<PAGE>
As filed with the Securities and Exchange Commission on July 28, 2000
Registration No. 333-38676
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------
AmSouth Auto Receivables LLC
as Seller to the Issuers described herein
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
Application Pending
(I.R.S. Employer
Identification No.)
1900 Fifth Avenue North
Amsouth Sonat Tower
Birmingham, Alabama 35203
(205) 326-5300
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Stephen A. Yoder
AmSouth Bank
1900 Fifth Avenue North
AmSouth Sonat Tower
Birmingham, Alabama 35203
(205) 326-5300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Stuart M. Litwin, Esq.
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 782-0600
Walter M. Beale, Jr. ,
Esq.
Balch & Bingham LLP
1901 Sixth Avenue North
Suite 2600
Birmingham, Alabama 35203
(205) 226-3436
Reed D. Auerbach, Esq.
Stroock & Stroock & Lavan
LLP
180 Maiden Lane
New York, New York 10038
(212) 588-9269
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
--------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Amount Proposed maximum Proposed maximum
Title of each class of to be offering price aggregate Amount of
securities to be registered registered per unit(1) offering price(1) registration fee
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Notes and Certificates.. $1,000,000 100% $1,000,000 $264(2)
------------------------------------------------------------------------------------------------------
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Previously paid.
--------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to Section 8(a), may determine.
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<PAGE>
Introductory Statement
This Registration Statement contains (a) a Prospectus relating to the
offering of a series of Asset Backed Notes and/or Asset Backed Certificates by
various trusts and limited liability companies created from time to time by
AmSouth Auto Receivables LLC and (b) two forms of Prospectus Supplement
relating to offerings of particular series of Asset Backed Certificates (such
form of Prospectus Supplement is identified on the outside front cover page
thereof as "Form 1") or of Asset Backed Notes and Asset Backed Certificates
(such form of Prospectus Supplement is identified on the outside front cover
page thereof as "Form 2" and, together with Form 1, the "Prospectus Supplement
Forms") described therein. Each Prospectus Supplement Form relates only to the
securities described therein.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+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 the registration statement +
+filed with the Securities and Exchange Commission is effective. 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Prospectus Supplement To Prospectus dated July 28, 2000 Form 1(1)
$[ ]
Asset-Backed Certificates
AmSouth Auto Trust 200 -
Issuer
AmSouth Auto Receivables LLC
Seller
AmSouth Bank
Servicer
<TABLE>
<CAPTION>
Principal Interest Price to Underwriting Proceeds to
Balance Rate Public Discount the Seller
---------- -------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C>
[Class A Certificates].... $ % % % %
[Class B Certificates].... $ % % % %
</TABLE>
The Certificates
The
certificates
issued by the . represent interests in the assets of the issuer, which
issuer do not consist primarily of motor vehicle installment sales
represent contracts and loans.
interests in,
and are not
guaranteed
by, AmSouth
Bank, AmSouth
Auto
Receivables
LLC or any of
their
affiliates.
. currently have no trading market.
. are not insured or guaranteed by any governmental agency
or any other party.
The
prospectus
supplement
may be used
to offer and
sell the
certificates
only if
accompanied
by the
prospectus.
Before you purchase any of the certificates, you should carefully read the
"risk factors" beginning on page S-[ ] in this prospectus supplement and on
page [ ] in 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 accompanying prospectus are accurate or
complete. Any representation to the contrary is a criminal offense.
[Underwriters]
[ ] [ ], [200 ]
-----
(1) This form of prospectus supplement is representative of the form of
prospectus supplement that may typically be used in a particular
transaction. The provisions in this form may change from transaction to
transaction, whether or not the provisions are bracketed in the form to
reflect the specific parties, the structure of the securities, servicing
provisions, receivables pool and the provisions of the transaction
documents.
<PAGE>
Important Notice About Information Presented In This
Prospectus Supplement And The Accompanying Prospectus
We tell you about the securities in two separate documents that
progressively provide more detail:
. the accompanying prospectus, which provides general information, some of
which may not apply to your securities; and
. this prospectus supplement, which describes the specific terms of your
securities.
