Bank may also move the due date forward at the written request of
an obligor, provided that the next payment is not due for at least 15 days and
no late fees are outstanding. If the due date is being changed by more than 10
days, the obligor will also have to pay interest for the number of days greater
than 10 that the due date is changing. Such a change of the due date is not
deemed to be an extension and no extension fee is charged.
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Insurance
Each receivable requires the obligor to obtain and maintain collision and,
comprehensive, insurance on each motor vehicle. As a prerequisite to acquiring
a loan, the obligor must provide the originator with evidence of acceptable
insurance, in the form of either a certificate of insurance, a binder or an
agreement evidencing a commitment to provide insurance to the obligor. In the
event such insurance coverage is not maintained, the servicer has the right,
but is not obligated, to declare the receivable to be in default. The servicer
will not purchase a policy and charge the obligor for the amount of the premium
of the insurance policy to cover any financed vehicle. However, in the event
that an obligor's insurance coverage lapses, the servicer may foreclose on the
receivable.
Delinquency and Loss Information
Information concerning the experience of AmSouth Bank or other entity
acting as servicer, pertaining to delinquencies, loan losses and recoveries
with respect to its portfolio of receivables will be set forth in each
prospectus supplement. There can be no assurance that the delinquency, loan
loss and recovery experience on any receivables related to a series of
securities will be comparable to prior experience or to the information
provided.
Prefunding Arrangement
To the extent provided in the prospectus supplement for a series of
securities, the related sale and servicing agreement or indenture may provide
for a prefunding arrangement under which the related issuer commits to
subsequently purchase additional receivables from the seller following the date
on which the issuer is established and the related securities are issued for a
period not to exceed twelve months and in an amount not to exceed 40% of the
initial principal balance of the securities. With respect to a series of
securities, the prefunding arrangement will require that any subsequent
receivables transferred to the issuer conform to the requirements and
conditions provided in the related sale and servicing agreement including the
requirement that the subsequent receivables satisfy all of the same credit and
underwriting criteria as the initial receivables. If a prefunding arrangement
is utilized in connection with the issuance of a series of securities, the
servicer will establish an account, known as the prefunding account, in the
name of the indenture trustee for the benefit of the securityholders into which
a portion of the net proceeds received from the sale of the securities will be
deposited and from which funds will be released during a specified period to
purchase subsequent receivables from the seller. Upon each conveyance of
subsequent receivables to the applicable issuer, an amount equal to the
purchase price paid by the seller to AmSouth Bank for the subsequent
receivables will be released from the prefunding account and paid to the
seller. If the amounts deposited in the prefunding account are not completely
used by the end of the funding period, the remaining amounts in the prefunding
account will be applied to prepay the securities. Regular periodic information
regarding the subsequent receivables will be included under Item 5 in each
Current Report filed on Form 8-K with the Securities and Exchange Commission
pursuant to the Exchange Act of 1934, as amended, with respect to each issuer
to which subsequent receivables have been transferred.
The utilization of a prefunding arrangement for a series of securities is
intended to improve the efficiency of the issuance of the securities and the
sale of the receivables to the related issuer through the incremental delivery
of the applicable receivables on the Closing Date and during a specified period
following the Closing Date for that series of securities. Prefunding
arrangements allow for a more even accumulation of the receivables by the
seller and AmSouth Bank and the issuance of a larger principal amount of
securities than would be the case without a prefunding arrangement.
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Although subsequent receivables will be subject to the same credit criteria
and underwriting guidelines applied with respect to the origination of the
initial receivables, subsequent receivables may be of a different credit
quality and seasoning. The credit quality of the subsequent receivables may
vary as a result of increases or decreases in the credit quality of the related
obligors within the predefined acceptable range, which variations could impact
the performance of the overall pool of receivables. The portfolio of initial
receivables will also be subject to greater seasoning than the subsequent
receivables due to the length of time elapsed from the dates of origination of
those receivables and the sale of those receivables to the related issuer.
Accordingly, less historical performance information will be available with
respect to the subsequent contracts. Moreover, following the transfer of
subsequent receivables to the applicable issuer, the characteristics of the
entire pool of receivables included in the issuer may vary from those of the
receivables initially transferred to the issuer.
Maturity and Prepayment Considerations
The weighted average life of the notes and the certificates of any series
will generally be influenced by the rate at which the principal balances of the
receivables are paid, which payments may be in the form of scheduled payments
or prepayments. Each receivable is prepayable in full by the obligor at any
time. Some receivables may require the obligor to pay a prepayment penalty if
the obligor prepays all or a portion of the receivables. Full and partial
prepayments on motor vehicle receivables included in the Issuer Property of an
issuer will be paid or distributed to the related securityholders on the next
Distribution Date following the Collection Period in which they are received.
To the extent that any receivable included in the Issuer Property of an issuer
is prepaid in full, whether by the obligor, or as the result of a purchase by
the servicer or a repurchase by AmSouth Bank or otherwise, the actual weighted
average life of the receivables included in the Issuer Property of the issuer
will be shorter than a weighted average life calculation based on the
assumptions that payments will be made on schedule and that no prepayments will
be made. Weighted average life means the average amount of time until the
entire principal amount of a receivable is repaid. Full prepayments may also
result from liquidations due to default, receipt of proceeds from theft,
physical damage, credit life and credit disability insurance policies,
repurchases by the seller as a result of the failure of a receivable to meet
the criteria set forth in the related sale and servicing agreement or purchases
by the servicer as a result of a breach of its covenants with respect to the
receivables made by it or its servicing duties in the related sale and
servicing agreement. In addition, early retirement of the securities may be
effected by the servicer exercising its option to purchase the remaining
receivables included in the Issuer Property of the issuer on any Distribution
Date as of which the Pool Balance, after giving effect to the principal
payments and distributions otherwise to be made on that Distribution Date, has
declined to or below the percentage of the Original Pool Balance specified in
the prospectus supplement. See "Description of the Transfer and Servicing
Agreements--Purchase of Receivables by the Servicer."
The rate of full prepayments by obligors on the receivables may be
influenced by a variety of economic, social and other factors. These factors
include the unemployment rate, servicing decisions, seasoning of loans,
destruction of vehicles by accident, loss of vehicles due to theft, sales of
vehicles, market interest rates, the availability of alternative financing and
restrictions on the obligor's ability to sell or transfer the financed motor
vehicle securing a receivable without the consent of the servicer. Any full
prepayments or partial prepayments applied immediately will reduce the average
life of the receivables.
AmSouth Bank can make no prediction as to the actual prepayment rates that
will be experienced on the receivables included in the Issuer Property of any
issuer in either stable or changing interest rate environments. Securityholders
of each series will bear all reinvestment risk resulting from the rate of
prepayment of the receivables included in the Issuer Property of the related
issuer.
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Pool Factor and Pool Information
For each issuer, the Pool Factor will be a six-digit decimal which the
servicer will compute each month indicating the Pool Balance at the end of the
month as a fraction of (1) the Original Pool Balance plus (2) the aggregate
principal balance of any subsequent receivables added to the issuer as of the
applicable subsequent Cut-off Date. The Pool Factor will be 1.000000 as of the
Closing Date; thereafter, the Pool Factor will decline to reflect reductions in
the Pool Balance. The amount of a securityholder's pro rata share of the Pool
Balance for a given month can be determined by multiplying the original
denomination of the holder's security by the Pool Factor for that month.
With respect to each issuer, the securityholders of record will receive
monthly reports from the trustee or indenture trustee, as applicable,
concerning payments received on the receivables, the Pool Balance, the Pool
Factor and other relevant information. The Depository Trust Company will supply
these reports to securityholders in accordance with its procedures. Since
owners of beneficial interests in a global security of a given series will not
be recognized as securityholders of that series, DTC will not forward monthly
reports to those owners. Copies of monthly reports may be obtained by owners of
beneficial interests in a global security by a request in writing addressed to
the trustee or indenture trustee, as applicable. Securityholders of record
during any calendar year will be furnished information for tax reporting
purposes not later than the latest date permitted by federal and/or state law.
See "Description of the Securities--Statements to Securityholders."
Use of Proceeds
The net proceeds from the sale of securities of a given series will be
applied by the seller (1) to purchase the receivables from AmSouth Bank and/or
its affiliates, as applicable, pursuant to the related purchase agreement, (2)
to deposit any amounts if applicable, to the prefunding account and to fund any
other collateral accounts and (3) to pay other expenses in connection with the
issuance of the securities. Any remaining amounts will be added to the seller's
general funds.
Description of the Seller
The seller, AmSouth Auto Receivables LLC, a wholly-owned, special purpose,
bankruptcy remote subsidiary of AmSouth Bank, was formed as a limited liability
company under the laws of the State of Delaware on June 2, 2000 and has a
limited operating history. The seller was organized solely for the limited
purpose of acquiring receivables and associated rights, issuing securities and
engaging in related transactions. The seller's limited liability company
agreement limits the activities of the seller to the foregoing purposes and to
any activities incidental to and necessary for these purposes. The principal
offices of the seller are located at 1900 Fifth Avenue, North, AmSouth Sonat
Tower, Birmingham, Alabama 35203.
Description of AmSouth Bank
AmSouth Bank, a banking corporation organized under the laws of the State
of Alabama, is a wholly owned subsidiary of AmSouth Bancorporation, a Delaware
financial services holding company. AmSouth Bank is engaged in banking and
related activities, including providing automotive financing to its customers
and to automotive dealers and their customers. The principal executive offices
of AmSouth Bank are at 1900 Fifth Avenue, North, Birmingham, Alabama 35203. The
telephone number of AmSouth Bank is (205) 326-5300.
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Description of the Securities
A series of securities may include one or more classes of notes and
certificates. Each issuer will issue the notes and the certificates for a
particular series to the holders of record of the notes and the holders of
record of the certificates, respectively. The following summary, together with
the summaries contained under "Description of the Notes" and "Description of
the Certificates" in the prospectus supplement, describe all of the material
terms of the offered securities. However, this summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the notes, the indenture, the certificates, the sale and
servicing agreement, the trust agreement and the prospectus supplement, as
applicable.
The Notes
With respect to each issuer that issues notes, one or more classes of notes
of the related series will be issued pursuant to the terms of an indenture, a
form of which has been filed as an exhibit to the registration statement of
which this prospectus forms a part. The prospectus supplement will specify
which class or classes of notes, if any, of a series are being offered pursuant
to the prospectus supplement.
Unless the prospectus supplement specifies that the notes are offered in
definitive form, the notes will be available for purchase in the denominations
specified in the prospectus supplement and in book-entry form only. Noteholders
will be able to receive notes in definitive registered form only in the limited
circumstances described herein or in the prospectus supplement. See
"Description of the Securities--Definitive Securities."
The timing and priority of payment, seniority, allocations of losses,
interest rate and amount of or method of determining payments of principal and
interest on each class of notes of a given series will be described in the
prospectus supplement. The right of holders of any class of notes to receive
payments of principal and interest may be senior or subordinate to the rights
of holders of any other class or classes of notes of such series, as described
in the prospectus supplement. Unless otherwise provided in the prospectus
supplement, payments of interest on the notes of such series will be made prior
to payments of principal thereon. To the extent provided in the prospectus
supplement, a series may include one or more classes of Strip Notes entitled to
. principal payments with disproportionate, nominal or no interest
payments or
. interest payments with disproportionate, nominal or no principal
payments.
Each class of notes may have a different interest rate, which may be a
fixed, variable or adjustable interest rate, and which may be zero for certain
classes of Strip Notes, or any combination of the foregoing. The prospectus
supplement will specify the interest rate for each class of notes of a given
series or the method for determining such interest rate. One or more classes of
notes of a series may be redeemable in whole or in part under the circumstances
specified in the prospectus supplement, including at the end of a prefunding
period or as a result of the seller's, servicer's or another entity's
exercising of its option to purchase the receivables.
To the extent specified in any prospectus supplement, one or more classes
of notes of a given series may have fixed principal payment schedules, as set
forth in such prospectus supplement. Noteholders of these notes would be
entitled to receive as payments of principal on any given Distribution Date the
applicable amounts set forth on such schedule with respect to such notes, in
the manner and to the extent set forth in the prospectus supplement.
If so specified in the prospectus supplement, payments of interest to all
noteholders of a particular class or to one or more other classes will have the
same priority. Under some
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circumstances, the amount available for such payments could be less than the
amount of interest payable on the notes on any Distribution Date, in which case
each noteholder of a particular class will receive its ratable share, based
upon the aggregate amount of interest due to such class of noteholders, of the
aggregate amounts available to be distributed on the notes of such series.
With respect to a series that includes two or more classes of notes, each
class may differ as to the timing and priority of payments, seniority,
allocations of losses, final maturity date, interest rate or amount of payments
of principal or interest, or payments of principal or interest in respect of
any such class or classes may or may not be made upon the occurrence of
specified events relating to the performance of the receivables, including
loss, delinquency and prepayment experience, the related subordination and/or
the lapse of time or on the basis of collections from designated portions of
the related pool of receivables. If an issuer issues two or more classes of
notes, the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination of interest and principal payments of each class of notes will be
set forth in the prospectus supplement. Generally, the related rating agencies,
the credit enhancement provider, if any, and the prevailing market conditions
at the time of issuance of the notes of a series dictate the applicable
specified events with respect to such series. Payments in respect of principal
and interest of any class of notes will be made on a pro rata basis among all
the noteholders of such class.
If the seller, the servicer or another entity exercises its option to
purchase the receivables of an issuer in the manner and on the respective terms
and conditions described under "Description of the Transfer and Servicing
Agreements--Termination," the outstanding notes will be redeemed as set forth
in the prospectus supplement.
The Certificates
If the issuer is a trust, the series will also include one or more classes
of certificates. The certificates will be issued by the issuer pursuant to the
terms of a trust agreement, the form of which has been filed as an exhibit to
the registration statement of which this prospectus is a part. The prospectus
supplement will specify which class or classes of certificates, if any, of a
series are being offered pursuant to the prospectus supplement.
Unless the prospectus supplement specifies that certificates are offered in
definitive form, the certificates will be available for purchase in the
denominations specified in the prospectus supplement and in book-entry form
only, other than the certificates sold to the seller, as described in the
prospectus supplement.
The timing and priority of distributions, seniority, allocations of losses,
interest rate and amount of or method of determining distributions with respect
to principal and interest on each class of certificates will be described in
the prospectus supplement. Unless otherwise provided in the prospectus
supplement, distributions of interest on such certificates will be made on the
dates specified in the prospectus supplement and will be made prior to
distributions with respect to principal of such certificates. To the extent
provided in the prospectus supplement, a series may include one or more classes
of Strip Certificates entitled to
.distributions of principal with disproportionate, nominal or no interest
distributions, or
.interest distributions with disproportionate, nominal or no distributions
of principal.
Each class of certificates may have a different interest rate, which may be
a fixed, variable or adjustable interest rate, and which may be zero for
certain classes of Strip Certificates, or any combination of the foregoing. The
prospectus supplement will specify the interest rate for each class of
certificates of a given series or the method for determining such interest
rate. Distributions on the
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certificates of a given series that includes notes may be subordinate to
payments on the notes of such series as more fully described in the prospectus
supplement. Distributions of interest on and principal of any class of
certificates will be made on a pro rata basis among all the certificateholders
of such class.
With respect to a series that includes two or more classes of certificates,
each class may differ as to timing and priority of distributions, seniority,
allocations of losses, interest rate or amount of distributions of principal or
interest, or distributions of principal or interest of any such class or
classes may or may not be made upon the occurrence of specified events relating
to the performance of the receivables, including loss, delinquency and
prepayment experience, the related subordination and/or the lapse of time or on
the basis of collections from designated portions of the related pool of
receivables. If an issuer issues two or more classes of certificates, the
sequential order and priority of payment in respect of principal and interest,
and any schedule or formula or other provisions applicable to the determination
of interest and principal payments of each class of certificates will be set
forth in the prospectus supplement. Generally the related rating agencies, the
credit enhancement provider, if any, and the prevailing market conditions at
the time of issuance of the certificates of a series dictate the applicable
specified events with respect to such series.
Ratings of the Securities
It will be a condition to the issuance of each class of securities
specified as being offered by the prospectus supplement that each class of
securities be rated in one of the four highest generic rating categories
established for the securities by at least one nationally recognized
statistical rating agency and receive the rating specified in the prospectus
supplement by at least one rating agency.
Revolving Period and Amortization Period
If the prospectus supplement so provides, there may be a period commencing
on the date of issuance of a class or classes of notes or certificates of a
series and ending in the date set forth on the prospectus supplement during
which no principal payments will be made to one or more classes of notes or
certificates of the related series as are identified in such prospectus
supplement. All collections of principal otherwise allocated to such classes of
notes or certificates may be
. utilized by the issuer during the revolving period to acquire additional
receivables which satisfy the criteria described under "The
Receivables--General" in this prospectus and the criteria set forth in
the prospectus supplement,
. held in an account and invested in Eligible Investments for later
distribution to securityholders,
. applied to those notes or certificates of the related series as then are
in amortization, if any, or
. otherwise applied as specified in the prospectus supplement.
An "amortization period" is the period during which an amount of principal
is payable to holders of a series of securities which, during the revolving
period, were not entitled to such payments. If so specified in the prospectus
supplement, during an amortization period all or a portion of principal
collections on the receivables may be applied as specified above for a
revolving period and, to the extent not so applied, will be distributed to the
classes of notes or certificates. In addition, the prospectus supplement will
set forth the circumstances which will result in the commencement of an
amortization period.
Each issuer which has a revolving period may also issue to the related
seller a certificate evidencing a retained interest in the issuer not
represented by the other securities issued by such
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issuer. As further described in the prospectus supplement, the value of such
retained interest will fluctuate as the amount of Issuer Property fluctuates
and the amount of notes and certificates of the related series of securities
outstanding is reduced. Each issuer will issue only one series of notes and/or
certificates, however, each series may contain one or more classes of notes and
certificates. The terms of each class of securities will be fully disclosed in
the prospectus supplement for each series.
If specified in the prospectus supplement, the issuer may issue securities
from time to time and use the proceeds of this issuance to make principal
payments with respect to other classes of securities of that series.
Book-Entry Registration
If specified in the prospectus supplement, securityholders may hold their
securities through DTC in the United States or Clearstream or Euroclear in
Europe, which in turn hold through DTC, if they are participants of those
systems, or indirectly through organizations that are participants in those
systems.
DTC's nominee will be Cede & Co., unless another nominee is specified in
the prospectus supplement. Accordingly, the nominee is expected to be the
holder of record of any book-entry securities of any class or series. Unless
and until definitive securities are issued under the limited circumstances
described in this prospectus or in the prospectus supplement, no securityholder
will be entitled to receive a physical certificate representing its interest in
a security. All references in this prospectus and in the prospectus supplement
to actions by securityholders refer to actions taken by DTC upon instructions
from DTC participants. All references in this prospectus and in the prospectus
supplement to distributions, notices, reports and statements to securityholders
of book-entry securities refer to distributions, notices, reports and
statements to DTC or its nominee, as the registered holder of the applicable
securities, for distribution to securityholders in accordance with DTC's
procedures with respect to the securities. See "Description of the Securities--
Definitive Securities" in this prospectus.
Clearstream and Euroclear will hold omnibus positions on behalf of the
Clearstream participants and the Euroclear participants, respectively, through
customers' securities accounts in Clearstream's and Euroclear's names on the
books of their respective depositaries which in turn will hold those positions
in customers' securities accounts in the depositaries' names on the books of
DTC.
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 New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for DTC participants and
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of DTC
participants, thereby eliminating the need for physical movement of
certificates. Indirect access to the DTC system also is available to DTC
indirect participants such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a DTC participant,
either directly or indirectly.
Transfers between DTC participants will occur in accordance with DTC rules.