You should rely only on the information provided in this prospectus
supplement and the accompanying prospectus, including the information
incorporated by reference. We have not authorized anyone to provide you with
different information.
We include cross-references in this prospectus supplement and in the
accompanying 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 accompanying prospectus
provide the page numbers on which these captions are located.
We are not offering the securities in any state where the offer of the
notes is not permitted.
Capitalized terms are defined in the glossary beginning on page of this
prospectus supplement or in the glossary on page of the prospectus.
----------------
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary of Terms......................................................... S-1
The Receivables........................................................ S-1
Interest Distributions................................................. S-2
Principal Distributions................................................ S-2
[Reserve Account....................................................... S-2]
Optional Termination................................................... S-2
Material Federal Income Tax Consequences............................... S-2
ERISA Considerations................................................... S-3
Ratings................................................................ S-3
[No] Listing of the Certificates....................................... S-3
Risk Factors........................................................... S-3
Risk Factors............................................................. S-4
Features of the Receivables Pool May Result in Losses.................. S-4
Class B Certificates Will Absorb Cash Shortfalls and Losses Before the
Class A Certificates................................................. S-4
Your Yield to Maturity May Be Reduced by Prepayments................... S-5
Withdrawal or Downgrading of Initial Ratings Will Reduce the Prices for
Certificates......................................................... S-6
Class B Certificateholders May Have to Pay Taxes on Amounts Not
Actually Received.................................................... S-6
Capitalized Terms...................................................... S-7
Formation of the Trust................................................... S-7
The Trust Property....................................................... S-7
The Receivables Pool..................................................... S-8
Pool Composition....................................................... S-8
The Servicer............................................................. S-12
Size of Servicing Portfolio............................................ S-12
Delinquencies and Loss................................................. S-12
[Weighted Average Life of the Certificates............................... S-15]
Use of Proceeds.......................................................... S-18
Description of the Certificates.......................................... S-18
General................................................................ S-19
The Agreements........................................................... S-19
Sale and Assignment of the Receivables................................. S-19
Accounts............................................................... S-19
Servicing Compensation................................................. S-19
Distributions on Certificates.......................................... S-19
Credit Enhancement..................................................... S-21
[Reserve Fund.......................................................... S-22]
Termination............................................................ S-23
[Auction Sale.......................................................... S-23]
Duties of the Trustee.................................................. S-23
The Trustee............................................................ S-24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Material Federal Income Tax Consequences.................................. S-25
State and Local Tax Consequences.......................................... S-26
ERISA Considerations...................................................... S-26
Class A Certificates.................................................... S-26
Class B Certificates.................................................... S-28
Underwriting.............................................................. S-29
Legal Matters............................................................. S-30
Glossary.................................................................. S-31
</TABLE>
ii
<PAGE>
Summary of Terms
This section outlines the significant terms of the offered certificates. As
a summary, we do not attempt to discuss or describe in any detail the terms
outlined here. We recommend that you review carefully the more detailed
information in this prospectus supplement and in the attached prospectus.
<TABLE>
<S> <C>
Issuer.................. AmSouth Auto Trust 200 -
Seller.................. AmSouth Auto Receivables LLC.
Servicer................ AmSouth Bank
Trustee and Collateral .
Agent..................
Closing Date............ On or about , 200 ,
Cutoff Date............. The [close] [opening] of business on , 200 .
Distribution Dates...... of each month or the next business day if
the day is not a business day, beginning in
, 200 .
Record Dates............ last day of the month prior to a distribution date.
[Minimum Denominations.. $25,000.]
Form.................... Book-entry.
Interest Accrual Method. 30/360.
Final Scheduled for the Class A certificates and for
Distribution Date...... the Class B certificates.
</TABLE>
The Receivables
The receivables are amounts owed by individuals under retail installment
sale contracts to purchase or refinance new or used automobiles, including
passenger cars, minivans, sport utility vehicles and light trucks, purchased
from motor vehicle dealers. The receivables were originated by dealers and
purchased by AmSouth Bank pursuant to dealer agreements.
The seller expects that the receivables will have the following
characteristics as of , 2000. As of the closing date, no more than 5%
of the receivables will have characteristics that differ from those described
in this prospectus supplement as of , 2000.
<TABLE>
<S> <C>
Number of contracts.................................
Principal Amount.................................... $
Annual Percentage Rates............................. % to %
Weighted Average Annual Percentage Rate............. %
Original term....................................... months to months
Weighted Average original term...................... months
Remaining term...................................... months to months
Weighted Average remaining term..................... months
</TABLE>
S-1
<PAGE>
<TABLE>
<S> <C>
New...................................................................... %
Used..................................................................... %
States...................................................................
Balloon Loans............................................................ %
</TABLE>
Interest Distributions
On each distribution date, if the trust has sufficient cash, it will pay
you the interest accrued on your certificates during the related interest
period. Interest periods begin on the prior distribution date and run through
the day before the current distribution date. The first interest period,
however, begins on the closing date and runs through the day before the first
distribution date. We will assume that each year has 360 days.
Principal Distributions
The trust will pay all principal collections to the holders of the Class A
certificates until the Class A certificates are paid in full. The trust will
not pay any principal collections to the holders of the Class B certificates
until the Class A certificates are paid in full.
[Reserve Account
There will be a reserve account to help cover cash flow shortfalls.
Initially, the account will be $ . On each distribution date amounts
remaining after distribution of the total servicing fee and amounts to be paid
to the certificateholders will be deposited in the reserve account until the
amount equals a specified amount.]
Optional Termination
When the principal amount of the receivables is % or less than it was on
the cutoff date, the servicer may buy the receivables. If the servicer does not
do so, the trustee will try to sell the receivables to another buyer. In either
case, you must receive the principal amount of your certificates and all
accrued but unpaid interest or the receivables will not be sold.
Material Federal Income Tax Consequences
Mayer, Brown & Platt, special federal tax counsel to the trust, is of the
opinion that the trust will be classified, for federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Mayer, Brown
& Platt is also of the opinion that the trust will not be subject to United
States federal income tax. Certificateholders must report their respective
allocable shares of income earned on trust assets excluding certain amounts
retained by the seller as described herein and, subject to certain limitations
applicable to individuals, estates and trusts, may deduct their respective
allocable shares of reasonable servicing and other fees. However, the tax code
is complex, and 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.
S-2
<PAGE>
ERISA Considerations
The Class A certificates may be purchased by ERISA and other retirement
plans if one or more administrative exemptions apply. No Class B certificate
may be purchased by ERISA or other retirement plans other than "an insurance
company general account meeting specific requirements". See "ERISA
Considerations" in this prospectus supplement and the prospectus.
Ratings
It is a condition to the issuance of the certificates that [insert
applicable rating agencies] rate the certificates [insert applicable rating of
certificates]. A rating is not a recommendation to purchase, hold or sell the
certificates, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. The ratings of the certificates address
the liklihood of the payment of principal and interest on the certificates
according to their terms. A rating agency may lower or withdraw its rating in
the future, in its discretion.
[No] Listing of the Certificates
[The certificates will not be listed on any national securities exchange or
on any automated quotation system of a registered securities association. See
"Risk Factors" in the prospectus.] [The certificates will be listed on
].
Risk Factors
You should consider the principal risks of an investment in the securities
set forth under the caption "Risk Factors" in this prospectus supplement and
the prospectus.
S-3
<PAGE>
Risk Factors
An investment in the certificates involves significant risks. Before you
decide to invest, we recommend that you carefully consider the following risk
factors and the risk factors specified under the heading "Risk Factors"
beginning on page of the prospectus, which are the principal risks of an
investment in the certificates.
There are a number of features of the receivables
Features of the in the pool that create additional risk of loss,
receivables pool may including the following:
result in losses
. The concentration of the receivables in
specific geographic areas may increase the
risk of loss. Economic conditions in the
states where obligors reside may affect the
delinquency, loan loss and repossession
experience of the trust with respect to the
receivables. As of the cutoff date, the
billing addresses of the obligors with
respect to approximately %, %, and
% of the principal amount of the
receivables were located in ,
and , respectively.