Transfers between Clearstream participants and Euroclear participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Clearstream participants or Euroclear participants, on the other, will
be effected in DTC in accordance with DTC rules on behalf of the
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relevant European international clearing system by its depositary. However,
these cross-market transactions will require delivery of instructions to the
relevant European international clearing system by the counterparty in that
system in accordance with its rules and procedures and within its established
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. Clearstream participants and Euroclear participants may not
deliver instructions directly to the depositaries.
Because of time-zone differences, credits or securities in Clearstream or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and these credits or any transactions in
these securities settled during the processing will be reported to the relevant
Clearstream participant or Euroclear participant on that business day. Cash
received in Clearstream or Euroclear as a result of sales of securities by or
through a Clearstream participant or Euroclear participant to a DTC participant
will be received with value on the DTC settlement date but will be available in
the relevant Clearstream or Euroclear cash account only as of the business day
following settlement in DTC.
A securityholder, as used in this prospectus, means a holder of a
beneficial interest in a book-entry security. Unless otherwise provided in the
prospectus supplement, securityholders that are not DTC participants or DTC
indirect participants but desire to purchase, sell or otherwise transfer
ownership of, or other interest in, securities may do so only through DTC
participants and DTC indirect participants. In addition, securityholders will
receive all distributions of principal of and interest on securities from the
Applicable Trustee, through the DTC participants, who in turn will receive them
from DTC.
Under a book-entry format, securityholders may experience some delay in
their receipt of payments, since these payments will be forwarded by the
Applicable Trustee to Cede & Co., as nominee for DTC. DTC will forward these
payments to DTC participants which will then forward them to DTC indirect
participants or securityholders. We anticipate that the only "noteholder" and
"certificateholder" will be Cede & Co., as nominee of DTC. Securityholders will
not be recognized by the trustee as noteholders or certificateholders, as these
terms are used in the trust agreement and indenture. Securityholders will only
be permitted to exercise the rights of securityholders indirectly through DTC,
Clearstream or Euroclear and their respective participants or organizations.
Under the Rules, DTC is required to make book-entry transfers of securities
among DTC participants on whose behalf it acts with respect to the securities
and to receive and transmit distributions of principal of, and interest on, the
securities. DTC participants and DTC indirect participants with which
securityholders have accounts with respect to the securities similarly are
required to make book-entry transfers and receive and transmit those payments
on behalf of their respective securityholders. Accordingly, although
securityholders will not physically possess securities, the DTC rules provide a
mechanism by which DTC participants will receive payments and will be able to
transfer their interests.
Because DTC can only act on behalf of DTC participants, who in turn act on
behalf of DTC indirect participants and certain banks, the ability of a
securityholder to pledge securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to those
securities, may be limited due to the lack of physical certificates for those
securities.
DTC has advised the seller that it will take any action permitted to be
taken by a noteholder under the indenture or a certificateholder under the
trust agreement, only at the direction of one or
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more DTC participants to whose accounts with DTC the applicable notes or
certificates are credited. DTC may take conflicting actions with respect to
other undivided interests to the extent that those actions are taken on behalf
of DTC participants whose holdings include those undivided interests.
Clearstream is incorporated under the laws of Luxembourg as a professional
depository. Clearstream holds securities for its participating organizations
and facilitates the clearance and settlement of securities transactions between
Clearstream participants through electronic book-entry changes in accounts of
Clearstream participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled by Clearstream in any of 28
currencies, including United States dollars.
Clearstream provides to its Clearstream participants, among other things:
. services for safekeeping, administration, clearance and settlement of
internationally traded securities, and
. securities lending and borrowing.
Clearstream interfaces with domestic markets in several countries. As a
professional depository, Clearstream is subject to regulations by the
Luxembourg Monetary Institute. Clearstream participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include an underwriter of any series. Indirect
access to Clearstream is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Clearstream participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of Euroclear 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 27 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangement for cross-market transfers with DTC
described above. Euroclear is operated by the Euroclear Operator, under
contract with 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
and may include an underwriter of any series. 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 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 Euroclear and applicable Belgian law. These
terms and conditions govern transfers of securities and cash within Euroclear,
withdrawal 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
aforementioned terms and conditions only on behalf of Euroclear participants
and has no record of or relationship with persons holding through Euroclear
participants.
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Distributions with respect to securities held through Clearstream or
Euroclear will be credited to the cash accounts of Clearstream participants or
Euroclear participants in accordance with the relevant system's rules and
procedures, to the extent received by its depositary. These distributions will
be subject to tax reporting in accordance with relevant United States tax laws
and regulations. Clearstream or the Euroclear Operator will take any other
action permitted to be taken by a securityholder under the indenture or trust
agreement on behalf of a Clearstream participant or a Euroclear participant
only in accordance with its relevant rules and procedures and subject to its
depositary's ability to effect these actions on its behalf through DTC.
DTC, Clearstream and Euroclear have agreed to the procedures described
above in order to facilitate transfers of certificates among participants of
DTC, Clearstream and Euroclear. However, they are under no obligation to
perform or continue to perform these procedures, and they may discontinue these
procedures at any time.
Except as required by law, neither the trustee nor the indenture trustee
will have any liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests of the securities of any
series held by DTC, Clearstream or Euroclear or for maintaining, supervising or
reviewing any records relating to these beneficial ownership interests.
Global Clearance, Settlement and Tax Documentation Procedures
In most circumstances, the securities offered by this prospectus will be
issued only as global securities which are registered and held by a depository.
Security owners of the global securities may hold their global securities
through any of DTC, Clearstream or Euroclear. The global securities will be
tradeable as home market instruments in both the European and U.S. domestic
markets. Initial settlement and all secondary trades will settle in same-day
funds.
Secondary market trading between investors holding global securities
through Clearstream and Euroclear will be conducted in the ordinary way under
their normal rules and operating procedures and under conventional eurobond
practice, which is seven calendar day settlement.
Secondary market trading between investors holding global securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Clearstream or Euroclear and DTC
participants holding global securities will be effected on a delivery-against-
payment basis through the respective depositaries of Clearstream and Euroclear
and the DTC participants.
Non-U.S. holders of global securities may have to pay U.S. withholding
taxes unless the holders meet the requirements for exemption from the tax and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All global securities will be held in book-entry form by DTC in the name of
Cede & Co., as nominee of DTC. Security owners' interests in the global
securities will be represented through financial institutions acting on their
behalf as direct and indirect participants in DTC. As a result, Clearstream and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, which in turn will hold their positions in accounts as
DTC participants.
Security owners electing to hold their global securities through DTC will
follow the settlement practices applicable to U.S. corporate debt obligations.
Security owner securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
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Security owners electing to hold their global securities through
Clearstream or Euroclear accounts will follow the settlement procedures
applicable to conventional eurobonds, except that there will be no temporary
global security and no "lock-up" or restricted period. Global securities will
be credited to the securities custody accounts on the settlement date against
payment in same-day funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
Trading between Clearstream and/or Euroclear Participants. Secondary market
trading between Clearstream participants or Euroclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Clearstream or Euroclear purchaser. When
global securities are to be transferred from the account of a DTC participant
to the account of a Clearstream participant or a Euroclear participant, the
purchaser will send instructions to Clearstream or Euroclear through a
Clearstream participant or Euroclear participant at least one business day
before settlement. Clearstream or Euroclear will instruct the respective
Depositary, as the case may be, to receive the global securities against
payment. Payment will include interest accrued on the global securities from
and including the last coupon payment date to and excluding the settlement
date. Payment will then be made by the respective Depositary to the DTC
participant's account against delivery of the global securities. After
settlement has been completed, the global securities will be credited to the
respective clearing system and by the clearing system, under its usual
procedures, to the Clearstream participant's or Euroclear participant's
account. The global securities credit will appear the next day accounting to
European time, and the cash debit will be back-valued to, and interest on the
global securities will accrue from, the value date. The value date would be the
day before the day that settlement occurred in New York. If the trade fails and
settlement is not completed on the intended value date, the Clearstream or
Euroclear cash debit will be valued instead on the actual settlement date.
Clearstream participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to pre-position
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the global securities are credited to their accounts one day later.
As an alternative, if Clearstream or Euroclear has extended a line of
credit to them, Clearstream participants or Euroclear participants can elect
not to pre-position funds and allow that credit line to be drawn upon the
finance settlement. Under this procedure, Clearstream participants or Euroclear
participants purchasing global securities wold incur overdraft charges for one
day, assuming they cleared the overdraft when the global securities were
credited to their accounts. However, interest on the global securities would
accrue from the value date. Therefore, in many cases the investment income on
the global securities earned during that one-day period may substantially
reduce or offset the amount of the overdraft charges, although this result will
depend on each Clearstream participant's or Euroclear participant's particular
cost of funds.
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Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending global securities to
the respective Depositary for the benefit of Clearstream participants or
Euroclear participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC participant a cross-market transaction
will settle no differently than a trade between two DTC participants.
Trading between Clearstream or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Clearstream participants and Euroclear
participants may employ their customary procedures for transactions in which
global securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream participant or
Euroclear participant at least one business day before settlement. In these
cases, Clearstream or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the bonds to the DTC participant's account against
payment. Payment will include interest accrued on the global securities from
and including the last coupon payment date to and excluding the settlement
date. The payment will then be reflected in the account of the Clearstream
participant or Euroclear participant the following day, and receipt of the cash
proceeds in the Clearstream participant's or Euroclear participant's account
would be back-valued to the value date. The value date would be the day before
the day that settlement occurred in New York. Should the Clearstream
participant or Euroclear participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If the trade fails and settlement is
not completed on the intended value date, receipt of the cash proceeds in the
Clearstream participant's or Euroclear participant's account would instead be
valued on the actual settlement date. Finally, day traders that use Clearstream
or Euroclear and that purchase global securities from DTC participants for
delivery to Clearstream participants or Euroclear participants should note that
these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
. borrowing through Clearstream or Euroclear for one day, until the
purchase side of the day trade is reflected in their Clearstream or
Euroclear accounts, under the clearing system's customary procedures;
. borrowing the global securities in the U.S. from a DTC participant no
later than one day prior to settlement, which would give the global
securities sufficient time to be reflected in their Clearstream or
Euroclear account in order to settle the sale side of the trade; or
. staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC participant is at
least one day before the value date for the sale to the Clearstream
participant or Euroclear participant.
U.S. Federal Income Tax Documentation Requirements
A beneficial owner of global securities holding securities through
Clearstream or Euroclear, or through DTC if the holder has an address outside
the U.S., will be required to pay the 30% U.S. withholding tax that generally
applies to payments of interest, including original issue discount, on
registered debt issued by U.S. Persons, unless
. each clearing system, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business in
the chain of intermediaries between that beneficial owner and the U.S.
entity required to withhold tax complies with applicable certification
requirements and
. that beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
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Exemption for non-U.S. Persons (Form W-8 or new Form W-8BEN). Beneficial
owners of global securities that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status) or new Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding). If the information shown on Form W-8
changes (or new Form W-8BEN), a new Form W-8 (or new Form W-8BEN) must be filed
within 30 days of that change.
Exemption for non-U.S. Persons with effectively connected income (Form 4224
or new Form W-8ECI). A non-U.S. Person, including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States) or New Form W-8ECI (Certificate of Foreign
Persons Claim for Exemption from Withholding on Income Effectively Connected
with the Conduct or Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001 or new Form W-8BEN). Non-U.S. Persons that are beneficial owners of
global securities residing in a country that has a tax treaty with the United
States can obtain an exemption or reduced tax rate, depending on the treaty
terms, by filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate)
or new Form W-8BEN. If the treaty provides only for a reduced rate, withholding
tax will be imposed at that rate unless the filer alternatively files Form W-8
or new Form W-8BEN. Form 1001 may be filed by the certificate owner or his
agent whereas new Form W-8BEN must be filed by the beneficial owner.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
global security or in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds,
the clearing agency, in the case of persons holding directly on the books of
the clearing agency. Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year, but Forms W-8, 1001 and
4224 will not be effective after December 31, 2000.
A new Form W-8BEN, if furnished with a taxpayer identification number,
("TIN"), will remain in effect until the status of the beneficial owner
changes, or a change in circumstances makes any information on the form
incorrect. A new Form W-8BEN, if furnished without a TIN, and a new Form W-8ECI
will remain in effect for a period starting on the date the form is signed and
ending on the last day of the third succeeding calendar year, unless a change
in circumstances makes any information on the form incorrect.
The term "U.S. Person" means
. a citizen or resident of the United States,
. a corporation or partnership organized in or under the laws of the
United States or any political subdivision of the United States,
. an estate, the income of which is includible in gross income for United
States tax purposes, regardless of its source, or
. a trust if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons have the
authority to control all substantial decisions of the trust. This
summary does not deal with all aspects of U.S. Federal income tax
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withholding that may be relevant to foreign holders of the global
securities. Security owners are advised to consult their own tax
advisers for specific tax advice concerning their holding and disposing
of the global securities.
In 1997, final Treasury regulations were issued that modify the filing
requirements with which non-U.S. persons must comply in order to be entitled to
an exemption from U.S. withholding tax or a reduction to the applicable U.S.
withholding tax rate. Those persons currently required to file Form W-8 or Form
1001 will be required to file new Form W-8BEN, while those persons currently
required to file Form 4224 will be required to file new Form W-8ECI. These new
withholding regulations generally are effective for payments of interest due
after December 31, 2000, but Forms W-8, 1001 and 4224 filed before that date
will continue to be effective until the earlier of December 31, 2000 or the
current expiration date of those forms. Prospective investors are urged to
consult their tax advisors about the effect of these new withholding
regulations.
Definitive Securities
The securities of a given series will be issued in fully registered,
certificated form to owners of beneficial interests in a global security or
their nominees rather than to DTC or its nominee, only
. if the seller, the applicable trustee or indenture trustee or the
administrator, as applicable, advises the trustee and indenture trustee
in writing that DTC is no longer willing or able to discharge properly
its responsibilities as depositary with respect to the securities, and
the seller, the applicable trustee or indenture trustee or the
administrator are unable to locate a qualified successor,
. if after the occurrence of an event of default under the related
indenture or an event of default under the related sale and servicing
agreement, owners of beneficial interests in a global security
representing in the aggregate more than 50% of the outstanding principal
amount of the securities of that series advise the applicable trustee
and indenture trustee through DTC participants in writing that the
continuation of a book-entry system with respect to the securities
through DTC is no longer in the best interest of those owners or
. under any other circumstances specified in the prospectus supplement.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the applicable trustee and indenture trustee will be
required to notify all owners of beneficial interests in a global security,
through DTC participants, of the availability through DTC of securities in
definitive registered form. Upon surrender by DTC of the definitive global
securities representing the securities and instructions for re-registration,
the applicable trustee and indenture trustee will reissue the securities in
definitive registered form, and thereafter the applicable trustee and indenture
trustee will recognize the holders of the definitive registered securities as
securityholders.
Payments or distributions of principal of, and interest on, the securities
will be made by a paying agent directly to holders of securities in definitive
registered form in accordance with the procedures set forth herein and in the
related indenture or the related trust agreement. Payments or distributions on
each Distribution Date and on the final scheduled Distribution Date, as
specified in the prospectus supplement, will be made to holders in whose names
the definitive securities were registered at the close of business on the
Record Date. Payments or distributions will be made by check mailed to the
address of each securityholder as it appears on the register maintained by the
applicable trustee or indenture trustee or by other means to the extent
provided in the prospectus supplement. The final payment or distribution on any
security, whether securities in definitive registered form or the security
registered in the name of Cede & Co., however, will be made only upon
presentation and surrender of the security at the office or agency specified in
the notice of final payment or distribution to securityholders.
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Securities in definitive registered form will be transferable and
exchangeable at the offices of the applicable trustee or indenture trustee, or
at the offices of a transfer agent or registrar named in a notice delivered to
holders of securities in definitive registered form, which shall initially be
the applicable trustee or indenture trustee. No service charge will be imposed
for any registration of transfer or exchange, but the applicable trustee,
indenture trustee, transfer agent or registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
List of Securityholders
With respect to the notes of any series, the related indenture trustee will
provide to the issuer and the administrator, if any,
. not more than five days after the earlier of (a) each Record Date and
(b) three months after the last Record Date, a list of the names and
addresses of the holders of the related notes as of such Record Date,
and
. at any other times that the issuer requests in writing, within 30 days
after receipt by the related indenture trustee of the request, a list of
the names and addresses of the holders of the related notes as of a date
not more than ten days prior to the time the list is furnished.
With respect to the certificates of any series, upon written request of the
issuer, the related trustee will provide to the issuer and the administrator,
if any, within 30 days after receipt of the issuer's request a list of the
names and addresses of all certificateholders of record as of the most recent
Record Date. Upon written request by three or more holders of the certificates
of a given series or by holders of certificates evidencing not less than 25% of
the aggregate outstanding principal amount of those certificates, the related
trustee will afford the requesting certificateholders access during business
hours to the current list of certificateholders for purposes of communicating
with other certificateholders with respect to their rights under the related
trust agreement or under the certificates.
Neither the trust agreement, if applicable, nor the indenture will provide
for the holding of annual or other meetings of securityholders.
Statements to Securityholders
With respect to each series of securities, on each Distribution Date the
applicable trustee or indenture trustee will include with each payment or
distribution to each securityholder a statement setting forth for that
Distribution Date the following information (and any additional information so
specified in the prospectus supplement):
. the amount of the distribution on or with respect to each class of the
securities allocable to principal;
. the amount of the distribution on or with respect to each class of the
securities allocable to interest;
. the aggregate distribution amount for that Distribution Date;
. the payments to the related credit enhancement provider with respect to
any credit or liquidity enhancement on that Distribution Date, after
giving effect to changes thereto on that Distribution Date and the
amount to be deposited in the spread account, if any;
. the number of, and aggregate amount of monthly principal and interest
payments due on, the related receivables which are delinquent as of the
end of the related Collection Period presented in 30-day increments;
. the aggregate servicing fee paid to the servicer with respect to the
related receivables for the related Distribution Date;
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. the amount available in the collection account for payment of the
aggregate amount payable or distributable on the securities, the amount
of the servicing fee, the amount of any principal or interest shortfall
with respect to each class of securities and the amount required from
any applicable credit enhancement provider to pay any shortfall;
. the aggregate amount of proceeds received by the servicer, net of
recoverable out-of-pocket expenses, in respect of a receivable which is
a Defaulted Receivable;
. the number and net outstanding balance of receivables for which the
related financed motor vehicle has been repossessed;
. the Pool Balance; and
. the amount remaining of any credit enhancement.
DTC will supply these reports to securityholders in accordance with its
procedures. Since owners of beneficial interests in a global security of a
given series will not be recognized as securityholders of that series, DTC will
not forward monthly reports to those owners. Copies of monthly reports may be
obtained by owners of beneficial interests in a global security by a request in
writing addressed to the trustee or indenture trustee, as applicable.
Within a reasonable period of time after the end of each calendar year
during the term of each issuer, but not later than the latest date permitted by
law, the applicable trustee or indenture trustee and paying agent will furnish
to each person who on any Record Date during that calendar year was a
registered securityholder federal income tax returns. See "Material Federal
Income Tax Consequences" in this prospectus.
Description of the Transfer and Servicing Agreements
The following summary describes the material terms of
. each sale and servicing agreement pursuant to which an issuer will
purchase receivables from the seller and the servicer will agree to
service those receivables, and
. each administration agreement pursuant to which AmSouth Bank or another
party specified in the prospectus supplement will undertake specified
administrative duties with respect to an issuer.
Forms of the sale and servicing agreement and the administration agreement have
been filed as exhibits to the registration statement of which this prospectus
is a part. This summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of each
applicable sale and servicing agreement and administration agreement and the
prospectus supplement.
Sale and Assignment of the Receivables
Sale and Assignment by AmSouth Bank. Prior to the issuance of a series of
securities by the related issuer, pursuant to a receivables purchase agreement,
AmSouth Bank and/or any affiliates specified in the prospectus supplement will
sell and assign to the seller, without recourse, its entire interest in the
receivables of the related receivables pool, including its security interest in
the related financed motor vehicles, and proceeds thereof.