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
certificates than if the concentration did
not exist.
. Newly originated loans may be more likely to
default which may cause losses. Defaults on
automobile loans tend to occur at higher
rates during the early years of the
automobile loans. Substantially all of the
automobile loans will have been originated
within 12 months prior to the sale to the
trust. As a result, the trust may experience
higher rates of default than if the
automobile loans had been outstanding for a
longer period of time.
Class B certificates will The Class B certificateholders will not receive
absorb cash shortfalls and any distribution of interest until the full
losses before the Class A amount of interest on the Class A certificates
certificates has been paid on each distribution date. The
Class B certificateholders will not receive any
distributions of principal until the full amount
of interest on and principal of the Class A
certificates and interest on the Class B
certificates payable on the distribution date has
been distributed to the Class A
certificateholders and
S-4
<PAGE>
Class B certificateholders respectively. Holders
of the certificates must rely for repayment upon
payments on the receivables, and, if and to the
extent available, amounts on deposit in the
reserve account. If funds in the reserve account
are exhausted, the trust will depend solely on
current distributions on the receivables to make
payments on the certificates. Delinquent payments
on the receivables may result in a shortfall in
the distributions on the Class B certificates on
any distribution date due to the priority of
payments on the Class A certificates.
The pre-tax yield to maturity is uncertain and
Your yield to maturity may will depend on a number of factors including the
be reduced by prepayments following:
. The rate of return of principal is
uncertain. The amount of distributions of
principal of the certificates and the time
when you receive those distributions depends
on the amount and the times at which
borrowers make principal payments on the
receivables. Those principal payments may be
regularly scheduled payments or unscheduled
payments resulting from prepayments or
defaults of the receivables.
. You may be unable to reinvest distributions
in comparable investments. Asset backed
securities, like the certificates, usually
produce more returns of principal to
investors when market interest rates fall
below the interest rates on the receivables
and produce less returns of principal when
market interest rates are above the interest
rates on the receivables. As a result, you
are likely to receive more money to reinvest
at a time when other investments generally
are producing a lower yield than that on the
certificates, and are likely to receive less
money to reinvest when other investments
generally are producing a higher yield than
that on the certificates. You will bear the
risk that the timing and amount of
distributions on your certificates will
prevent you from attaining your desired
yield.
. 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 or the auction call,
you will receive the principal amount of
your securities plus accrued interest
through the related
S-5
<PAGE>
interest period. Because your securities will
no longer be outstanding, you will not
receive the additional interest payments that
you would have received had the securities
remained outstanding. If you bought your
securities at par on at a premium, your yield
to maturity will be lower than it would have
been if the optional termination or auction
call had not been exercised.
Withdrawal or downgrading A security rating is not a recommendation to buy,
of initial ratings will sell or hold securities. Similar ratings on
reduce the prices for different types of securities do not necessarily
certificates mean the same thing. You are encouraged to
analyze the significance of each rating
independently from any other rating. Any rating
agency may change its rating of the certificates
after those certificates are issued if that
rating agency believes that circumstances have
changed. Any subsequent change in rating will
likely reduce the price that a subsequent
purchaser will be willing to pay for the
certificates.
Class B certificateholders For federal income tax purposes, amounts
may have to pay taxes on otherwise payable to the owners of the Class B
amounts not actually certificates that are paid to the owners of the
received Class A certificates may be deemed to have been
received by the owners of the Class B
certificates and then paid by them to the owners
of the Class A certificates pursuant to a
guaranty. Accordingly, the owners of the Class B
certificates could be liable for taxes on amounts
not actually received. See "Material Federal
Income Tax Consequences" in this prospectus
supplement.
[Insert any additional risk factors applicable to
a particular offering]
S-6
<PAGE>
Capitalized Terms
The capitalized terms used in this prospectus, unless defined elsewhere in
this prospectus supplement, have the meanings set forth in the glossary
starting on page .
Formation of the Trust
Pursuant to the trust agreement, the seller will establish the trust.