Sale and Assignment by the Seller. Prior to the issuance of a series of
securities by the related issuer, the seller will sell and assign to the
applicable trustee of that issuer, without recourse, pursuant to the sale and
servicing agreement, the seller's entire interest in the receivables of the
related receivables pool, including its security interest in the related
financed motor vehicles. Each
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receivable will be identified in a schedule appearing as an exhibit to the sale
and servicing agreement. The trustee or indenture trustee will not
independently verify the existence and qualification of any receivables. The
trustee or indenture trustee in respect of the trust will, concurrently with
the sale and assignment, execute, authenticate and deliver the definitive
certificates and/or notes representing the related securities.
Representations and Warranties of AmSouth Bank. Pursuant to each
receivables purchase agreement, AmSouth Bank will represent to the seller, and
the seller will assign the representations pursuant to the sale and servicing
agreement to the issuer and the indenture trustee, if any, for the benefit of
holders of securities and any applicable credit enhancement provider, if any,
that:
. each receivable to be included in the Issuer Property of an issuer
contains customary and enforceable provisions such that the rights and
remedies of the holder thereof shall be adequate for realization against
the collateral of the benefits of the security;
. each receivable and the sale of the related financed motor vehicle at
the time it was made complied in all material respects with all
requirements of applicable federal, state and local laws and regulations
thereunder, including usury laws, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Federal
Trade Commission Act, the Fair Debt Collection Practices Act, the Fair
Credit Billing Act, the Magnuson-Moss Warranty Act, the Federal Reserve
Board's Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act
of 1940, state adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code, and any other consumer credit, equal
opportunity and disclosure laws applicable to that receivable and sale;
. each receivable constitutes the legal, valid and binding payment
obligation in writing of the obligor, enforceable by the holder thereof
in all respects in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization,
liquidation and other similar laws and equitable principles relating to
or affecting the enforcement of creditors' rights generally;
. as of the Closing Date, each receivable was secured by a validly
perfected first priority security interest in the financed motor vehicle
in favor of AmSouth Bank as secured party or all necessary action with
respect to the receivable has been taken to perfect a first priority
security interest in the related financed motor vehicle in favor of
AmSouth Bank, or an affiliate, as secured party, which security
interest, in either case, is assignable and has been so assigned by
AmSouth Bank to the seller and by the seller to the issuer;
. as of the Closing Date, AmSouth Bank had good and marketable title to
and was the sole owner of each receivable free of liens, claims,
encumbrances and rights of others;
. as of the Closing Date, there are no rights of rescission, offset,
claim, counterclaim or defense, and AmSouth Bank has no knowledge of the
same being asserted or threatened, with respect to any receivable;
. as of the Cut-off Date, AmSouth Bank has not received notice that any
obligor under a receivable has filed for bankruptcy, and to the best of
AmSouth Bank's knowledge without any independent investigation, no
obligor under a receivable is in bankruptcy or similar proceedings;
. as of the Closing Date, AmSouth Bank has no knowledge that a default,
breach, violation or event permitting acceleration under the terms of
any receivable exists, and the seller has no knowledge that a continuing
condition that with notice or lapse of time would constitute a default,
breach, violation or event permitting acceleration under the terms of
any receivable exists, and the seller has not waived any of the
foregoing;
. each receivable requires that the obligor thereunder obtain
comprehensive and collision insurance covering the financed motor
vehicle;
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. no materially adverse selection procedures were utilized in selecting
the receivables;
. scheduled payments under each receivable have been applied in accordance
with the method for allocating principal and interest set forth in the
receivable;
. there is only one original of each receivable in existence, and the
original is being held by the servicer or its agent on behalf of the
issuer and any applicable credit enhancement provider; and
. each receivable and/or AmSouth Bank satisfies any additional conditions
or requirements set forth in the prospectus supplement, as applicable.
As of the last day of the Collection Period following the Collection Period
or, if AmSouth Bank elects, the last day of the Collection Period, during which
AmSouth Bank becomes aware or receives written notice from the applicable
trustee, the servicer or any credit enhancement provider specified in the
prospectus supplement that a receivable does not meet any of the criteria
required by the receivables purchase agreement, and the failure materially and
adversely affects the interests of the issuer, the securityholders or any
applicable credit enhancement provider, AmSouth Bank, unless it cures the
failed criterion, will repurchase the receivable from the issuer at the price
equal to the outstanding amount of principal plus accrued interest on the
receivable calculated in accordance with the servicer's customary practice and,
if applicable, all amounts due to any applicable credit enhancement provider.
The repurchase obligation will constitute the sole remedy available to the
securityholders or the applicable trustee for the failure of a receivable to
meet any of the criteria set forth in the receivables purchase agreement.
The Collection Account and Eligible Investments
With respect to each issuer, the servicer, trustee or the indenture trustee
will establish and maintain one or more accounts, known collectively as the
collection account, in the name of the related trustee or indenture trustee on
behalf of the related securityholder into which all payments made on or with
respect to the related receivables will be deposited. Funds in the collection
account will be invested in Eligible Investments by the indenture trustee,
acting at the direction of the servicer. Eligible Investments are limited to
investments acceptable to each rating agency rating the applicable securities
and which are consistent with the rating of those securities. Eligible
Investments made with respect to the collection account will mature no later
than the business day immediately preceding the next following Distribution
Date and income from amounts on deposit in the collection account which are
invested in Eligible Investments will be paid to the servicer monthly unless
otherwise directed by the servicer.
Other Accounts
Any other Issuer Accounts to be established with respect to an issuer will
be described in the prospectus supplement. For any series of securities, funds
in any related reserve account or any other Issuer Accounts as may be
identified in the prospectus supplement will be invested in Eligible
Investments as provided in the related sale and servicing agreement, trust
agreement, or indenture.
Payments on Receivables
With respect to each issuer, all collections on the receivables will be
deposited into or credited to the collection account by the servicer within
three business days of the receipt of payments from obligors or as specified in
the prospectus supplement. Those collections will include the following:
. amounts received with respect to the receivables in the related
Collection Period representing monthly principal and interest payments;
. full and partial prepayments;
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. the proceeds paid by any credit enhancement provider under a
comprehensive and collision insurance policy related to a receivable,
other than funds used for the repair of the related financed vehicle or
proceeds released to the related obligor in excess of the principal
balance of the receivable, and all accrued interest thereon and all
other amounts due thereunder, after reimbursement to the servicer of
expenses recoverable under that insurance policy;
. with respect to any receivable that becomes a Defaulted Receivable, the
amount received by the servicer in respect of that receivable during or
after the Collection Period in which that receivable becomes a Defaulted
Receivable, excluding Liquidation Expenses with respect to that
receivable.
. any amounts deposited by AmSouth Bank in the collection account to
repurchase receivables because of material defects in documents related
to the receivables or breaches of representations or warranties
regarding the receivables made by AmSouth Bank in the receivables
purchase agreement that materially and adversely affect the interests of
the securityholders, the issuer or any applicable credit enhancement
provider;
. any amounts deposited by the servicer in the collection account to
purchase receivables as to which the servicer has breached its servicing
covenants in a manner that materially and adversely affect the interests
of the securityholders, the issuer or any applicable credit enhancement
provider;
. any amounts deposited by the seller or servicer into the collection
account as a result of that entity exercising its right under limited
circumstances to purchase all or a portion of the receivables; and
. any other amounts specified in the prospectus supplement.
However, in the event that
. there exists no servicer default under the transaction documents,
. the credit enhancement provider, if any, consents, and
. each other condition to making monthly or less frequent deposits as
may be required by the applicable rating agencies is satisfied,
the servicer will not be required to deposit collections into the
collection account until on or before the Distribution Date. Until these
funds have been deposited into the collection account, the servicer may
invest these funds at its own risk and for its own benefit and will not
segregate them from its own funds.
Payments and Distributions on the Securities
With respect to each series of securities, beginning on the Distribution
Date specified in the prospectus supplement, payments and distributions of
principal of and interest on or, where applicable, of principal or interest
only, each class of securities entitled thereto will be made by the applicable
indenture trustee to the noteholders and by the applicable trustee to the
certificateholders of that series. The timing, calculation, allocation, order,
source, priorities of and requirements for all payments and distributions to
each class of securities of the series will be set forth in the prospectus
supplement.
With respect to each issuer, on each Distribution Date collections on the
related receivables will be withdrawn from the related collection account and
will be paid and distributed to the securityholders as provided in the
prospectus supplement. Credit enhancement will be available to cover any
shortfalls in the amount available for payment or distribution to the
securityholders on that Distribution Date to the extent specified in the
prospectus supplement. If specified in the prospectus
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supplement, payments or distributions in respect of one or more classes of
securities of the applicable series may be subordinate to payments or
distributions in respect of one or more other classes of securities of that
series.
Credit and Cash Flow Enhancement
The amounts and types of credit and cash flow enhancement arrangements, if
any, and the provider thereof, if applicable, with respect to each class of
securities of a given series, will be set forth in the prospectus supplement.
If and to the extent provided in the prospectus supplement, credit and cash
flow enhancement with respect to an issuer or any class or classes of
securities may include any one or more of the following: subordination of one
or more classes of securities to one or more other classes of securities, a
reserve fund, a spread account, a yield maintenance account,
overcollateralization, letters of credit, credit or liquidity facilities,
guarantees on the securities, guarantees on the receivables, guaranteed
investment contracts, swaps or other interest rate protection agreements,
repurchase obligations, cash deposits, other agreements or arrangements with
respect to third party payments, or other support as may be described in the
prospectus supplement or any combination of the foregoing. Any credit
enhancement that constitutes a guarantee of the applicable securities will be
separately registered under the Securities Act unless exempt from registration
under the Securities Act. If specified in the applicable prospectus supplement,
credit or cash flow enhancement for a class of securities may cover one or more
other classes of securities of the same series, and credit or cash flow
enhancement for a series of securities may cover one or more other series of
securities.
The presence of credit enhancement for the benefit of any class or series
of securities is intended to enhance the likelihood of receipt by the
securityholders of that class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that those securityholders
will experience losses. Any form of credit enhancement will have limitations
and exclusions from coverage thereunder, which will be described in the
prospectus supplement. The credit enhancement for a class or series of
securities will not provide protection against all risks of loss and may not
guarantee repayment of the entire principal balance and interest thereon. If
losses occur which exceed the amount covered by any credit enhancement or which
are not covered by any credit enhancement, securityholders of any class or
series will bear an allocable share of deficiencies, as described in the
prospectus supplement. In addition, if a form of credit enhancement covers more
than one class or series of securities, securityholders of any given class will
be subject to the risk that the credit enhancement will be exhausted by the
claims of securityholders of other classes or series.
Insurance on Financed Motor Vehicles
Each obligor on a receivable will be contractually required to maintain
insurance covering physical damage to the obligor's financed motor vehicle in
an amount not less than the lesser of its maximum insurable value or the unpaid
principal balance under the receivable. AmSouth Bank will be required to be
named as loss payee under the policy of insurance obtained by the obligor. Each
financed motor vehicle will be required to be insured against loss and damage
due to fire, theft, transportation, collision and other risks covered by
comprehensive coverage. Since obligors may choose their own insurers to provide
the required coverage, the specific terms and conditions of their policies
vary.
Servicer Reports
The servicer will perform monitoring and reporting functions for the
applicable trustee, indenture trustee, if any, and any credit enhancement
provider, including the preparation and delivery on a
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specified periodic date set forth in the related sale and servicing agreement
of a statement setting forth the amounts on deposit in the collection account,
the sources of those amounts and the amounts to be paid to securityholders. The
statement will also include information regarding the receivables, including
the number and outstanding principal balance of all Defaulted Receivables and
the number of receivables purchased by the servicer or repurchased by AmSouth
Bank.
Purchase of Receivables by the Servicer
The servicer will be required to purchase receivables as to which the
servicer has breached its servicing covenants in any manner that materially and
adversely affects the interest of the securityholders, the applicable issuer or
any applicable credit enhancement provider at a price equal to the outstanding
amount of principal plus accrued interest on the receivable calculated in
accordance with the servicer's customary practice.
Servicing Fee
The servicer will be entitled to compensation for the performance of its
obligations under each sale and servicing agreement. If specified in the
prospectus supplement, the servicer will be entitled to receive on each
Distribution Date a servicing fee in an amount equal to the product of (1) one-
twelfth of a specified percentage per annum set forth in the prospectus
supplement multiplied by (2) the Pool Balance as of the end of the Collection
Period preceding the related Collection Period or, in the case of the first
Distribution Date, the Original Pool Balance. If specified in the prospectus
supplement, the servicer or its designee shall be entitled to retain, as
additional compensation, all late payment charges, extension fees, prepayment
penalties and similar items paid in respect of the receivables. The servicer or
its designee may also be entitled to receive as servicing compensation,
reinvestment earnings on Eligible Investments. The servicer shall pay all
expenses incurred by it in connection with its servicing activities under the
sale and servicing agreement and will not be entitled to reimbursement of its
expenses except to the extent they constitute Liquidation Expenses or expenses
recoverable under an applicable insurance policy.
Waivers and Extensions
Each sale and servicing agreement will require the servicer to use its best
efforts to collect all payments called for and due under the terms and
provisions of the related receivables held by each issuer. Subject to any
limitations set forth in the prospectus supplement, the servicer, consistent
with its normal procedures, will be permitted, in its discretion, to
. waive any late payment charges in connection with delinquent payments on
a receivable,
. waive any prepayment charges,
. grant an extension in order to work out a default or an impending
default in accordance with the servicer's customary practice; provided
that the final maturity date of a receivable may not be extended past
the month preceding the final maturity date of the class of securities
having the latest final maturity date, or
. take any other action specified in the prospectus supplement.
Advances
If and to the extent specified in the prospectus supplement, the servicer
may be required to advance monthly payments of interest or monthly payments of
principal and interest in respect of a delinquent receivable or servicer
approved deferrals of monthly payments that the servicer, in its sole
discretion, expects to receive from subsequent payments on or with respect to
such receivable or from other receivables. The servicer shall be entitled to
reimbursement of advances from subsequent payments on or with respect to the
receivables to the extent described in the prospectus supplement.
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Realization Upon Defaulted Receivables
The servicer will liquidate any receivable with respect to which a default
has occurred and such receivable continues to be in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments. A
liquidation may occur through repossession or sale of the financed motor
vehicle securing the applicable receivable or otherwise. In connection with a
repossession or other conversion, the servicer will follow the normal and usual
procedures adopted by holders of motor vehicle retail installment sales
receivables. In this regard, the servicer may sell the financed motor vehicle
at an auction or other public or private sale, and may take any other action
permitted by applicable law.
Evidence as to Compliance
Each sale and servicing agreement will provide that a firm of independent
public accountants will annually furnish to the related trustee, indenture
trustee and, if applicable, the related credit enhancement provider, a
statement as to compliance by the servicer during the preceding twelve months
or, in the case of the first statement, from the applicable Closing Date, with
specified standards relating to the servicing of the applicable receivables,
the servicer's accounting records and computer files with respect thereto and
other matters.
Each sale and servicing agreement will also provide for annual delivery to
the related trustee, indenture trustee and, if applicable, the related credit
enhancement provider, of a certificate signed by an authorized officer of the
servicer stating that the servicer has fulfilled its obligations under the sale
and servicing agreement throughout the preceding twelve months or, in the case
of the first certificate, from the Closing Date or, if there has been a default
in the fulfillment of any obligation, describing the default. The servicer will
also give the related trustee, indenture trustee and, if applicable, the
related credit enhancement provider, notice of any events of termination of the
servicer under the related sale and servicing agreement.
Copies of the statements and certificates described above may be obtained
by securityholders by a request in writing addressed to the applicable trustee
or indenture trustee.
Material Matters Regarding the Servicer
Each sale and servicing agreement will provide that the servicer may not
resign from its obligations and duties as servicer thereunder except upon
determination that the servicer's performance of its duties is no longer
permissible under applicable law. No resignation of the servicer will become
effective until the related trustee, indenture trustee or a successor servicer
has assumed the servicer's servicing obligations and duties under the sale and
servicing agreement. The servicer is permitted to delegate any and all of its
servicing duties to any of its affiliates or other third parties, provided that
the servicer will remain obligated and liable for servicing the receivables as
if the servicer alone were servicing the receivables. See "Description of the
Transfer and Servicing Agreements--The Trustee and Indenture Trustee" in this
prospectus.
Each sale and servicing agreement will further provide that neither the
servicer nor any of its directors, officers, employees and agents will be under
any liability to the related issuer or the related securityholders for taking
any action or for refraining from taking any action pursuant to the sale and
servicing agreement or for errors in judgment; provided, however, that neither
the servicer nor any other person described above will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties thereunder. In addition, the sale and
servicing agreement will provide that the servicer is under no obligation to
appear in, prosecute or defend any legal action that is not incidental to the
servicer's servicing responsibilities under the sale and servicing
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agreement and that, in its opinion, may cause it to incur any expense or
liability. The servicer may, however, undertake any reasonable action that it
may deem necessary or desirable in respect of the sale and servicing agreement
and the rights and duties of the parties thereto and the interests of the
securityholders thereunder. Any indemnification or reimbursement of the
servicer could reduce the amount otherwise available for distribution to
securityholders.
Any corporation into which the servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the servicer is a party or any corporation succeeding to the business of the
servicer, or, with respect to the servicer's obligation as the servicer, will
be the successor of the servicer under the sale and servicing agreement.
Defaults by the Servicer
A default by the servicer under the sale and servicing agreement may
include any of the following:
. any failure by the servicer to deposit in or credit to the collection
account any amount required to be so deposited or credited, which
failure continues unremedied for five business days after discovery by
the servicer or receipt by the servicer of written notice from the
applicable trustee or indenture trustee, or, if applicable, the related
credit enhancement provider;
. any failure by the servicer or the seller duly to observe or perform in
any material respect any other covenants or agreements of the servicer
or the seller in the sale and servicing agreement, which failure
materially and adversely affects the rights of securityholders or the
applicable trustee or indenture trustee, or, if applicable, the related
credit enhancement provider, and which continues unremedied for 60 days
after the seller, the issuer or the servicer has knowledge of the
failure or the giving of written notice of the failure (A) to the
servicer or the seller, as the case may be, by the applicable trustee or
indenture trustee, or, if applicable, the related credit enhancement
provider or (B) to the servicer or the seller, as the case may be, and
to the applicable trustee or indenture trustee by holders of notes or
certificates, as applicable evidencing not less than 25% in principal
amount of the Controlling Class, or, if applicable, the related credit
enhancement provider, or, for a longer period, not to exceed 120 days,
as may be reasonably necessary to remedy the default, if the default is
capable of remedy within 120 days and the servicer or seller, as
applicable, delivers an officer's certificate to the trustee and
indenture trustee and credit enhancement provider, if any, that the
seller or servicer has commenced or will promptly commence and will
diligently pursue all reasonable efforts to remedy the default;
. specified events of insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings and actions by the
servicer or seller indicating its insolvency, reorganization pursuant to
bankruptcy or similar proceedings or inability to pay its obligations as
they become due;
. if applicable, the reasonable determination by a credit enhancement
provider, if any, that the quality of performance of the servicer is not
in compliance with either the terms of the sale and servicing agreement,
or that the servicer's performance is not adequate, as measured in
accordance with industry standards, in respect of all motor vehicle
receivables serviced by the servicer; and
. any other event specified in the prospectus supplement.
Rights Upon Default by the Servicer
Matters relating to the termination of the related servicer's rights and
obligations and the waiver of any defaults by the related servicer under the
related sale and servicing agreement will be as
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described in the accompanying prospectus supplement under "Description of the
Transfer and Servicing Agreements--Default by the Servicer; Rights Upon Default
by the Servicer" in this prospectus.