Pursuant to the sale and servicing agreement, the seller will sell and assign
the receivables and the other trust property to the trust in exchange for the
certificates. The seller will sell the certificates to the underwriter in
exchange for cash. All references herein to sales, assignments and transfers to
the trust refer to sales, assignments and transfers to the trustee on behalf of
the trust for the benefit of the certificateholders. Prior to such sale and
assignment, the trust will have no assets or obligations or any operating
history. Upon formation, the trust will not engage in any business activities
other than acquiring and holding the receivables, issuing the certificates and
distributing payments thereon.
The servicer will, directly or through subservicers, hold the receivables
and the certificates of title or ownership or other documents evidencing the
notation of AmSouth Bank's lien on the certificates of title or ownership
relating to the financed vehicles as custodian for the trustee. However, the
receivables will not be marked or stamped to indicate that they have been sold
to the trust, and the certificates of title for the financed vehicles will not
be endorsed or otherwise amended to identify the trustee as the new secured
party. Under the foregoing circumstances and in certain jurisdictions, the
trust's interest in the receivables and the financed vehicles may be defeated.
See "Risk Factors--The issuer's security interest in the financed vehicles will
not be noted on the certificates of title, which may cause losses" and
"Material Legal Aspects of the Receivables" in the prospectus.
The trust will not acquire any contracts or assets other than the trust
property, and it is not anticipated that the trust will have any need for
additional capital resources. Because the trust will have no operating history
upon its establishment and will not engage in any business activity other than
acquiring and holding the trust property, issuing the certificates and
distributing payments on them, no historical or pro forma financial statements
or ratios of earnings to fixed charges with respect to the trust have been
included in this prospectus supplement.
The Trust Property
Each certificate represents a fractional undivided interest in the trust.
The trust property will include the receivables, which were originated by
dealers and purchased by AmSouth Bank pursuant to dealer agreements with
dealers. On the Cutoff Date, none of the receivables will be 30 or more days
delinquent. On the Closing Date, the seller will buy the receivables from
AmSouth Bank and the seller will sell the receivables to the trust. The
servicer will, directly or through subservicers, service the receivables. The
trust property also includes:
. all monies received under the receivables on and after the Cutoff Date
and, with respect to receivables which are Actuarial Receivables, monies
received thereunder prior to the Cutoff Date that are due on or after
the Cutoff Date;
S-7
<PAGE>
. such amounts as from time to time may be held in the Collection Account,
the Reserve Account, the Payahead Account, the Class A Distribution
Account and the Class B Distribution Account, established and maintained
by the servicer pursuant to the sale and servicing agreement as
described below;
. security interests in the financed vehicles;
. the rights of AmSouth Bank to receive proceeds from claims under certain
insurance policies;
. the rights of the trust under the Transaction Documents;
. 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, as obligors of, or other
persons owing payments on, the financed vehicles;
. 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;
. rights with respect to any repossessed financed vehicles; and
. all proceeds within the meaning of the UCC of the foregoing. The Reserve
Fund will be maintained in the name of the Trustee for the benefit of
the certificateholders, but will not be part of the trust.
The Receivables Pool
Pool Composition
The receivables were selected from AmSouth Bank's portfolio by several
criteria, including, as of the Cutoff Date, the following:
. each receivable has a scheduled maturity of not later than either Final
Scheduled Distribution Date;
. each receivable was originated in the United States of America;
. each receivable has an original term to maturity of not more than
months and a remaining term to maturity of months or less as of the
Cutoff Date;
. approximately % of the Initial Pool Balance was secured by new
financed vehicles, and approximately % of the Initial Pool Balance
was secured by used financed vehicles;
. [each receivable provides for level monthly payments which fully
amortize the amount financed except, in the case of Simple Interest
Receivables, for the last payment, which may be different from the level
payment;]
. each receivable is not more than 30 days contractually past due as of
the Cutoff Date and is not more than months paid ahead;
. each receivable has an outstanding principal balance between $ and
$ ; and
. each receivable has an APR of no less than %.
As of the Cutoff Date, no obligor on any receivable was noted in the
related records of the servicer as being the subject of any pending bankruptcy
or insolvency proceeding. The
S-8
<PAGE>
latest scheduled maturity of any receivable is not later than . No
selection procedures believed by the seller to be materially adverse to
certificateholders were used in selecting the receivables.
The seller 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.
The composition, distribution by remaining term, distribution by APR,
geographic distribution and distribution by remaining principal of the
receivables as of the Cutoff Date are set forth in the tables below. The
percentages in the following tables may not add to 100% due to rounding.
Composition of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
New Financed Used Financed
Vehicles Vehicles Total
----------------- ----------------- -----------------
<S> <C> <C> <C>
Aggregate Principal
Balance................ $ $ $
Number of Receivables...
Average Principal
Balance................ $ $ $
Average Original
Balance................ $ $ $
Weighted Average
Contract Rate.......... % % %
Contract Rate (Range)... %- % %- % %- %
Weighted Average
Original Term.......... months months months
Original Term (Range)... to months to months to months
Weighted Average
Remaining Term......... to months to months to months
Remaining Term (Range).. to months to months to months
</TABLE>
Distribution by Remaining Term of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Aggregate Percentage of
Remaining Number of Principal Original
Term (Range) Receivables Balance Pool Balance
------------ ----------- --------- -------------
<S> <C> <C> <C>
Less than 30 months........................ $ %
30 to 35 months............................
36 to 41 months............................
42 to 47 months............................
48 to 53 months............................
54 to 59 months............................
60 to 65 months............................
66 to 71 months............................
72 to 77 months............................
78 to 89 months............................
-------- -------- ------
Total.................................. $ 100.00%
======== ======== ======
</TABLE>
S-9
<PAGE>
Distribution by Annual Percentage Rate of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Annual Aggregate Percentage of
Percentage Rate Number of Principal Original
Range Receivables Balance Pool Balance
--------------- ----------- ----------- -------------
<S> <C> <C> <C>
8.00% to below........................... $ %
8.00% to 8.99%...........................
9.00% to 9.99%...........................
10.00% to 10.99%.........................
11.00% to 11.99%.........................
12.00% to 12.99%.........................
13.00% to 13.99%.........................
14.00% to 14.99%.........................
15.00% to 15.99%.........................
16.00% to 16.99%.........................
17.00% to 17.99%.........................
18.00% to 18.99%.........................
19.00% to 19.99%.........................
20.00% to 20.99%.........................
21.00% to 21.99%.........................
22.00% and above.........................
---------- ----------- ------
Total................................ $ 100.00%
========== =========== ======
</TABLE>
Geographic Distribution of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Aggregate Percentage of
Number of Principal Original
State Receivables Balance Pool Balance
----- --------------- ----------- -------------
<S> <C> <C> <C>
................................. $ %
.................................
.................................
.................................
.................................
.................................
.................................
.................................
Other.................................
--------------- ----------- ------
Total............................. $ 100.00%
=============== =========== ======
</TABLE>
Distribution by state is based on billing addresses of the obligors as of
the cutoff date, which may differ from the state of origination of the
receivable.
"Other" include other states, none of which have a concentration of
receivables in excess of % of the aggregate principal balance.
S-10
<PAGE>
Distribution by Remaining Principal Balance of the Receivables
as of the Cutoff Date
<TABLE>
<CAPTION>
Remaining Aggregate Percentage of
Principal Balance Number of Principal Original
(Range) Receivables Balance Pool Balance
----------------- --------------- ----------- -------------
<S> <C> <C> <C>
$2,500 to $4,999..................... $ %
$5,000 to $7,499.....................
$7,500 to $9,999.....................
$10,000 to $12,499...................
$12,500 to $14,999...................
$15,000 to $17,499...................
$17,500 to $19,999...................
$20,000 to $22,499...................
$22,500 to $24,999...................
$25,000 to $27,499...................
$27,500 to $29,999...................
$30,000 to $32,499...................
$32,500 to $34,999...................
$35,000 to $37,499...................
$37,500 to $39,999...................
$40,000 to $41,499...................
$42,500 to $44,999...................
$45,000 to $47,499...................
$47,500 to $49,999...................
$50,000 to $52,499...................
$52,500 to $54,999...................