Amendment
Each of the sale and servicing agreement, trust agreement and
administration agreement may be amended by the parties thereto, with the
consent of the related credit enhancement provider, if any, but without the
consent of the related securityholders, to cure any ambiguity or defect, to
correct or supplement any provisions therein or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
therein or of modifying in any manner the rights of the noteholders or the
certificateholders; provided that such action shall not, as evidenced by an
opinion of counsel satisfactory to the related trustee and indenture trustee,
as applicable adversely affect in any material respect the interests of any
noteholder or certificateholder.
The sale and servicing agreement, the trust agreement and the
administration agreement may also be amended by the parties thereto with the
consent of, subject to the rights, if any, of the applicable credit enhancement
provider as described in the prospectus supplement,
. the holders of notes of the related series evidencing not less than a
majority of the principal amount of those notes then outstanding, acting
together as a single class and
. the holders of certificates of the related series evidencing not less
than a majority of the principal amount of those certificates then
outstanding, acting together as a single class,
. and in either case with the consent of the related credit enhancement
provider, if any, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the sale
and servicing agreement, the trust agreement or the administration
agreement or of modifying in any manner the rights of the related
noteholders or certificateholders; provided, however, that no amendment
may:
. increase or reduce in any manner the amount of, or accelerate or
delay the timing of, collections of payments on the related
receivables or distributions that are required to be made for the
benefit of the noteholders or certificateholders, or
. reduce the aforesaid percentage of the notes or certificates of any
series which are required to consent to any amendment, without the
consent of the holders of all the outstanding notes or certificates,
as the case may be, of that series.
Termination
With respect to each issuer, the obligations of the seller, the servicer,
the trustee and indenture trustee pursuant to the sale and servicing agreement,
the administration agreement and the indenture will terminate upon the earlier
of
. the maturity or other liquidation of the last related receivable and the
disposition of any amounts received upon liquidation of any remaining
receivables or other assets that are part of the related Issuer Property
and
. (a) the payment to noteholders and certificateholders of the related
series of all amounts required to be paid to them pursuant to the sale
and servicing agreement and the administration agreement and the
disposition of all property held as part of the related issuer, (b) if
applicable, the termination of the related insurance policy in
accordance with its terms and the surrender of the insurance policy to
the related insurer for cancellation, (c) the payment of all amounts
owed to the trustee or indenture trustee under the sale and servicing
agreement, the administration agreement and the indenture and (d) if
applicable, the payment of all amounts owed to any credit enhancement
provider.
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To the extent specified in the prospectus supplement, in order to avoid
excessive administrative expense, the seller, the servicer or other entity
specified in the prospectus supplement will be permitted at its option to
purchase the remaining receivables and other property included in the Issuer
Property of an issuer on any Distribution Date as of which the related Pool
Balance, after giving effect to the principal payments and distributions
otherwise to be made on that Distribution Date, has declined to the percentage
of the Original Pool Balance specified in the prospectus supplement at a price
equal to the aggregate of the outstanding principal amounts of the receivables,
plus accrued interest, calculated in accordance with the servicer's customary
practice, thereof as of the end of the preceding Collection Period, provided
that such price is sufficient to redeem each security issued by such issuer at
a redemption price equal to its outstanding principal amount plus accrued and
unpaid interest at the applicable interest rate. In no event will any
noteholders or certificateholders or the related issuer be subject to any
liability to the entity purchasing the receivables as a result of or arising
out of that entity's purchase of the receivables.
As more fully described in the prospectus supplement, any outstanding notes
of the related issuer will be redeemed concurrently with either of the events
specified in the two preceding paragraphs, and the subsequent distribution to
the related certificateholders, if any, of all amounts required to be
distributed to them pursuant to the applicable trust agreement will effect
early retirement of the certificates of that series. The applicable trustee or
indenture trustee will give written notice of termination to each
securityholder of record. The final payment or distribution to any
securityholder will be made only upon surrender and cancellation of the
securityholder's security at an office or agency of the applicable trustee or
indenture trustee specified in the notice of termination. The applicable
trustee or indenture trustee will return, or cause to be returned, any
unclaimed funds to the issuer.
The Trustee and Indenture Trustee
With respect to each issuer, neither the trustee nor the indenture trustee
will make any representations as to the validity or sufficiency of the related
sale and servicing agreement, trust agreement, administration agreement,
indenture, securities or any related receivables or related documents. As of
the applicable Closing Date, neither the trustee nor the indenture trustee will
have examined the receivables. If no event of default has occurred under the
indenture, the trustee and indenture trustee will be required to perform only
those duties specifically required of it under the related sale and servicing
agreement, trust agreement, administration agreement or indenture, as
applicable. Generally, those duties are limited to the receipt of the various
certificates, reports or other instruments required to be furnished to the
trustee or indenture trustee under the related sale and servicing agreement,
administration agreement, or indenture, as applicable, the making of payments
or distributions to securityholders in the amounts specified in certificates
provided by the servicer and, if applicable, drawing on the related insurance
policy if required to make payments or distributions to securityholders.
With respect to each issuer, the applicable trustee or indenture trustee
will be under no obligation to exercise any of the issuers or powers vested in
it by the sale and servicing agreement, trust agreement or indenture, as
applicable, or to make any investigation of matters arising thereunder or to
institute, conduct or defend any litigation thereunder or in relation thereto
at the request, order or direction of any of the securityholders, unless those
securityholders have offered to the trustee or indenture trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby.
Each trustee and indenture trustee, and any of their affiliates, may hold
securities in their own names. In addition, for the purpose of meeting the
legal requirements of local jurisdictions, each trustee and indenture trustee,
in some circumstances, acting jointly with the servicer, will have the
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power to appoint co-trustees or separate trustees of all or any part of the
related Issuer Property. In the event of the appointment of co-trustees or
separate trustees, all rights, powers, duties and obligations conferred or
imposed upon the trustee or indenture trustee by the related sale and servicing
agreement, trust agreement, administration agreement or indenture, as
applicable, will be conferred or imposed upon the trustee or indenture trustee
and the separate trustee or co-trustee jointly, or, in any jurisdiction in
which the trustee or indenture trustee is incompetent or unqualified to perform
specified acts, singly upon the separate trustee or co-trustee who will
exercise and perform any rights, powers, duties and obligations solely at the
direction of the trustee or indenture trustee.
Each applicable trustee and indenture trustee will be entitled to a fee
which will be payable by the servicer either on an annual basis or any other
basis specified in the prospectus supplement. The related sale and servicing
agreement, trust agreement, administration agreement, and indenture, as
applicable, will further provide that the trustee and indenture trustee will be
entitled to indemnification by the servicer for, and will be held harmless
against, any loss, liability or expense incurred by the trustee or indenture
trustee not resulting from the trustee's or indenture trustee's own willful
misfeasance, bad faith or negligence or by reason of breach of any of their
respective representations or warranties set forth in the related sale and
servicing agreement, trust agreement, administration agreement or indenture, as
applicable.
AmSouth Bank and the seller may maintain other banking relationships with
each applicable trustee and indenture trustee in the ordinary course of
business.
Description of the Administration Agreement
AmSouth Bank or another party specified in the prospectus supplement, in
its capacity as administrator, may enter into an administration agreement,
which may be amended and supplemented from time to time, with the issuer and
the related indenture trustee pursuant to which the administrator will agree,
to the extent provided in the administration agreement, to provide the notices
and to perform other administrative obligations required by the related
indenture. With respect to any issuer, as compensation for the performance of
the administrator's obligations under the applicable administration agreement
and as reimbursement for its expenses related thereto, the administrator will
be entitled to a monthly administration fee in an amount to be set forth in the
prospectus supplement. Any administration fee will be paid by the servicer.
Description of the Indenture
The following summary describes the material terms of each indenture
pursuant to which the notes of a series, if any, will be issued. A form of
indenture has been filed as an exhibit to the registration statement of which
this prospectus is a part. This summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions
of each applicable indenture and the prospectus supplement.
Modification of Indenture
The issuer and the indenture trustee may, subject to the rights, if any, of
the applicable credit enhancement provider described in the prospectus
supplement, with the consent of the noteholders of the related series
evidencing not less than a majority of the principal amount of those notes then
outstanding acting as a single class, and with the consent of the related
credit enhancement provider, if any, execute a supplemental indenture for the
purpose of adding provisions to, changing in any manner or eliminating any
provisions of, the related indenture, or modifying (except as provided below)
in any manner the rights of the related noteholders.
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With respect to the notes of a given series, without the consent of the
holder of each outstanding note affected thereby, no supplemental indenture
will:
. change the due date of any installment of principal of, or interest on,
any note or reduce the principal amount thereof, the interest rate
specified thereon or the redemption price with respect thereto or change
any place of payment or the coin or currency in which any note or any
interest thereon is payable;
. impair the right to institute suit for the enforcement of specified
provisions of the related indenture regarding payment;
. reduce the percentage of the aggregate amount of the outstanding notes
or Controlling Class of notes of the series, the consent of the holders
of which is required for any supplemental indenture or the consent of
the holders of which is required for any waiver of compliance with
specified provisions of the related indenture or of defaults thereunder
and their consequences as provided for in the indenture;
. modify or alter the provisions of the related indenture regarding the
voting of notes held by the applicable issuer, any other obligor on the
notes, the seller or an affiliate of any of them;
. reduce the percentage of the aggregate outstanding amount of the notes
or Controlling Class of notes, the consent of the holders of which is
required to direct the related indenture trustee to sell or liquidate
the receivables if the proceeds of the sale would be insufficient to pay
the principal amount and accrued but unpaid interest on the outstanding
notes and certificates of the series;
. decrease the percentage of the aggregate principal amount of the notes
or the Controlling Class of notes required to amend the sections of the
related indenture which specify the applicable percentage of aggregate
principal amount of the notes of the series necessary to amend the
indenture or the other related agreements;
. affect the calculation of the amount of interest or principal payable on
any note on any distribution date or to affect the rights of noteholders
to the benefit of any provisions for the mandatory redemption of the
notes;
. permit the creation of any lien ranking prior to or pari passu with the
lien of the related indenture with respect to any of the collateral for
the notes or, except as otherwise permitted or contemplated in the
indenture, terminate the lien of the indenture on any collateral or
deprive the holder of any note of the security afforded by the lien of
the indenture; or
. to the extent provided in the prospectus supplement, add provisions to,
change in any manner or eliminate any provisions of, the related
indenture, or modify in any manner the rights of the related
noteholders, relating to any other matters specified in the prospectus
supplement.
The related issuer and the applicable indenture trustee may also enter into
supplemental indentures, without obtaining the consent of the noteholders of
the related series but with the consent of the related credit enhancement
provider, if any, for the purpose of, among other things, adding any provisions
to or changing in any manner or eliminating any of the provisions of the
related indenture or of modifying in any manner the rights of those
noteholders; provided that the action will not as evidenced by an opinion of
counsel satisfactory to the indenture trustee, materially and adversely affect
the interest of any noteholder.
Events of Default Under the Indenture; Rights Upon Event of Default
With respect to the notes of a given series, an event of default under the
related indenture may consist of:
. a default for five days or more in the payment of any interest on any
note of that series;
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. a default in the payment of the principal of, or any installment of the
principal of, any note of that series when the same becomes due and
payable;
. a default in the observance or performance of any covenant or agreement
of the applicable issuer made in the related indenture and the
continuation of any default for a period of 30 days (or a longer period,
not in excess of 90 days, as may be reasonably necessary to remedy such
default, if the default is capable of remedy within 90 days or less and
the servicer on behalf of the trustee delivers an officer's certificate
to the indenture trustee to the effect that the issuer has commenced, or
will promptly commence and diligently pursue, all reasonable efforts to
remedy the default) after notice thereof is given to the issuer by the
applicable indenture trustee or, if applicable, the related credit
enhancement provider, or to the issuer and the indenture trustee by the
holders of at least 25% of the principal amount of the Controlling Class
of notes;
. any representation or warranty made by the issuer in the related
indenture or in any certificate delivered pursuant thereto or in
connection therewith was incorrect in any material respect as of the
time made, and that breach has not been cured within 30 days (or a
longer period, not in excess of 90 days, as may be reasonably necessary
to remedy such default, if the default is capable of remedy within 90
days or less and the servicer on behalf of the trustee delivers an
officer's certificate to the indenture trustee to the effect that the
issuer has commenced, or will promptly commence and diligently pursue,
all reasonable efforts to remedy the default) after notice thereof is
given to the issuer by the applicable indenture trustee or, if
applicable, the related credit enhancement provider, or to the issuer,
the related credit enhancement provider, insurer, if any, and the
indenture trustee by the holders of at least 25% of the principal amount
of the Controlling Class;
. specified events of bankruptcy, insolvency, receivership or liquidation
of the applicable issuer; or
. other events, if any, set forth in the prospectus supplement.
The failure to pay principal on a class of notes generally will not result
in the occurrence of an event of default under the indenture until the final
scheduled Distribution Date for that class of notes.
With respect to each series that includes notes, the rights and remedies of
the related indenture trustee, the related holders of the notes and the related
credit enhancement provider, if any, will be described in the prospectus
supplement.
Material Covenants
Each indenture will provide that the related issuer may not consolidate
with or merge into any other entity, unless:
. the entity formed by or surviving any consolidation or merger is
organized under the laws of the United States, any state thereof or the
District of Columbia;
. the entity expressly assumes the issuer's obligation to make due and
punctual payments on the notes of the related series and the performance
or observance of every agreement and covenant of the issuer under the
indenture;
. no event of default under the indenture shall have occurred and be
continuing immediately after the merger or consolidation;
. the issuer has been advised that the ratings of the securities of the
applicable series then in effect would not be reduced or withdrawn by
any rating agency as a result of the merger or consolidation;
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. the issuer has received an opinion of counsel to the effect that the
consolidation or merger would have no material adverse tax consequence
to the issuer or to any holder of the securities of the issuer;
. any action as is necessary to maintain the lien and security interest
created by the related indenture has been taken; and
. any other conditions specified in the prospectus supplement have been
satisfied.
Additionally, the related indenture will provide that each issuer will not,
among other things:
. except as expressly permitted by the applicable indenture, the
applicable sale and servicing agreement, the applicable trust agreement,
the applicable administration agreement or the other related documents
with respect to the issuer, sell, transfer, exchange or otherwise
dispose of any of the assets of the issuer;
. claim any credit on or make any deduction from the principal and
interest payable in respect of the notes of the related series (other
than amounts withheld under the Internal Revenue Code of 1986, as
amended, or applicable state law) or assert any claim against any
present or former holder of the notes because of the payment of taxes
levied or assessed upon the issuer;
. dissolve or liquidate in whole or in part;
. permit the validity or effectiveness of the related indenture to be
impaired or permit any person to be released from any covenants or
obligations with respect to the notes under the indenture except as may
be expressly permitted thereby;
. permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon
or burden the assets of the issuer or any part thereof, or any interest
therein or the proceeds thereof; or
. incur, assume or guarantee any indebtedness other than indebtedness
incurred pursuant to the related notes and the related indenture, or
otherwise in accordance with the related documents with respect to the
issuer.
List of Noteholders
With respect to the notes of any issuer, three or more holders of the notes
of any issuer or one or more holders of such notes evidencing not less than 25%
of the aggregate outstanding principal amount of the notes may, by written
request to the related indenture trustee accompanied by a copy of the
communication that the applicant proposes to send, obtain access to the list of
all noteholders maintained by such indenture trustee for the purpose of
communicating with other noteholders with respect to their rights under the
related indenture or under such notes. Such indenture trustee may elect not to
afford the requesting noteholders access to the list of noteholders if it
agrees to mail the desired communication or proxy, on behalf of and at the
expense of the requesting noteholders, to all noteholders of such issuer.
Annual Compliance Statement
Each issuer will be required to file annually with the related indenture
trustee a written statement as to the fulfillment of its obligations under the
indenture.
Indenture Trustee's Annual Report
The indenture trustee for each issuer will be required to mail each year to
all related noteholders a brief report setting forth the following:
. its eligibility and qualification to continue as indenture trustee under
the related indenture;
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. if the related indenture requires the indenture trustee to make
advances, any amount advanced by it under the indenture;
. the amount, interest rate and maturity date of any indebtedness owing by
the issuer to the applicable indenture trustee in its individual
capacity;
. the property and funds physically held by the indenture trustee in its
capacity as indenture trustee; and
. any action taken by it that materially affects the related notes and
that has not been previously reported.
Satisfaction and Discharge of Indenture
An indenture will be discharged with respect to the collateral securing the
related notes upon the delivery to the related indenture trustee for
cancellation of all the related notes or, subject to specified limitations,
upon deposit with the indenture trustee of funds sufficient for the payment in
full of all of the notes.
The Indenture Trustee
The indenture trustee of notes for each issuer will be specified in the
prospectus supplement. The principal office of the indenture trustee will be
specified in the prospectus supplement. The indenture trustee for any trust may
resign at any time, in which event the issuer will be obligated to appoint a
successor trustee for such issuer. The issuer will remove an indenture trustee
if such indenture trustee ceases to be eligible to continue as such under the
related indenture or if such indenture trustee becomes insolvent. In such
circumstances, the issuer will be obligated to appoint a successor trustee for
the notes of the applicable issuer. In addition, a majority of the Controlling
Class of notes may remove the indenture trustee without cause and may appoint a
successor indenture trustee. Any resignation or removal of the indenture
trustee and appointment of a successor trustee for the notes of the issuer does
not become effective until acceptance of the appointment by the successor
trustee for such issuer.
Additional matters relating to the indenture trustee are described under
"Description of the Transfer and Servicing Agreements--The Trustee and
Indenture Trustee."
Material Legal Aspects of the Receivables
Rights in the Receivables
The transfer of the receivables by AmSouth Bank to the seller, and by the
seller to the applicable issuer, and the pledge thereof to an indenture
trustee, if any, the perfection of the security interests in the receivables
and the enforcement of rights to realize on the related financed motor vehicles
as collateral for the receivables are subject to a number of federal and state
laws, including the Uniform Commercial Code and certificate of title act as in
effect in various states. The servicer and the seller will take the actions
described below to perfect the rights of the applicable trustee and the
indenture trustee in the receivables.
Under each sale and servicing agreement or indenture, as applicable, the
servicer or a subservicer may be appointed by the applicable trustee or
indenture trustee to act as the custodian of the receivables. The servicer or a
subservicer, as the custodian, will have physical possession of the
receivables. While the receivables will not be physically marked to indicate
the ownership interest thereof by the issuer, appropriate UCC-1 financing
statements reflecting the sale and assignment of the receivables by AmSouth
Bank to the seller and by the seller to the issuer will be filed to perfect
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that interest and give notice of the issuer's ownership interest in, and the
indenture trustee's security interest in, the receivables. If, through
inadvertence or otherwise, any of the receivables were sold or pledged to
another party who purchased the receivables in the ordinary course of its
business and took possession of the receivables, the purchaser would acquire an
interest in the receivables superior to the interests of the issuer and the
indenture trustee if the purchaser acquired the receivables for value and
without actual knowledge of the issuer's and the indenture trustee's interests
in the receivables which could cause investors to suffer losses on their
securities.
Generally, the rights held by assignees of the receivables, including
without limitation the issuer and the indenture trustee, will be subject to
. all the terms of the contracts related to or evidencing the receivable
and
. any other defense or claim of the obligor against the assignor of such
receivable which accrues before the obligor receives notification of the
assignment. Because it is not anticipated that any of the obligors would
receive notice of the assignment of any of the receivables, the issuer
and the indenture trustee, if any, will be subject to defenses or claims
of the obligor against the assignor even if such claims are unrelated to
the receivable.
Security Interests in the Financed Motor Vehicles
Obtaining Security Interests in Financed Motor Vehicles. In all states in
which the receivables have been originated, retail installment sales
receivables such as the receivables evidence the credit sale of automobiles
and/or light-duty trucks by dealers to consumers. The receivables also
constitute personal property security agreements and include grants of security
interests in the vehicles under the applicable Uniform Commercial Code.
Perfection of security interests in the vehicles is generally governed by the
motor vehicle registration laws of the state in which the vehicle is located.
In most states, a security interest in an automobile or a light-duty truck is
perfected by obtaining the certificate of title to the financed motor vehicle
or the notation of the secured party's lien on the vehicle's certificate of
title. AmSouth Bank will warrant to the seller in the receivables purchase
agreement that AmSouth Bank has taken all steps necessary to obtain a perfected
first priority security interest with respect to all financed motor vehicles
securing the receivables and that the security interest has been assigned to
the issuer. If AmSouth Bank fails, because of clerical errors or otherwise, to
effect or maintain the notation of the security interest on the certificate of
title relating to a financed motor vehicle, the issuer may not have a first
priority security interest in that financed motor vehicle.
If AmSouth Bank did not take the steps necessary to cause the security
interest of AmSouth Bank to be noted on the certificate of title for a financed
vehicle until after 20 days after the date such security interest was created
and the related obligor was insolvent on the date such steps were taken, the
perfection of such security interest may be avoided as a preferential transfer
under bankruptcy law if the obligor under the related receivables becomes the
subject of a bankruptcy proceeding commenced within 90 days of the date of such
perfection, in which case AmSouth Bank, and subsequently, the seller, the
issuer and the indenture trustee, if any, would be treated as an unsecured
creditor of such obligor.
Perfection of Security Interests in Financed Motor Vehicles. AmSouth Bank
will sell the receivables and assign its security interest in each financed
motor vehicle to the seller. The seller will sell the receivables and assign
the security interest in each financed motor vehicle to the related issuer.
However, because of the administrative burden and expense, the servicer, the
seller and the issuer will not amend any certificate of title to identify the
issuer as the new secured party on the certificates of title relating to the
financed motor vehicles. Accordingly, AmSouth Bank will continue to be named as
the secured party on the certificates of title relating to the financed motor
vehicles. In most states, assignments such as those under the receivables
purchase agreement and the sale and
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servicing agreement relating to each issuer, together with a perfected security
interest in the related financed vehicles, is an effective conveyance of the
security interests in the financed vehicles without amendment of the lien noted
on the related certificate of title, and the new secured party succeeds to the
assignor's rights as the secured party. However, there exists a risk in not
identifying the related issuer as the new secured party on the certificate of
title that, through fraud or negligence, the security interest of the issuer
could be released or primed.
In the absence of fraud, forgery or neglect by the financed motor vehicle
owner or administrative error by state recording officials, notation of the
lien of AmSouth Bank generally will be sufficient to protect the related issuer
against the rights of subsequent purchasers of a financed motor vehicle or
subsequent lenders who take a security interest in a financed motor vehicle. If
there are any financed motor vehicles as to which AmSouth Bank has failed to
perfect the security interest assigned to the related issuer, that security
interest would be subordinate to, among others, subsequent purchasers of the
financed motor vehicles and holders of perfected security interests.
Under the laws of most states, the perfected security interest in a
financed motor vehicle would continue for four months after a vehicle is moved
to a state other than the state in which it is initially registered and
thereafter until the vehicle owner re-registers the vehicle in the new state. A
majority of states require surrender of a certificate of title to re-register a
vehicle. Therefore, the servicer will provide the department of motor vehicles
or other appropriate state or county agency of the state of relocation with the
certificate of title so that the owner can effect the re-registration. If the
financed motor vehicle owner moves to a state that provides for notation of a
lien on the certificate of title to perfect the security interests in the
financed motor vehicle, absent clerical errors or fraud, AmSouth Bank would
receive notice of surrender of the certificate of title if its lien is noted
thereon. Accordingly, the secured party will have notice and the opportunity to
re-perfect the security interest in the financed motor vehicle in the state of
relocation. If the financed motor vehicle owner moves to a state which does not
require surrender of a certificate of title for registration of a motor
vehicle, re-registration could defeat perfection. In the ordinary course of
servicing its portfolio of motor vehicle installment sales receivables, AmSouth
Bank takes steps to effect re-perfection upon receipt of notice of registration
or information from the obligor as to relocation. Similarly, when an obligor
under a receivable sells a financed motor vehicle, the servicer must provide
the owner with the certificate of title, or the servicer will receive notice as
a result of its lien noted thereon and accordingly will have an opportunity to
require satisfaction of the related receivable before release of the lien.
Under each sale and servicing agreement, the servicer, at its expense, will be
obligated to take appropriate steps to maintain the continuous notation of
AmSouth Bank as the lienholder on the certificate of title for the financed
motor vehicle.
Under the laws of most states, statutory liens such as liens for unpaid
taxes, liens for towing, storage and repairs performed on a motor vehicle,
motor vehicle accident liens and liens arising under various state and federal
criminal statutes take priority over a perfected security interest in a
financed motor vehicle. The Internal Revenue Code also grants priority to
federal tax liens over the lien of a secured party. The laws of most states and
federal law permit the confiscation of motor vehicles by governmental
authorities under some circumstances if used in or acquired with the proceeds
of unlawful activities, which may result in the loss of a secured party's
perfected security interest in a confiscated vehicle. With respect to each
issuer, the seller will represent in each sale and servicing agreement that, as
of the initial issuance of the securities of the related series, no state or
federal liens exist with respect to any financed motor vehicle securing payment
on any related receivable. However, liens could arise, or a confiscation could
occur, at any time during the term of a receivable. It is possible that no
notice will be given to the servicer in the event that a lien arises or a
confiscation occurs, and any lien arising or confiscation occurring after the
related Closing Date would not give rise to AmSouth Bank's repurchase
obligations under the related receivables purchase agreement.
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Repossession
In the event of a default by an obligor, the holder of the related retail
installment sales receivable has all the remedies of a secured party under the
Uniform Commercial Code, except as specifically limited by other state laws.
Among the Uniform Commercial Code remedies, the secured party has the right to
repossess a financed vehicle by self-help means, unless that means would
constitute a breach of the peace or is otherwise limited by applicable state
law. Unless a financed vehicle is voluntarily surrendered, self-help
repossession is accomplished simply by retaking possession of the financed
vehicle. In cases where the obligor objects or raises a defense to
repossession, or if otherwise required by applicable state law, a court order
must be obtained from the appropriate state court, and the financed vehicle
must then be recovered in accordance with that order. In some jurisdictions,
the secured party is required to notify the obligor of the default and the
intent to repossess the collateral and to give the obligor a time period within
which to cure the default prior to repossession. Generally, this right to cure
may only be exercised on a limited number of occasions during the term of the
related receivable. Other jurisdictions permit repossession without prior
notice if it can be accomplished without a breach of the peace (although in
some states, a course of conduct in which the creditor has accepted late
payments has been held to create a right by the obligor to receive prior
notice). In many states, after the financed vehicle has been repossessed, the
obligor may reinstate the related receivable by paying the delinquent
installments and other amounts due.
Notice of Sale; Redemption Rights
In the event of a default by the obligor, some jurisdictions require that
the obligor be notified of the default and be given a time period within which
the obligor may cure the default prior to repossession. Generally, this right
of reinstatement may be exercised on a limited number of occasions in any one-
year period.
The Uniform Commercial Code and other state laws require the secured party
to provide the obligor with reasonable notice of the date, time and place of
any public sale and/or the date after which any private sale of the collateral
may be held. In addition, some states also impose substantive timing
requirements on the sale of repossessed vehicles and/or various substantive
timing and content requirements relating to those notices. In some states,
after a financed vehicle has been repossessed, the obligor may redeem the
collateral by paying the delinquent installments and other amounts due. The
obligor has the right to redeem the collateral prior to actual sale or entry by
the secured party into a contract for sale of the collateral by paying the
secured party the unpaid principal balance of the obligation, accrued interest
thereon, reasonable expenses for repossessing, holding and preparing the
collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses. In some other
states, the obligor may redeem the collateral by payment of delinquent
installments on the unpaid principal balance of the related obligation.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the repossessed vehicles generally will be
applied first to the expenses of resale and repossession and then to the
satisfaction of the indebtedness. While some states impose prohibitions or
limitations on deficiency judgments if the net proceeds from resale do not
cover the full amount of the indebtedness, a deficiency judgment can be sought
in those states that do not prohibit or limit those judgments. However, the
deficiency judgment would be a personal judgment against the obligor for the
shortfall, and a defaulting obligor can be expected to have very little capital
or sources of income available following repossession. Therefore, in many
cases, it may not be useful to seek a deficiency judgment or, if one is
obtained, it may be settled at a significant discount. In addition to the
notice requirement, the Uniform Commercial Code requires that every
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aspect of the sale or other disposition, including the method, manner, time,
place and terms, be "commercially reasonable." Generally, courts have held that
when a sale is not "commercially reasonable," the secured party loses its right
to a deficiency judgment.
The Uniform Commercial Code also permits the debtor or other interested
party to recover for any loss caused by noncompliance with the provisions of
the Uniform Commercial Code. In particular, if the collateral is consumer
goods, the Uniform Commercial Code grants the debtor the right to recover in
any event an amount not less than the credit service charge plus 10% of the
principal amount of the debt. In addition, prior to a sale, the Uniform
Commercial Code permits the debtor or other interested person to prohibit or
restrain on appropriate terms the secured party from disposing of the
collateral if it is established that the secured party is not proceeding in
accordance with the "default" provisions under the Uniform Commercial Code.
Occasionally, after resale of a repossessed vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the
Uniform Commercial Code requires the creditor to remit the surplus to any
holder of a subordinate lien with respect to the vehicle or if no subordinate
lienholder exists, the Uniform Commercial Code requires the creditor to remit
the surplus to the obligor.
Consumer Protection Laws
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z,
the Soldiers' and Sailors' Civil Relief Act of 1940, state adoptions of the
National Consumer Act and of the Uniform Consumer Credit Code, state motor
vehicle retail installment sales acts, state "lemon" laws and other similar
laws. Also, state laws impose finance charge ceilings and other restrictions on
consumer transactions and require contract disclosures in addition to those
required under federal law. These requirements impose specific statutory
liabilities upon creditors who fail to comply with their provisions. In some
cases, this liability could affect an assignee's ability to enforce consumer
finance contracts such as the receivables described above.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
has the effect of subjecting any assignee of the seller in a consumer credit
transaction, and related creditors and their assignees, to all claims and
defenses which the obligor in the transaction could assert against the seller.
Liability under the FTC rule is limited to the amounts paid by the obligor
under the contract, and the holder of the contract may also be unable to
collect any balance remaining due thereunder from the obligor. The FTC rule is
generally duplicated by the Uniform Consumer Credit Code, other state statutes
or the common law in some states. Liability of assignees for claims under state
consumer protection laws may differ though. In Alabama, for example, claims
under Alabama consumer protection laws against the assignee are limited to the
amount owing to the assignee at the time the claim or defense is asserted
against the assignee.
Most of the receivables will be subject to the requirements of the FTC
rule. Accordingly, each issuer, as holder of the related receivables, will be
subject to any claims or defenses that the purchaser of the applicable financed
motor vehicle may assert against the seller of the financed motor vehicle. As
to each obligor, those claims under the FTC rule are limited to a maximum
liability equal to the amounts paid by the obligor on the related receivable.
AmSouth Bank will represent in each receivables purchase agreement that each of
the receivables, and the sale of the related financed motor vehicle thereunder,
complied with all material requirements of applicable laws and the regulations
issued pursuant thereto.
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Any shortfalls or losses arising in connection with the matters described
in the three preceding paragraphs, to the extent not covered by amounts payable
to the securityholders from amounts available under a credit enhancement
mechanism, could result in losses to securityholders.
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the Uniform Commercial Code and related laws violate the
due process protections provided under the 14th Amendment to the Constitution
of the United States. Courts have generally upheld the notice provisions of the
Uniform Commercial Code and related laws as reasonable or have found that the
repossession and resale by the creditor do not involve sufficient state action
to afford constitutional protection to borrowers.
Certain Matters Relating to Conservatorship and Receivership
AmSouth Bank is chartered as an Alabama state bank and is subject to
regulation and supervision by, among others, the Alabama Superintendent of
Banking. The rights of creditors of a failed bank are determined in accordance
with the applicable provisions of Alabama law and applicable federal law. When
the Alabama Superintendent concludes that an Alabama state bank is in an
unsound or unsafe condition to transact business, the superintendent, with the
approval of the Banking Board, is authorized to take possession of the property
and business of such bank and retain such possession until such bank shall
resume business or a receiver is appointed. Once the Superintendent has taken
possession of the bank, he may appoint a receiver to liquidate and distribute
its assets. Upon the appointment of a receiver to liquidate a bank, the
possession of and title to all assets, business and property of such bank vests
in the receiver. The receiver may be the FDIC or any other agency or
corporation created by the United States to act in such capacity or any person
selected by the superintendent.
The FDIC, however, has broad discretion and authority to appoint itself
conservator or receiver of any insured state depository institution, even if
the state has appointed another person as receiver. The FDIC may appoint itself
as conservator or receiver for AmSouth Bank if the FDIC determines that one or
more of certain conditions exist, such as, but not limited to, AmSouth Bank's
assets being insufficient for obligations, substantial dissipation of assets or
earnings, the existence of unsafe or unsound conditions, the willful violation
of a cease and desist order, concealment of records or assets, inability to
meet obligations, the incurrence or likelihood of losses resulting in depletion
of substantially all of its capital, violations of law likely to cause
financial deterioration, cessation of insured status or undercapitalization of
AmSouth Bank. The FDIC would likely exercise its right to act as receiver under
the broad authority discussed above in order to protect its interests as the
insurer of insured deposit accounts.
The FDIA sets forth certain powers that the FDIC in its capacity as
conservator or receiver for AmSouth Bank could exercise. To the extent that
AmSouth Bank has granted a security interest in the receivables to the issuer,
and that interest was validly perfected before the appointment of the FDIC as
conservator or receiver and before AmSouth Bank's insolvency, was not taken in
contemplation of the insolvency of AmSouth Bank, and certain other conditions
are satisfied, including that such security interest was not taken with the
intent to hinder, delay or defraud AmSouth Bank or the creditors of AmSouth
Bank, such security interest, to the extent of the issuers "actual, direct
compensatory damages" as described below, should not be subject to avoidance if
the purchase agreement and sale and servicing agreement and related documents
are approved by AmSouth Bank and are continuously maintained as records of
AmSouth Bank, as required by the FDIA, and the transactions represent bona fide
and arm's length transactions undertaken for
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adequate consideration in the ordinary course of business and the secured
party is neither an insider nor an affiliate of AmSouth Bank. In addition, the
FDIC has promulgated, effective September 11, 2000, a regulation on the FDIC's
treatment, as conservator or receiver, of financial assets transferred in
connection with a securitization or participation. This regulation provides,
among other things, that the FDIC will not seek to recharacterize as loans
transfer by insured depository institutions in connection with securitization
if the securitization satisfies the conditions of the regulation. In general,
these conditions require that the transfer satisfy the requirements of sale
accounting under GAAP. As a result payments to the issuer with respect to the
receivables, up to the amount of "actual, direct compensatory damages," as
described below, should not be subject to recovery by the FDIC as conservator
or receiver of AmSouth Bank. The foregoing conclusions regarding avoidance or
recovery are based on the FDIC's regulations on the treatment by the FDIC, as
conservator or receiver, of financial assets transferred in connection with a
securitization or participation, which take effect September 11, 2000, and
FDIC general counsel opinions and policy statements regarding the application
of certain provisions of the FDIA. However, such opinions and policy
statements are not necessarily binding on the FDIC and the application of the
FDIC's regulation to any particular transaction is subject to certain
conditions. If, the FDIC, as conservator or receiver for AmSouth Bank were to
assert a contrary position, the FDIC's regulation on the treatment by the
FDIC, as conservator or receiver, of financial assets transferred in
connection with a securitization or participation were not applicable, or the
FDIC were to require the trustee or indenture trustee to establish its right
to those payments by submitting to and completing the administrative claims
procedure established under the FDIA, or the conservator or receiver were to
request a stay of proceedings with respect to AmSouth Bank as provided under
the FDIA, delays in payments on the securities and possible reductions in the
amount of those payments could occur. The FDIA provides that the FDIC may
repudiate contracts, including secured contracts, determined by it to be
burdensome and that claims for repudiated obligations are limited to actual,
direct compensatory damages determined as of the date of the appointment of
the conservator or receiver. The FDIA does not define the term "actual direct
compensatory damages." On April 10, 1990, the RTC, formerly a sister agency of
the FDIC, adopted a statement of policy with respect to the payment of
interest on direct collateralized borrowings of savings associations. The RTC
policy statement states that interest on such borrowings will be payable at
the contract rate up to the date of the redemption or payment by the
conservator, receiver, or the trustee of an amount equal to the principal owed
plus the contract rate of interest up to the date of such payment or
redemption, plus any expenses of liquidation if provided for in the contract
to the extent secured by the collateral. However, in a case involving zero-
coupon bonds issued by a savings association which were repudiated by the RTC,
a federal district court in the Southern District of New York held, in 1993,
that the RTC was obligated to pay holders the fair market value of repudiated
bonds as of the date of repudiation. The FDIC, as conservator or receiver,
would also have the rights and powers conferred under state law.
In addition, while AmSouth Bank is the servicer, cash collections held by
the servicer may, subject to certain conditions, be commingled and used for
the benefit of the servicer prior to the date on which such collections are
required to be deposited in the collection account. In the event of the
conservatorship or receivership of the servicer or, in certain circumstances,
the lapse of certain time periods, the issuer may not have a perfected
interest in such collections and, in such event, the issuer may suffer a loss
of all or part of such collections which may result in a loss to
securityholders.
A conservator or receiver may also have the power to cause the early sale
of the receivables and the early retirement of the securities, to prohibit the
continued transfer of receivables to the issuer during any prefunding or
revolving period, and to repudiate any servicing obligations of AmSouth Bank.
In addition, in the event of a servicer termination event relating to the
insolvency of the servicer, if no servicer termination event other than such
conservatorship or receivership or insolvency exists, the conservator or
receiver for the servicer may have the power to prevent the appointment of a
successor servicer.
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Alabama law provides that a receiver of an Alabama bank must assume or
reject an executory contract within sixty days after appointment. Alabama
statutes governing bank receivership do not expressly limit the amount of
damages which may be claimed by or awarded to a party arising out of a claim
against an Alabama bank in receivership, whether the claim arises from
repudiation or otherwise, and contains no provision which expressly allows or
authorizes the receiver of an Alabama bank to override or void a perfected
security interest in the assets of the failed bank.
Repurchase Obligation
Under each receivables purchase agreement, AmSouth Bank will make
representations and warranties relating to the validity, subsistence,
perfection and priority of the security interest in each related financed motor
vehicle as of the related Closing Date. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of the Receivables." Accordingly, if
any defect exists in the perfection of the security interest in the name of
AmSouth Bank in any financed motor vehicle as of the Closing Date and that
defect adversely affects the related issuer's interest in the related
receivable, the defect would constitute a breach of a warranty under the
receivables purchase agreement and would create an obligation of AmSouth Bank
to repurchase the receivable unless the breach is cured. Additionally, in the
sale and servicing agreement the servicer will make affirmative covenants
regarding, among other things, the maintenance of the security interest in the
name of AmSouth Bank in each financed motor vehicle, the breach of which would
create an obligation of the servicer to purchase any affected receivable from
the related issuer unless the breach is cured.
Other Limitations
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including the Bankruptcy Code and similar
state laws, may interfere with or affect the ability of a secured party to
realize upon collateral or to enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the Bankruptcy Code, a court may prevent a creditor
from repossessing a vehicle, and, as part of the rehabilitation plan, reduce
the amount of the secured indebtedness to the market value of the vehicle at
the time of bankruptcy, as determined by the court, leaving the creditor as a
general unsecured creditor for the remainder of the indebtedness. A bankruptcy
court may also reduce the monthly payments due under a receivable or change the
rate of interest and time of repayment of the indebtedness.
Under the terms of the Soldiers' and Sailors' Relief Act of 1940, an
obligor who enters the military service after the origination of the obligor's
receivable, including an obligor who is a member of the National Guard or is in
reserve status at the time of the origination of the obligor's receivable and
is later called to active duty, may not be charged interest above an annual
rate of 6% during the period of the obligor's active duty status, unless a
court orders otherwise upon application of the lender. In addition, pursuant to
the Military Reservist Relief Act, under some circumstances, California
residents called into active duty with the reserves can delay payments on
retail installment sales contracts, including the receivables described above,
for a period, not to exceed 180 days, beginning with the order to active duty
and ending 30 days after release. It is possible that the foregoing could have
an effect on the ability of the servicer to collect the full amount of interest
owing on some of the receivables. In addition, the acts described above impose
limitations that would impair the ability of the servicer to repossess an
affected receivable during the obligor's period of active duty status. Thus, in
the event that an affected receivable is in default, there may be delays and
losses occasioned by the inability to exercise the issuer's rights with respect
to the related financed motor vehicle in a timely fashion.
Any shortfalls or losses arising in connection with the matters described
in the two preceding paragraphs, to the extent not covered by amounts payable
to the securityholders from amounts available under a credit enhancement
mechanism, could result in losses to securityholders.
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Material Federal Income Tax Consequences
Set forth below is a discussion of the material United States federal
income tax consequences relevant to the purchase, ownership and disposition of
the notes and the certificates of any series. This discussion is based upon
current provisions of the Internal Revenue Code, existing and proposed Treasury
Regulations thereunder, current administrative rulings, judicial decisions and
other applicable authorities. To the extent that the following summary relates
to matters of law or legal conclusions with respect thereto, such summary
represents the opinion of Mayer, Brown & Platt, Special Tax Counsel for each
issuer, subject to the qualifications set forth in this section. There are no
cases or Internal Revenue Service rulings on similar transactions involving
both debt and equity interests issued by a trust with terms similar to those of
the notes and the certificates. As a result, there can be no assurance that the
IRS will not challenge the conclusions reached in this prospectus, and no
ruling from the IRS has been or will be sought on any of the issues discussed
below. Furthermore, legislative, judicial or administrative changes may occur,
perhaps with retroactive effect, which could affect the accuracy of the
statements and conclusions set forth in this prospectus as well as the tax
consequences to noteholders and certificateholders.
Special Tax Counsel has prepared or reviewed the statements under the
heading "Material Federal Income Tax Consequences" and is of the opinion that
these statements discuss all material federal income tax consequences to
investors of the purchase, ownership and disposition of the notes or
certificates. The tax opinions of Special Tax Counsel with respect to each type
of trust or limited liability company and the notes or certificates to be
issued by the trusts or limited liability companies which have been delivered
in connection with the filing of this prospectus are subject to certain
assumptions, conditions and qualifications as described in detail below. Prior
to the time a trust or limited liability company is established and notes or
certificates are issued, Special Tax Counsel will deliver another opinion,
regarding the same tax issues, to either confirm the legal conclusions and the
accuracy of those assumptions or conditions or to address any changes or
differences which may exist at that time. To the extent any given series of
notes or certificates, or the form of any trust or limited liability company,
differs from the assumptions or conditions set forth in the following
discussion or changes occur in the relevant tax laws, or in their application,
any additional tax consequences will be disclosed in the applicable prospectus
supplement and legal conclusions will be provided in an opinion of Special Tax
Counsel. Each of those subsequent opinions of Special Tax Counsel will be filed
with the Securities and Exchange Commission under Form 8-K prior to sale.
However, the following discussion does not purport to deal with all aspects
of federal income taxation that may be relevant to the noteholders and
certificateholders in light of their personal investment circumstances nor,
except for limited discussions of particular topics, to holders subject to
special treatment under the federal income tax laws, including:
. financial institutions,
. broker-dealers,
. life insurance companies,
. tax-exempt organizations,
. persons that hold the notes or certificates as a position in a
"straddle" or as part of a synthetic security or "hedge," "conversion
transaction" or other integrated investment,
. persons that have a "functional currency" other than the U.S. dollar,
and
. investors in pass-through entities.
This information is directed to prospective purchasers who purchase notes
or certificates in the initial distribution thereof, who are citizens or
residents of the United States, including domestic
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corporations and partnerships, and who hold the notes or certificates as
"capital assets" within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended. We suggest that prospective investors consult with
their tax advisors as to the federal, state, local, foreign and any other tax
consequences to them of the purchase, ownership and disposition of the notes or
the certificates.
The following discussion addresses notes, other than Strip Notes or any
other series of notes specifically identified as receiving different tax
treatment in the accompanying prospectus supplement, which the seller, the
servicer and the noteholders will agree to treat as indebtedness secured by the
receivables. Upon the issuance of each series of notes, Special Tax Counsel is
of the opinion that the notes will be treated as debt for federal income tax
purposes.
The following discussion also addresses certificates falling into three
general categories:
(1) Certificates ("Trust Certificates") representing interests in a
trust which the seller, the servicer and the applicable certificateholders
will agree to treat as equity interests in a grantor trust (a "Tax
Trust"). Upon the issuance of each series of notes or certificates, if the
prospectus supplement specifies that the trust is a grantor trust, Special
Tax Counsel is of the opinion that the trust will not be taxable as an
association or publicly traded partnership taxable as a corporation, but
will be classified as a grantor trust under Sections 671 through 679 of
the Internal Revenue Code. Special counsel is of the opinion that the
trust will not be subject to United States federal income tax, and Special
Tax Counsel is of the opinion that the Trust Certificates represent a pro
rata undivided interest in the income and assets of the Tax Trust.
(2) Certificates or membership interests--including Strip
Certificates--and Strip Notes ("Partnership Certificates"), representing
interests in a trust or limited liability company which the seller, the
servicer and the applicable holders will agree to treat as equity
interests in a partnership (a "Tax Partnership"). Upon the issuance of the
notes or Partnership Certificates, if the prospectus supplement specifies
that the trust or limited liability company is a partnership, Special Tax
Counsel is of the opinion that the trust or limited liability company will
be treated as a partnership and not as an association or publicly traded
partnership taxable as a corporation and that the trust or limited
liability company will not be subject to United States federal income tax.
Special Tax Counsel is also of the opinion that the Partnership
Certificates will be treated as partnership interests in the Tax
Partnership.
(3) Certificates or membership interests ("Tax Non-Entity
Certificates"), all of which are owned by the seller, representing
interests in a trust or limited liability company, as the case may be,
which the seller and the servicer will agree to treat as a division of the
seller and hence disregarded as a separate entity, in each case for
purposes of federal, state and local income and franchise taxes (a "Tax
Non-Entity"). Upon the issuance of each series of notes or certificates,
if the prospectus supplement specifies that the trust or limited liability
company is a disregarded entity, Special Tax Counsel is of the opinion
that the trust or limited liability company will be disregarded and that
the trust or limited liability company will not be subject to United
States federal income tax. Special Tax Counsel is also of the opinion that
the Tax Non-Entity Certificates represent direct ownership of the assets.
The prospectus supplement for each series of certificates will indicate whether
the associated trust is a Tax Trust, Tax Partnership or Tax Non-Entity. Because
the seller will treat each Tax Trust as a grantor trust, each Tax Partnership
as a partnership, and each Tax Non-Entity as a division of seller, for federal
income tax purposes, the seller will not comply with the tax reporting
requirements that would apply under any alternative characterizations of a Tax
Trust, Tax Partnership or Tax Non-Entity. For purposes of this discussion,
references to a "holder" are to the beneficial owner of a note, Trust
Certificate, Partnership Certificate or Tax Non-Entity Certificate, as the
context may require.
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The Notes
Characterization as Debt. For each series of notes, except for Strip Notes
and any series which is specifically identified as receiving different tax
treatment in the accompanying prospectus supplement, regardless of whether the
notes are issued by a Tax Trust or a Tax Partnership or a Tax Non-Entity, upon
the issuance of each series of notes, Special Tax Counsel is of the opinion
that the notes will be treated as debt for federal income tax purposes. The
seller, the servicer and each noteholder, by acquiring an interest in a note,
will agree to treat the notes as indebtedness for federal, state and local
income, excise, privilege and franchise tax purposes. The accompanying
prospectus supplement will specify whether the issuer of the notes is a Tax
Trust, Tax Partnership or Tax Non-Entity for federal income tax purposes. See
"Trust Certificates--Classification of Trusts and Trust Certificates",
"Partnership Certificates--Classification of Partnerships and Partnership
Certificates" or "Tax Non-Entity Certificates--Classification of Tax Non-Entity
and Tax Non-Entity Certificates" for a discussion of the potential federal
income tax considerations for noteholders if the IRS were successful in
challenging the characterization of a Tax Trust, a Tax Partnership or a Tax
Non-Entity, as applicable, for federal income tax purposes.
Treatment of Stated Interest. Assuming the notes are treated as debt for
federal income tax purposes and are not issued with original issue discount,
also known as OID, the stated interest on a note will be taxable to a
noteholder as ordinary income when received or accrued in accordance with the
noteholder's regular method of tax accounting. Interest received on a note may
constitute "investment income" for purposes of some limitations of the Internal
Revenue Code concerning the deductibility of investment interest expense.
Original Issue Discount. Except to the extent indicated in the accompanying
prospectus supplement, no series of notes will be issued with OID. In general,
OID is the excess of the stated redemption price at maturity of a debt
instrument over its issue price, unless that excess falls within a statutorily
defined de minimis exception. A note's stated redemption price at maturity is
the aggregate of all payments required to be made under the note through
maturity except qualified stated interest. Qualified stated interest is
generally interest that is unconditionally payable in cash or property, other
than debt instruments of the issuer, at fixed intervals of one year or less
during the entire term of the instrument at specified rates. The issue price
will be the first price at which a substantial amount of the notes are sold,
excluding sales to bond holders, brokers or similar persons acting as
underwriters, placement agents or wholesalers.
If a note were treated as being issued with OID, a noteholder would be
required to include OID in income as interest over the term of the note under a
constant yield method. In general, OID must be included in income in advance of
the receipt of cash representing that income. Thus, each cash distribution
would be treated as an amount already included in income, to the extent OID has
accrued as of the date of the interest distribution and is not allocated to
prior distributions, or as a repayment of principal. This treatment would have
no significant effect on noteholders using the accrual method of accounting.
However, cash method noteholders may be required to report income on the notes
in advance of the receipt of cash attributable to that income. Even if a note
has OID falling within the de minimis exception, the noteholder must include
that OID in income proportionately as principal payments are made on that note.
A holder of a Short-Term Note which has a fixed maturity date not more than
one year from the issue date of that note will generally not be required to
include OID on the Short-Term Note in income as it accrues, provided the holder
of the note is not an accrual method taxpayer, a bank, a broker or dealer that
holds the note as inventory, a regulated investment company or common trust
fund, or the beneficial owner of pass-through entities specified in the
Internal Revenue Code, or provided the holder does not hold the instrument as
part of a hedging transaction, or as a stripped bond or stripped coupon.
Instead, the holder of a Short-Term Note would include the OID accrued on
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the note in gross income upon a sale or exchange of the note or at maturity, or
if the note is payable in instalments, as principal is paid thereon. A holder
of a Short-Term Note would be required to defer deductions for any interest
expense on an obligation incurred to purchase or carry the note to the extent
it exceeds the sum of the interest income, if any, and OID accrued on the note.
However, a holder may elect to include OID in income as it accrues on all
obligations having a maturity of one year or less held by the holder in that
taxable year or thereafter, in which case the deferral rule of the preceding
sentence will not apply. For purposes of this paragraph, OID accrues on a
Short-Term Note on a ratable, straight-line basis, unless the holder
irrevocably elects, under regulations to be issued by the Treasury Department,
to apply a constant interest method to such obligation, using the holder's
yield to maturity and daily compounding.
A holder who purchases a note after the initial distribution thereof at a
discount that exceeds a statutorily defined de minimis amount will be subject
to the "market discount" rules of the Internal Revenue Code, and a holder who
purchases a note at a premium will be subject to the bond premium amortization
rules of the Internal Revenue Code.
Disposition of Notes. If a noteholder sells a note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the note. The
adjusted tax basis of the note to a particular noteholder will equal the
holder's cost for the note, increased by any OID and market discount previously
included by the noteholder in income from the note and decreased by any bond
premium previously amortized and any principal payments previously received by
the noteholder on the note. Any gain or loss will be capital gain or loss if
the note was held as a capital asset, except for gain representing accrued
interest or accrued market discount not previously included in income. Capital
gain or loss will be long-term if the note was held by the holder for more than
one year and otherwise will be short-term. Any capital losses realized
generally may be used by a corporate taxpayer only to offset capital gains, and
by an individual taxpayer only to the extent of capital gains plus $3,000 of
other income.
Information Reporting and Backup Withholding. Each Tax Trust, Tax
Partnership and Tax Non-Entity will be required to report annually to the IRS,
and to each noteholder of record, the amount of interest paid on the notes, and
the amount of interest withheld for federal income taxes, if any, for each
calendar year, except as to exempt holders which are generally, corporations,
tax-exempt organizations, qualified pension and profit-sharing trusts,
individual retirement accounts, or nonresident aliens who provide certification
as to their status. Each holder will be required to provide to the Tax Trust,
Tax Partnership or Tax Non-Entity, under penalties of perjury, a certificate
containing the holder's name, address, correct federal taxpayer identification
number and a statement that the holder is not subject to backup withholding. If
a nonexempt noteholder fails to provide the required certification, the Tax
Trust, Tax Partnership or Tax Non-Entity will be required to withhold, from
interest otherwise payable to the holder, 31% of that interest and remit the
withheld amount to the IRS as a credit against the holder's federal income tax
liability.
The IRS has issued new regulations governing the backup withholding and
information reporting requirements. The new regulations are generally effective
for payments made after December 31, 2000. We suggest that noteholders consult
with their tax advisors with respect to the impact, if any, of the new
regulations.
Because the seller will treat each Tax Trust as a grantor trust, each Tax
Partnership as a partnership, each Tax Non-Entity as a division of the seller
and all notes, except Strip Notes and any other series of notes specifically
identified as receiving different tax treatment in the accompanying prospectus
supplement, as indebtedness for federal income tax purposes, the seller will
not comply with the tax reporting requirements that would apply under any
alternative characterizations of a Tax Trust, Tax Partnership or Tax Non-
Entity.
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Tax Consequence to Foreign Noteholders. If interest paid or accrued to a
noteholder who is a Foreign Person is not effectively connected with the
conduct of a trade or business within the United States by the Foreign Person,
the interest generally will be considered "portfolio interest," and generally
will not be subject to United States federal income tax and withholding tax, as
long as the Foreign Person:
. is not actually or constructively a "10 percent shareholder" of a Tax
Trust, Tax Partnership or the seller, including a holder of 10 percent
of the applicable outstanding certificates, or a "controlled foreign
corporation" with respect to which the Tax Trust, Tax Partnership or the
seller is a "related person" within the meaning of the Internal Revenue
Code, and
. provides an appropriate statement, signed under penalties of perjury,
certifying that the beneficial owner of the note is a Foreign Person and
providing that Foreign Person's name and address. If the information
provided in this statement changes, the Foreign Person must so inform
the Tax Trust or Tax Partnership within 30 days of change.
If the interest were not portfolio interest or if applicable certification
requirements were not satisfied, then it would be subject to United States
federal income and withholding tax at a rate of 30 percent unless reduced or
eliminated pursuant to an applicable tax treaty. The IRS has issued new
regulations governing withholding, backup withholding and information reporting
requirements. The new regulations are generally effective for payments made
after December 31, 2000. Foreign persons should consult their tax advisors with
respect to the effect, if any, of the new regulations.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a Foreign Person will be exempt from United
States federal income and withholding tax, provided that
. the gain is not effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, and
. in the case of a foreign individual, the Foreign Person is not present
in the United States for 183 days or more in the taxable year.
If the interest, gain or income on a note held by a Foreign Person is
effectively connected with the conduct of a trade or business in the United
States by the Foreign Person, the holder, although exempt from the withholding
tax previously discussed if an appropriate statement is furnished, generally
will be subject to United States Federal income tax on the interest, gain or
income at regular federal income tax rates. In addition, if the Foreign Person
is a foreign corporation, it may be subject to a branch profits tax equal to 30
percent of its "effectively connected earnings and profits" within the meaning
of the Internal Revenue Code for the taxable year, as adjusted for specified
items, unless it qualifies for a lower rate under an applicable tax treaty.
Trust Certificates
Classification of Trusts and Trust Certificates. For each series of
certificates identified in the accompanying prospectus supplement as Trust
Certificates, upon the issuance of each series of Trust Certificates, Special
Tax Counsel is of the opinion that the Tax Trust will not be taxable as an
association or publicly traded partnership taxable as a corporation, but will
be classified as a grantor trust under Sections 671 through 679 of the Internal
Revenue Code and that the Trust Certificates will be treated as representing a
pro rata undivided interest in the income and assets of the Tax Trust. For each
series of Trust Certificates, the seller and the certificateholders will
express in the trust agreement and on the Trust Certificates their intent that,
for federal, state and local income and franchise tax purposes, the Trust
Certificates will represent an equity interest in the Tax Trust.
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Although Special Tax Counsel has opined that each Tax Trust will be
properly be classified as a grantor trust for federal income tax purposes,
there are no cases or IRS rulings on similar transactions that opinion is not
binding on the IRS or the courts and no assurance can be given that this
characterization would prevail. If the IRS were to contend successfully that
any such Tax Trust is not a grantor trust, the Tax Trust will be classified for
federal income tax purposes as a partnership which is not taxable as a
corporation. The income reportable by the holders of Trust Certificates as
partners could differ from the income reportable by the holders of Trust
Certificates as grantors of a grantor trust. However, it is not expected that
such differences would be material. If a Tax Trust were classified for federal
income tax purposes as a partnership, the IRS might contend that it is a
"publicly traded partnership" taxable as a corporation. If the IRS were to
contend successfully that a Tax Trust is an association taxable as a
corporation for federal income tax purposes, such Tax Trust would be subject to
federal and state income tax at corporate rates on the income from the
receivables, reduced by deductions, including interest on any notes unless the
notes were treated as an equity interest. See "Partnership Certificates--
Classification of Partnerships and Partnership Certificates" below.
Despite Special Tax Counsel's opinion that a Tax Trust will be classified
as a grantor trust, the lack of cases or IRS rulings on similar transactions,
as discussed above, permits a variety of alternative characterizations in
addition to the position to be taken that the Trust Certificates represent
equity interests in a grantor trust. For example, because Trust Certificates
will have some features characteristic of debt, the Trust Certificates might be
considered indebtedness of a Tax Trust, the seller or the Issuer. Except as
described above, any such characterization would not result in materially
adverse tax consequences to certificateholders as compared to the consequences
from treatment of Trust Certificates as equity in a trust, described below. The
following discussion assumes that Trust Certificates represent equity interests
in a grantor trust.
Grantor Trust Treatment. As a grantor trust, a Tax Trust will not be
subject to federal income tax. Subject to the discussion below under "Treatment
of Fees or Payment," in Special Tax Counsel's opinion each certificateholder
will be required to report on its federal income tax return its pro rata share
of the entire income from the receivables and any other property in the Tax
Trust for the period during which it owns a Trust Certificate, including
interest or finance charges earned on the receivables and any gain or loss upon
collection or disposition of the receivables, in accordance with the
certificateholder's method of accounting. A certificateholder using the cash
method of accounting will generally take into account its pro rata share of
income as and when received by the owner trustee. A certificateholder using an
accrual method of accounting will generally take into account its pro rata
share of income as it accrues or is received by the owner trustee, whichever is
earlier.
Assuming that the market discount rules do not apply, the portion of each
payment to a certificateholder that is allocable to principal on the
receivables will represent a recovery of capital, which will reduce the tax
basis of the certificateholder's undivided interest in the receivables. In
computing its federal income tax liability, a certificateholder will be
entitled to deduct, consistent with its method of accounting, its pro rata
share of interest paid on any notes, reasonable servicing fees, and other fees
paid or incurred by the Tax Trust. If a certificateholder is an individual,
estate or trust, the deduction for the certificateholder's pro rata share of
such fees will be allowed only to the extent that all of such
certificateholder's miscellaneous itemized deductions, including servicing and
other fees, exceed 2% of the certificateholder's adjusted gross income. Because
the servicer will not report to certificateholders the amount of income or
deductions attributable to miscellaneous charges, a certificateholder may
effectively under report its net taxable income. See "Treatment of Fees or
Payments" below for a discussion of other possible consequences if amounts paid
to the servicer exceed reasonable compensation for services rendered.
Treatment of Fees or Payments. It is expected that income will be reported
to certificateholders on the assumption that the certificateholders own a 100%
interest in all of the
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principal and interest derived from the receivables. However, a portion of the
amounts paid to the servicer or the seller may exceed reasonable fees for
services. There are no authoritative guidelines, for federal income tax
purposes, as to the maximum amount of compensation that may be considered
reasonable for servicing the receivables or performing other services, in the
context of this or similar transactions; accordingly, Special Tax Counsel is
unable to give an opinion on this issue. If amounts paid to the servicer or the
seller exceed reasonable compensation for services provided, the servicer or
the seller or both may be viewed as having retained, for federal income tax
purposes, an ownership interest in a portion of each interest payment or
certain receivables. As a result, such receivables may be treated as "stripped
bonds" within the meaning of the Internal Revenue Code.
To the extent that the receivables are characterized as "stripped bonds,"
the income of the Tax Trust allocable to certificateholders would not include
the portion of the interest on the receivables treated as having been retained
by the servicer or the seller, as the case may be, and the Tax Trust's
deductions would be limited to reasonable servicing fees, interest paid on any
notes and other fees. In addition, a certificateholder would not be subject to
the market discount and premium rules discussed below with respect to the
stripped receivables, but instead would be subject to the OID rules of the
Internal Revenue Code. However, if the price at which a certificateholder were
deemed to have acquired a stripped receivable is less than the remaining
principal balance of the receivable by an amount which is less than a
statutorily defined de minimis amount, the receivable would not be treated as
having OID. In general, it appears that the amount of OID on a receivable
treated as a "stripped bond" will be de minimis if it is less than of 1% for
each full year remaining after the purchase date until the final maturity of
the receivable, although the IRS could take the position that the weighted
average maturity date, rather than the final maturity date, should be used in
performing this calculation. If the amount of OID was de minimis under this
rule, the actual amount of discount on a receivable would be includible in
income as principal payments are received on the receivable.
If the OID on a receivable were not treated as de minimis, a
certificateholder would be required to include any OID in income as it accrues,
regardless of when cash payments are received, using a method reflecting a
constant yield on the receivables. It is possible that the IRS could assert
that a prepayment assumption should be used in computing the yield of a
stripped receivable. If a stripped receivable is deemed to be acquired by a
certificateholder at a significant discount, the use of a prepayment assumption
could accelerate the accrual of income by a certificateholder.
It is also possible that any fees deemed to be excessive could be
recharacterized as deferred purchase price payable to the seller by
certificateholders in exchange for the receivables. The likely effect of such
recharacterization would be to increase current taxable income to a
certificateholder.
Discount And Premium. The following discussion generally assumes that the
fees and other amounts payable to the servicer and the seller will not be
recharacterized as being retained ownership interests in the receivables, as
discussed above. A purchaser of a Trust Certificate should be treated as
purchasing an interest in each receivable and any other property in the Tax
Trust at a price determined by allocating the purchase price paid for the Trust
Certificate among the receivables and other property in proportion to their
fair market values at the time of purchase of the Trust Certificate.
It is believed that the receivables were not and will not be issued with
OID; therefore, a Tax Trust should not have OID income. However, the purchase
price paid by the Tax Trust for the receivables may be greater or less than the
remaining principal balance of the receivables at the time of purchase. If so,
the receivables will have been acquired at a premium or market discount, as the
case may be. The market discount on a receivable will be considered to be zero
if it is less than the statutorily defined de minimis amount.
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Any gain on the sale of a Trust Certificate attributable to the holder's
share of unrecognized accrued market discount on the receivables would
generally be treated as ordinary income to the holder. Moreover, a holder who
acquires a Trust Certificate representing an interest in receivables acquired
at a market discount may be required to defer a portion of any interest expense
otherwise deductible on indebtedness incurred or maintained to purchase or
carry the Trust Certificate until the holder disposes of the Trust Certificate
in a taxable transaction. Instead of recognizing market discount, if any, upon
a disposition of Trust Certificates and deferring any applicable interest
expense, a holder may elect to include market discount in income currently as
the discount accrues. The current inclusion election, once made, applies to all
market discount obligations acquired on or after the first day of the first
taxable year to which the election applies, and may not be revoked without the
consent of the IRS.
In the event that a receivable is treated as purchased at a premium, that
is, the allocable portion of the certificateholder's purchase price for the
Trust Certificate exceeds the remaining principal balance of the receivable,
the premium will be amortizable by a certificateholder as an offset to interest
income, with a corresponding reduction in basis, under a constant yield method
over the term of the receivable if the certificateholder makes an election. Any
such election will apply to all debt instruments held by the certificateholder
during the year in which the election is made and to all debt instruments
acquired thereafter.
Disposition of Trust Certificates. Generally, capital gain or loss will be
recognized on a sale of Trust Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Trust
Certificates sold. A certificateholder's tax basis in a Trust Certificate will
generally equal his cost increased by any OID and market discount previously
included in income, and decreased by any bond premium previously amortized and
by the amount of principal payments previously received on the receivables held
by the Tax Trust. Any gain on the sale of a Trust Certificate attributable to
the holder's share of unrecognized accrued market discount on the receivables
would generally be treated as ordinary income to the certificateholder, unless
the certificateholder makes the special election described under "Discount and
Premium" above.
If a certificateholder is required to recognize an aggregate amount of
income, not including income attributable to disallowed itemized deductions
described above, over the life of the Trust Certificates that exceeds the
aggregate cash distributions, that excess will generally give rise to a capital
loss upon the retirement of the Trust Certificates.
Backup Withholding. Distributions made on Trust Certificates and proceeds
from the sale of the certificates will be subject to a "backup" withholding tax
of 31% if, as discussed above in connection with the notes, the
certificateholder fails to comply with identification procedures, unless the
holder is an exempt recipient under applicable provisions of the Internal
Revenue Code.
Tax Consequences to Foreign Trust Certificateholders. Interest attributable
to receivables which is received by a certificateholder which is a Foreign
Person will generally not be subject to the normal 30% withholding tax imposed
on those payments, provided that such certificateholder is not engaged in a
trade or business in the United States and that such certificateholder fulfills
the certification requirements discussed above under "The Notes--Tax
Consequences to Foreign Noteholders."
Partnership Certificates
Classification of Partnerships and Partnership Certificates. For each
series of certificates identified in the accompanying prospectus supplement as
Partnership Certificates, the seller and the servicer will agree, and the
certificateholders will agree by their purchase of the Partnership
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Certificates, to treat the Tax Partnership as a partnership for purposes of
federal, state and local income and franchise tax purposes, with the partners
of the Partnership being the certificateholders and the seller, in its capacity
as recipient of distributions from the reserve account, and any notes being
debt of such Tax Partnership. However, the proper characterization of the
arrangement involving the Tax Partnership, the Partnership Certificates, the
seller and the servicer is not clear because there is no authority on
transactions closely comparable to that contemplated in this prospectus and
accompanying prospectus supplement.
If the Tax Partnership were classified as an association taxable as a
corporation for federal income tax purposes, the Tax Partnership would be
subject to corporate income tax. Any corporate income tax could materially
reduce or eliminate cash that would otherwise be distributable on the
Partnership Certificates and certificateholders could be liable for any such
tax that is unpaid by the Tax Partnership. However, upon the issuance of each
series of Partnership Certificates, Special Tax Counsel is of the opinion that,
for United States federal income tax purposes, the Tax Partnership will be
treated as a partnership and will not be treated as an association or publicly
traded partnership taxable as a corporation, and that the Partnership
Certificates will be treated as partnership interests in the Tax Partnership.
Even if a Tax Partnership were not classified as an association taxable as
a corporation, it would be subject to corporate income tax if it were a
"publicly traded partnership" taxable as a corporation. However, in the opinion
of Special Tax Counsel, even if the Tax Partnership were treated as a publicly
traded partnership, it would not be taxable as a corporation because it would
meet qualifying income tests. Nonetheless, if a Tax Partnership were treated as
a publicly traded partnership and the Partnership Certificates were treated as
equity interests in such a partnership, some holders could suffer adverse
consequences. For example, some holders might be subject to limitations on
their ability to deduct their share of the Tax Partnership's expenses.
Despite Special Tax Counsel's opinion that a Tax Partnership will be
classified as a partnership and not as an association or publicly traded
partnership taxable as a corporation, the lack of cases or rulings on similar
transactions, as discussed above, permits a variety of alternative
characterizations in addition to the position to be taken that the Partnership
Certificates represent equity interests in a partnership. For example, because
the Partnership Certificates will have some features characteristic of debt,
the Partnership Certificates might be considered indebtedness of the Tax
Partnership, the seller or the Issuer. Except as described above, any such
characterization would not result in materially adverse tax consequences to
certificateholders as compared to the consequences from treatment of the
Partnership Certificates as equity in a partnership, described below. The
following discussion assumes that the Partnership Certificates represent equity
interests in a partnership.
Partnership Taxation. A Tax Partnership will not be subject to federal
income tax, but each certificateholder will be required to separately take into
account such holder's allocated share of income, gains, losses, deductions and
credits of the Tax Partnership. The Tax Partnership's income will consist
primarily of interest and finance charges earned on the receivables, including
appropriate adjustments for market discount, OID, and bond premium, and any
gain upon collection or disposition of the receivables. The Tax Partnership's
deductions will consist primarily of interest paid or accrued on any notes,
servicing and other fees, and losses or deductions upon collection or
disposition of the receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Internal Revenue Code, Treasury Regulations and the partnership
agreement and, for any series of Partnership Certificates, the trust agreement
and related documents. Each trust agreement for a Tax Partnership will provide
that the certificateholders will be allocated taxable income of the Tax
Partnership for each month equal to their allocable share of the sum of:
. the Pass Through Rate on the Partnership Certificates for such month;
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. an amount equivalent to interest that accrues during that month on
amounts previously due on such Partnership Certificates but not yet
distributed;
. any Tax Partnership income attributable to discount on the receivables
that corresponds to any excess of the principal amount of the
Partnership Certificates over their initial issue price; and
. any Prepayment Surplus payable to the Partnership Certificates for that
month.
In addition, each trust agreement for a Tax Partnership will provide that the
certificateholders will be allocated their allocable share for each month of
the entire amount of interest expense paid by the Tax Partnership on any notes.
If the Tax Partnership issues any Strip Notes or Strip Certificates, it will
also provide that the certificateholders will be allocated taxable income of
such Tax Partnership for each month in the amounts described in the
accompanying prospectus supplement. All taxable income of the Tax Partnership
remaining after the allocations to the certificateholders will be allocated to
the seller. It is believed that the allocations to certificateholders will be
valid under applicable Treasury Regulations, although no assurance can be given
that the IRS would not require a greater amount of income to be allocated to
certificateholders. Moreover, even under the foregoing method of allocation,
certificateholders may be allocated income equal to the entire Pass Through
Rate plus the other items described above, and holders of Strip Notes or Strip
Certificates may be allocated income equal to the amount described in the
accompanying prospectus supplement, even though the Tax Partnership might not
have sufficient cash to make current cash distributions of such amount. Thus,
cash basis holders will in effect be required to report income from the
Partnership Certificates on the accrual method. In addition, because tax
allocations and tax reporting will be done on a uniform basis for all
certificateholders but certificateholders may be purchasing Partnership
Certificates at different times and at different prices, certificateholders may
be required to report on their tax returns taxable income that is greater or
less than the amount reported to them by the Tax Partnership.
Additionally, all of the taxable income allocated to a certificateholder
that is a pension, profit sharing or employee benefit plan or other tax-exempt
entity, including an individual retirement account, will constitute "unrelated
business taxable income" generally taxable to such a holder under the Internal
Revenue Code.
An individual taxpayer may generally deduct miscellaneous itemized
deductions, which do not include interest expense, only to the extent they
exceed two percent of adjusted gross income, and, additional limitations may
apply. Those limitations would apply to an individual certificateholder's share
of expenses of a Tax Partnership, including fees to the servicer, and might
result in the holder being taxed on an amount of income that exceeds the amount
of cash actually distributed to such holder over the life of such Tax
Partnership.
Each Tax Partnership intends to make all tax calculations relating to
income and allocations to certificateholders on an aggregate basis. If the IRS
were to require that calculations be made separately for each receivable, a Tax
Partnership might be required to incur additional expense but it is believed
that there would not be a material adverse effect on certificateholders.
Discount and Premium. It is believed that the receivables were not and will
not be issued with OID and, therefore, that a Tax Partnership should not have
OID income. However, the purchase price paid by the Tax Partnership for the
receivables may be greater or less than the remaining principal balance of the
receivables at the time of purchase. If so, the receivables will have been
acquired at a premium or market discount, as the case may be. As indicated
above, each Tax Partnership will make this calculation on an aggregate basis,
but might be required to recompute it on a receivable-by-receivable basis.
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Each Tax Partnership will make an election that will result in any market
discount on the receivables being included in income currently as such discount
accrues over the life of the receivables. As indicated above, a portion of the
market discount income will be allocated to certificateholders.
Section 708 Termination. Under Section 708 of the Internal Revenue Code, a
Tax Partnership will be deemed to terminate for federal income tax purposes if
50% or more of the capital and profits interests in such Tax Partnership are
sold or exchanged within a 12-month period. If a termination occurs, a Tax
Partnership will be considered to contribute all of its assets to a new
partnership followed by a liquidation of the original Tax Partnership. A Tax
Partnership will not comply with the technical requirements that might apply
when such a constructive termination occurs. As a result, the Tax Partnership
may be subject to tax penalties and may incur additional expenses if it is
required to comply with those requirements. Furthermore, a Tax Partnership
might not be able to comply due to lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Partnership Certificates in an amount equal to the
difference between the amount realized and the seller's tax basis in the
Partnership Certificates sold. A certificateholder's tax basis in a Partnership
Certificate will generally equal his cost increased by his share of the Tax
Partnership's income, includible in his income, for the current and prior
taxable years and decreased by any distributions received on such Partnership
Certificate. In addition, both tax basis in the Partnership Certificates and
the amount realized on a sale of a Partnership Certificate would include the
holder's share of any notes and other liabilities of the Tax Partnership. A
holder acquiring Partnership Certificates of the same series at different
prices may be required to maintain a single aggregate adjusted tax basis in the
Partnership Certificates, and, upon a sale or other disposition of some of the
Partnership Certificates, allocate a pro rata portion of the aggregate tax
basis to the Partnership Certificates sold, rather than maintaining a separate
tax basis in each Partnership Certificate for purposes of computing gain or
loss on a sale of that Partnership Certificate.
If a certificateholder is required to recognize an aggregate amount of
income not including income attributable to disallowed itemized deductions
described above over the life of the Partnership Certificates that exceeds the
aggregate cash distributions on the Partnership Certificates, that excess will
generally give rise to a capital loss upon the retirement of the Partnership
Certificates.
Allocations Between Transferors and Transferees. In general, each Tax
Partnership's taxable income and losses will be determined monthly and the tax
items for a particular calendar month will be apportioned among the
certificateholders in proportion to the principal amount of the Partnership
Certificates or a fractional share of the Strip Notes or Strip Certificates
owned by them as of the first Record Date following the end of the month. As a
result, a holder purchasing Partnership Certificates may be allocated tax
items, which will affect its tax liability and tax basis, attributable to
periods before its actual purchase.
The use of a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed or only applies to
transfers of less than all of the partner's interest, taxable income or losses
of a Tax Partnership might be reallocated among the certificateholders. The
owner trustee is authorized to revise a Tax Partnership's method of allocation
between transferors and transferees to conform to a method permitted by future
regulations.
Section 754 Election. In the event that a certificateholder sells its
Partnership Certificate for greater or less than its adjusted basis therefor,
the purchasing certificateholder will have a higher or lower basis, as the case
may be, in the Partnership Certificates than the selling certificateholder had.
The tax basis of the Tax Partnership's assets will not be adjusted to reflect
that higher or lower basis
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unless the Tax Partnership were to file an election under Section 754 of the
Internal Revenue Code. In order to avoid the administrative complexities that
would be involved in keeping accurate accounting records, as well as
potentially onerous information reporting requirements, a Tax Partnership will
not make such an election. As a result, certificateholders might be allocated a
greater or lesser amount of Tax Partnership income than would be based on their
own purchase price for Partnership Certificates.
Administrative Matters. For each Tax Partnership, the owner trustee is
required to maintain complete and accurate books of such Tax Partnership. Such
books will be maintained for financial reporting and tax purposes on an accrual
basis and the fiscal year of each Tax Partnership will be the calendar year.
The owner trustee will file a partnership information return, IRS Form 1065,
with the IRS for each taxable year of the Tax Partnership and will report each
certificateholder's allocable share of items of Tax Partnership income and
expense to holders and the IRS on Schedule K-1. Any person that holds
Partnership Certificates as a nominee at any time during a calendar year is
required to furnish the Tax Partnership with a statement containing information
on the nominee, the beneficial owners and the Partnership Certificates so held.
Each Tax Partnership will provide the Schedule K-1 information to nominees that
fail to provide the Tax Partnership with the information referenced in the
preceding sentence and such nominees will be required to forward such
information to the beneficial owners of the Partnership Certificates.
Generally, holders must file tax returns that are consistent with the
information return filed by the Tax Partnership or be subject to penalties
unless the holder notifies the IRS of all such inconsistencies.
The seller, as the tax matters partner for each Tax Partnership, will be
responsible for representing the certificateholders in any dispute with the
IRS. The Internal Revenue Code provides for administrative examination of a
partnership as if the partnership were a separate taxpayer. Generally, the
statute of limitations for partnership items does not expire until three years
after the date on which the partnership information return is filed or deemed
filed. Any adverse determination following an audit of the return of a Tax
Partnership by the appropriate taxing authorities could result in an adjustment
of the returns of the certificateholders and, under some circumstances, a
certificateholder may be precluded from separately litigating a proposed
adjustment to the items of the Tax Partnership. An adjustment could result in
an audit of a certificateholder's returns and adjustments of items not related
to the income and losses of the Tax Partnership.
Tax Consequences to Foreign Certificateholders. It is not clear whether any
Tax Partnership would be considered to be engaged in a trade or business in the
United States for purposes of federal withholding taxes with respect to non-
United States persons because there is no clear authority on that issue under
facts substantially similar to those described in this prospectus and the
accompanying prospectus supplement. Although it is not expected that any Tax
Partnership would be engaged in a trade or business in the United States for
such purposes, each Tax Partnership will withhold as if it were so engaged in
order to protect the Tax Partnership from possible adverse consequences of a
failure to withhold. It is expected that each Tax Partnership will withhold on
the portion of its taxable income that is allocable to foreign
certificateholders as if such income were effectively connected to a United
States trade or business, at a rate of 35% for foreign holders that are taxable
as corporations and 39.6% for all other foreign holders. In determining a
holder's nonforeign status, a Tax Partnership may generally rely on the
holder's certification of nonforeign status signed under penalties of perjury.
Each foreign holder might be required to file a United States individual or
corporate income tax return and pay tax, including, in the case of a
corporation, the branch profits tax, on its share of the Tax Partnership's
income. Each foreign holder must obtain a taxpayer identification number from
the IRS and submit that number to the Tax Partnership on Form W-8 in order to
assure appropriate crediting of the taxes withheld. A foreign holder generally
would be entitled to file with the IRS a
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claim for refund for taxes withheld by the Tax Partnership, taking the
position that no taxes were due because the Tax Partnership was not engaged in
a U.S. trade or business. However, the IRS may assert that the tax liability
should be based on gross income, and no assurance can be given as to the
appropriate amount of tax liability.
Backup Withholding. Distributions made on any Partnership Certificates and
proceeds from the sale of such Partnership Certificates will be subject to a
"backup" withholding tax of 31% if, as discussed above in connection with the
notes, the certificateholder fails to comply with identification procedures,
unless the holder is an exempt recipient under applicable provisions of the
Internal Revenue Code.
Tax Non-Entity Certificates
Classification of Tax Non-Entity and Tax Non-Entity Certificates. For each
series of certificates or membership interests identified in the accompanying
prospectus supplement as Tax Non-Entity Certificates and which are entirely
owned by the seller, the seller and the servicer will agree, pursuant to the
"check-the-box" Treasury Regulations, to treat the Tax Non-Entity as a
division of the seller, and hence a disregarded entity, for federal income tax
purposes. In other words, for federal income tax purposes, the seller will be
treated as the owner of all the assets of the Tax Non-Entity and the obligor
of all the liabilities of the Tax Non-Entity. Upon the issuance of each series
of Tax Non-Entity Certificates, Special Tax Counsel is of the opinion that the
Tax Non-Entity will be treated as a division of the seller and will be
disregarded as a separate entity for United States federal income tax
purposes, and that the Tax Non-Entity Certificates represent direct ownership
of the assets. Under the "check-the-box" Treasury Regulations, unless the Tax
Non-Entity is a trust that is treated as a Tax Trust for federal income tax
purposes, an unincorporated domestic entity with more than one equity owner is
automatically classified as a Tax Partnership for federal income tax purposes.
If the trust or limited liability company, as the case may be, is classified
as a Tax Non-Entity when all its equity interests are wholly-owned by the
seller and if certificates are then sold or issued in any manner which results
in there being more than one certificateholder, the trust or limited liability
company, as the case may be, will be treated as a Tax Partnership.
If certificates are issued to more than one person, the seller and the
servicer will agree, and the certificateholders will agree by their purchase,
to treat the trust or limited liability company, as the case may be, as a Tax
Partnership for purposes of federal, state and local income and franchise tax
purposes, with the partners of such partnership being the certificateholders,
including the seller, and the notes being debt of such partnership.
Risks of Alternative Characterization. If a Tax Non-Entity were an
association or a "publicly traded partnership" taxable as a corporation for
federal income tax purposes, it would be subject to corporate income tax as
discussed above under "Partnership Certificates--Classification of
Partnerships and Partnership Certificates."
State and Local Tax Consequences
The above discussion does not address the tax treatment of any Tax Trust,
Tax Partnership, Tax Non-Entity, notes, certificates, noteholders,
certificateholders or membership interest holders under any state or local tax
laws. The activities to be undertaken by the servicer in servicing and
collecting the receivables will take place throughout the United States and,
therefore, many different tax regimes potentially apply to different portions
of these transactions. Prospective investors are urged to consult with their
tax advisors regarding the state and local tax treatment of any Tax Trust, Tax
Partnership or Tax Non-Entity as well as any state and local tax
considerations for them of purchasing, holding and disposing of notes,
certificates or membership interests.
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ERISA Considerations
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, which is generally referred to as "ERISA" and Section 4975 of the
Internal Revenue Code prohibit a pension, profit-sharing or other employee
benefit plan, as well as individual retirement accounts, some types of Keogh
Plans, other retirement plans, accounts and arrangements, and entities deemed
to hold "plan assets" of any of the foregoing by reason of investment in such
entity (in this discussion, we refer to these as "plans"), from engaging in
transactions involving "plan assets" with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Internal Revenue Code
with respect to that benefit plan. ERISA also imposes duties on persons who are
fiduciaries of employee benefit plans subject to ERISA and prohibits
transactions between an employee benefit plan and parties in interest with
respect to those employee benefit plans. Under ERISA, any person who exercises
any authority or control with respect to the management or disposition of the
assets of an employee benefit plan is considered to be a fiduciary of that
benefit plan (subject to exceptions not here relevant). A violation of these
"prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and the Internal Revenue Code for those persons.
Transactions involving an issuer might be deemed to constitute prohibited
transactions under ERISA and the Internal Revenue Code with respect to a plan
that purchased notes or certificates if assets of the issuer were deemed to be
assets of the plan. Under a regulation issued by the Department of Labor and
found at 29 C.F.R. 2510.3-101 (the "Plan Asset Regulation"), the assets of an
issuer would be treated as plan assets of a plan for the purposes of ERISA and
the Internal Revenue Code if the plan acquired an "equity interest" in the
issuer and none of the exceptions contained in the Plan Asset Regulation was
applicable. An equity interest is defined under the Plan Asset Regulation as an
interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. The likely
treatment in this context of notes and certificates of a given series will be
discussed in the prospectus supplement.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements, but may be subject to other state or
local laws that are substantially similar to ERISA and Section 4975 of the
Code.
Due to the complexities of the "Prohibited Transaction" rules and the
penalties imposed upon persons involved in prohibited transactions, it is
important that the fiduciary of any plan considering the purchase of securities
consult with its tax and legal advisors regarding whether the assets of the
related issuer would be considered plan assets, the possibility of exemptive
relief from the prohibited transaction rules and other issues and their
potential consequences.
Acceptance of subscriptions on behalf of a plan is in no respect a
representation by an issuer or any other party that this investment meets all
relevant legal requirements with respect to investments by any particular plan
or that the investment is appropriate for any particular plan. Each benefit
plan fiduciary should consult with its attorneys and financial advisors as to
the propriety of an investment in light of the circumstances of the particular
plan and the restrictions of ERISA and Section 4975 of the Internal Revenue
Code.
Underwriting
Subject to the terms and conditions set forth in one or more underwriting
agreements with respect to the securities of a series, the seller will agree to
sell or cause the related issuer to sell to the underwriter(s) named in the
prospectus supplement, and each of the underwriters will severally agree to
purchase, the principal amount of each class of securities, as the case may be,
of the
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related series set forth in the related underwriting agreement and in the
prospectus supplement. One or more classes of a series may not be subject to an
underwriting agreement. Any of these classes will be retained by the seller or
sold in a private placement.
In the underwriting agreement with respect to any given series of
securities, the applicable underwriter(s) will agree, subject to the terms and
conditions set forth in the underwriting agreement, to purchase all the
securities offered by the prospectus supplement if any of those securities are
purchased. In the event of a default by any underwriter, each underwriting
agreement will provide that, in certain circumstances, purchase commitments of
the nondefaulting underwriters may be increased or the underwriting agreement
may be terminated.
Each prospectus supplement will either
. set forth the price at which each class of securities being offered
thereby initially will be offered to the public and any concessions that
may be offered to dealers participating in the offering of the
securities or
. specify that the related securities are to be resold by the
underwriter(s) in negotiated transactions at varying prices to be
determined at the time of sale. After the initial public offering of any
securities, the public offering prices and concessions may be changed.
Each underwriting agreement will provide that AmSouth Bank and the seller
will indemnify the related underwriters against specified civil liabilities,
including liabilities under the Securities Act of 1933, as amended, or
contribute to payments the several underwriters may be required to make in
respect thereof. Each issuer may invest funds in its issuer accounts in
Eligible Investments acquired from the underwriters or from AmSouth Bank, the
seller or any of their affiliates.
Underwriters may engage in over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids with respect to
the securities in accordance with Regulation M under the Exchange Act. Over-
allotment transactions involve syndicate sales in excess of the offering size,
which creates a syndicate short position. The underwriters do not have an
"overallotment" option to purchase additional securities in the offering, so
syndicate sales in excess of the offering size will result in a naked short
position. The underwriters must close out any naked short position through
syndicate covering transactions in which the underwriters purchase securities
in the open market to cover the syndicate short position. A naked short
position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the securities in the open
market after pricing that would adversely affect investors who purchase in the
offering. Stabilizing transactions permit bids to purchase the security so long
as the stabilizing bids do not exceed a specified maximum. Penalty bids permit
the underwriters to reclaim a selling concession from a syndicate member when
the securities originally sold by the syndicate member are purchased in a
syndicate covering transaction. These over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
prices of the securities to be higher than they would otherwise be in the
absence of these transactions. Neither the seller nor any of the underwriters
will represent that they will engage in any of these transactions or that these
transactions, once commenced, will not be discontinued without notice.
Pursuant to each underwriting agreement with respect to a given series of
securities, the closing of the sale of any class of securities subject to the
underwriting agreement will be conditioned on the closing of the sale of all
other classes of securities of that series.
The place and time of delivery for any series of securities in respect of
which this prospectus is delivered will be set forth in the accompanying
prospectus supplement.
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Forward-Looking Statements
This prospectus includes words such as "expects", "intends", "anticipates",
"estimates" and similar words and expressions. Such words and expressions are
intended to identify forward-looking statements. Any forward-looking statements
are made subject to risks and uncertainties include, among other things,
declines in general economic and business conditions, increased competition,
changes in demographics, changes in political and social conditions, regulatory
initiatives and changes in customer preferences, many of which are beyond the
control of AmSouthBank or the seller. The forward-looking statements made in
this prospectus are accurate as of the date stated on the cover of the
prospectus. The seller has no obligation to update or revise any such forward-
looking statement.
Ratings of the Securities
Any class of offered securities will be:
. rated by at least one nationally recognized statistical rating agency or
organization that initially rates the series at the request of the
seller, and
. identified in the prospectus supplement as being in one of the rating
agency's four highest rating categories, which are referred to as
investment grade.
The security ratings of the offered securities should be evaluated
independently from similar ratings on other types of securities. A securities
rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the rating agencies. The
rating does not address the expected schedule of principal repayments other
than to say that principal will be returned no later than the final maturity
date. There is no assurance that the ratings initially assigned to any offered
securities will not be lowered or withdrawn by the rating agency. In the event
the rating initially assigned to any securities is subsequently lowered for any
reason, no person or entity will be obligated to provide any credit enhancement
unless otherwise specified in the related prospectus supplement.
Reports to Securityholders
Unless and until securities in definitive registered form are issued,
monthly and annual reports containing information concerning the issuer and
prepared by the servicer will be sent on behalf of the issuer to Cede & Co., as
nominee of DTC and the registered holder of the related global securities,
pursuant to the sale and servicing agreement. These reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. The servicer does not intend to send any financial reports of
AmSouth Bank to securityholders. The servicer will file with the SEC all
required annual, monthly and special SEC reports and other information about
the issuer.
Where You Can Find More Information
AmSouth Auto Receivables LLC, as seller, has filed a registration statement
with the SEC relating to the securities. This prospectus and the prospectus
supplement for each series are parts of our registration statement. This
prospectus does not contain, and the prospectus supplement will not contain,
all of the information in our registration statement. For further information,
please see our registration statement and the accompanying exhibits which we
have filed with the SEC. This prospectus and any prospectus supplement may
summarize contracts and/or other documents. For further information, please see
the copy of the contract or other document filed as an exhibit to the
registration statement. You can obtain copies of the registration statement
from the SEC upon
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payment of the prescribed charges, or you can examine the registration
statement free of charge at the SEC's offices. Reports and other information
filed with the SEC can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Regional Offices of the SEC 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 material can be obtained
from the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. You can obtain information on the
operation of the Public Reference Section by calling 1-800-732-0330. The SEC
also maintains a site on the World Wide Web at "http://www.sec.gov" at which
users can view and download copies of reports, proxy and information statements
and other information filed electronically through the EDGAR system.
Incorporation By Reference
The SEC allows us to "incorporate by reference" information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus. Information that we file later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the most recently printed information rather than contradictory
information included in this prospectus or the prospectus supplement.
Information that will be incorporated by reference with respect to a series
will be filed under the name of the issuer of that series.
As a recipient of this prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing or
calling us at: (205) 326-5807.
Legal Matters
Relevant legal matters relating to the issuance of the securities of any
series will be passed upon for the seller by Mayer, Brown & Platt, Chicago,
Illinois.
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Glossary
"Closing Date" means, with respect to any series of securities, the date
of initial issuance of that series of securities.
"Collection Period" has the meaning set forth in the applicable prospectus
supplement.
"Controlling Class" means, with respect to any issuer, the class or
classes of notes and/or certificates designated as the initial "controlling
class" in the prospectus supplement so long as they are outstanding, and
thereafter each other class or classes of notes and/or certificates in the
order of priority designated in the prospectus supplement.
"Cut-off Date" has the meaning set forth in the applicable prospectus
supplement.
"Defaulted Receivable" has the meaning set forth in the applicable
prospectus supplement.
"Distribution Date" means, with respect to any series of securities, the
day on which a principal or interest payment is to be made on those securities
(or if that day is not a business day (i.e., a Saturday, Sunday, a day on
which the credit enhancement provider, if any, is closed or a day on which
banking institutions in New York, New York or in the city in which the
indenture trustee's corporate trust office or the trustee's corporate trust
office is located are authorized or obligated by law to be closed), on the
next succeeding business day).
"Eligible Investments" has the meaning set forth in the applicable
prospectus supplement.
"Financial Institution" means any securities clearing organization, bank
or other financial institution that holds customers' securities in the
ordinary course of its trade or business.
"Foreign Person" means a nonresident alien, foreign corporation or other
non-United States person.
"Issuer Accounts" means the collection account and any other accounts to
be established with respect to an issuer, including any note distribution
account, certificate distribution account, prefunding account, reserve fund,
spread account or yield supplement account, which accounts will be described
in the prospectus supplement.
"Issuer Property" means, to the extent specified in the prospectus
supplement, the property of each issuer, which will include:
. a pool of fixed rate motor vehicle installment sales contracts and
installment loans made by AmSouth Bank, its predecessors in interest, or
an affiliate or through a dealer that sold a motor vehicle, all of which
are secured by new and/or used automobiles and/or light-duty trucks;
. the seller's right to all documents and information contained in the
receivables files;
. collections and all other amounts due under the receivables after the
Cut-off date specified in the prospectus supplement;
. security interests in the new and used automobiles and trucks financed
by the receivables;
. any of the AmSouth's rights to receive proceeds from claims on credit
life, disability, theft and physical damage insurance policies covering
the financed vehicles or the obligors under the receivables;
. some of AmSouth Bank's rights relating to the receivables under
agreements between AmSouth Bank and the dealers that sold the financed
vehicles;
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. all amounts on deposit in the applicable issuer accounts, including the
related collection account and any other account identified in the
applicable prospectus supplement, including all Eligible Investments
credited thereto (but excluding any investment income from Eligible
Investments which is to be paid to the servicer of the receivables or as
otherwise specified in the prospectus supplement);
. the rights of the issuer under the sale and servicing agreement;
. the rights under any credit enhancement to the extent specified in the
prospectus supplement;
. any other property specified in the prospectus supplement; and
. all proceeds of the foregoing.
"Liquidation Expenses" means the reasonable out-of-pocket expenses (not
including overhead expenses) incurred by the servicer in connection with the
collection and realization of the full amounts due under any Defaulted
Receivable and the repossession and sale of any property acquired in respect
thereof which are not recoverable under any type of motor vehicle insurance
policy.
"Original Pool Balance" means, with respect to any issuer, the aggregate
principal balance of the related receivables as of the applicable Cut-Off Date.
"Partnership Certificates" means certificates or membership interests,
including Strip Certificates, and Strip Notes issued by a Tax Partnership.
References to a holder of these certificates shall be to the beneficial owner
thereof.
"Plan Asset Regulation" means the United States Department of Labor
regulation (29 CFR Section 2510.3-101) concerning the definition of what
constitutes the assets of an employee benefit plan or an individual retirement
account subject to the Employee Retirement Income Security Act of 1974, as
amended.
"Pool Balance" means, with respect to any issuer as of any date of
determination, the aggregate principal balance of the related receivables.
"Pool Factor" means, with respect to any issuer, a six-digit decimal which
the servicer will compute each month indicating the Pool Balance at the end of
the month as a fraction of the Original Pool Balance plus the aggregate
principal balance of any subsequent receivables added to the issuer as of the
applicable subsequent Cut-Off Date.
"Prepayment Assumption" means the method used to assume the anticipated
rate of prepayments in pricing a debt instrument.
"Record Date" means, with respect to any Distribution Date or final
scheduled Distribution Date, the close of business on the business day
immediately prior to that Distribution Date or final scheduled Distribution
Date.
"Scheduled Interest Method" means the method of calculating interest due on
a motor vehicle receivable without regard to the period of time which has
elapsed since the preceding payment was made, using the actuarial method or the
method known as the Rule of 78s or sum-of-the-digits method.
"Scheduled Interest Receivables" means receivables pursuant to which the
payments due from the obligors during any month are allocated between finance
charges and principal on a Scheduled Interest Method, without regard to the
period of time which has elapsed since the
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preceding payment was made, using the actuarial method or the method known as
the Rule of 78s or sum-of-the-digits method.
"Short-term Note" means any note that has a fixed maturity date of not more
than one year from the issue date of that note.
"Simple Interest Method" means the method of calculating interest due on a
motor vehicle receivable on a daily basis based on the actual principal balance
of the receivable on that date.
"Special Tax Counsel" means Mayer, Brown & Platt, as special tax counsel to
the seller.
"Strip Certificates" means any class of certificates entitled to principal
distributions with disproportionate, nominal or no interest distributions or
interest distributions with disproportionate, nominal or no principal
distributions.
"Strip Notes" means any class of notes entitled to principal distributions
with disproportionate, nominal or no interest distributions or interest
distributions with disproportionate, nominal or no principal distributions.
"Tax Non-entity" means a trust or limited liability company in which all of
the certificates or membership interests in that trust or limited liability
company which are owned by the seller, and the seller and the servicer agree to
treat the trust or limited liability company as a division of the seller and
hence disregarded as a separate entity for purposes of federal, state and local
income and franchise taxes.
"Tax Non-entity Certificates" means certificates or membership interests
issued by a Tax Non-Entity. References to a holder of these certificates shall
be to the beneficial owner thereof.
"Tax Partnership" means a trust or limited liability company in which the
seller, the servicer and the applicable holders agree to treat certificates or
membership interests, including Strip Certificates, and Strip Notes as equity
interests in a partnership for purposes of federal, state and local income and
franchise taxes.
"Tax Trust" means a trust in which the seller, the servicer and the
applicable certificateholders agree to treat the certificates of the trust as
equity interests in a grantor trust for purposes of federal, state and local
income and franchise taxes.
"Trust Certificates" means certificates issued by a Tax Trust. References
to a holder of these certificates shall be to the beneficial owner thereof.
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No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the notes offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is currently only as of its date.
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AmSouth Auto Receivables LLC
Seller
AmSouth Bank
Servicer
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Through and including January , 2001 (the 90th day after the date of this
prospectus) all dealers affecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to a dealer's obligation to deliver a prospectus when
acting as an underwriter and with respect to an unsold allotment or
subscription.
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AmSouth Auto Trust 2000-1
$230,000,000 Class A-1
% Asset Backed Notes
$240,000,000 Class A-2
% Asset Backed Notes
$315,000,000 Class A-3
% Asset Backed Notes
$103,640,000 Class A-4
% Asset Backed Notes
$28,510,000 Class B
% Asset Backed Notes
$14,260,000 Class C
% Asset Backed Notes
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PROSPECTUS SUPPLEMENT
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Goldman, Sachs & Co.
Bear, Stearns & Co. Inc.
Salomon Smith Barney
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