--------------- ----------- ------
Total............................ $ 100.00%
=============== =========== ======
</TABLE>
As of the Cutoff Date, approximately % of the aggregate principal balance
of the Receivables, constituting % of the number of receivables, were between
1 payment and payments paid-ahead.
As of the Cutoff Date, approximately % of the aggregate principal
balance of the Receivables, constituting % of the number of receivables, are
actuarial receivables. "actuarial receivables" are receivables that provide for
amortization of the amount financed over a series of fixed, level-payment
monthly installments. Each monthly installment, including the monthly
installment representing the final payment on the receivable, consists of an
amount of interest equal to 1/12 of the APR of the amount financed multiplied
by the unpaid principal balance of the amount financed, and an amount of
principal equal to the remainder of the monthly payment.
As of the Cutoff Date, approximately % of the aggregate principal
balance of the receivables, constituting % of the number of receivables, are
simple interest receivables. "Simple interest receivables" are receivables that
provide for the amortization of the amount financed under the receivable over a
series of fixed level monthly payments. However, unlike the monthly payment
under an actuarial receivable, each monthly payment includes an installment of
interest which is calculated on the basis of the outstanding principal balance
of the receivable multiplied by the stated APR and further multiplied by the
period elapsed, as
S-11
<PAGE>
a fraction of a calendar year, since the preceding payment of interest was
made. As payments are received under a simple interest receivable, the amount
received is applied first to interest accrued to the date of payment and the
balance is applied to reduce the unpaid principal balance. Accordingly, if an
obligor pays a fixed monthly installment before its scheduled due date, the
portion of the payment allocable to interest for the period since the preceding
payment was made will be less than it would have been had the payment been made
as scheduled, and the portion of the payment applied to reduce the unpaid
principal balance will be correspondingly greater. Conversely, if an obligor
pays a fixed monthly installment after its scheduled due date, the portion of
the payment allocable to interest for the period since the preceding payment
was made will be greater than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid
principal balance will be correspondingly less. In either case, the obligor
pays a fixed monthly installment until the final scheduled payment date, at
which time the amount of the final installment is increased or decreased as
necessary to repay the then outstanding principal balance.
If an actuarial receivable is prepaid in full, with minor variations based
upon state law, under the terms of the motor vehicle retail installment sale
contract or loan agreement, as the case may be, a refund or rebate will be made
to the borrower of the portion of the total amount of payments then due and
payable under such contract or agreement allocable to unearned interest,
calculated on the basis of a constant interest rate. If a simple interest
receivable is prepaid, rather than receive a rebate, the borrower is required
to pay interest only to the date of prepayment. The amount of a rebate under an
actuarial receivable generally will be less than the remaining scheduled
payments of interest that would have been due under a simple interest
receivable for which all payments were made on schedule.
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, which are not amounts representing
Payaheads, made in advance will be treated as a principal prepayment and will
be distributed as part of the principal distribution amount in the month
following the collection period in which the prepayment was made. See "Maturity
and Prepayment Considerations" in the prospectus.
The Servicer
Size of Servicing Portfolio
As of , the servicer serviced approximately retail
installments sale contracts, consisting primarily of new and used automobile,
including passenger car, minivan, sport/utility vehicles and light truck,
receivables, representing an outstanding balance of approximately $
million. See "AmSouth Bank" in the prospectus.
Delinquencies And Loss
Set forth below is information concerning the historical delinquency and
loss experience of AmSouth Bank pertaining to new and used automobile,
including passenger car, minivan, sport/utility vehicle and light truck, retail
installment sales contracts originated indirectly by
S-12
<PAGE>
AmSouth Bank through dealers. The information is presented in a pro forma
basis, and includes information with respect to First American Bank receivables
prior to AmSouth Bank's acquisition of First American Bank on October 1, 1999.
The tables also include information on receivables previously sold by AmSouth
Bank which AmSouth Bank continues to service. There can be no assurance that
the delinquency and loss experience on the receivables will be comparable to
that set forth below.
AmSouth Bank
Delinquency Experience
<TABLE>
<CAPTION>
As of June 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................. 361,352 290,584 327,821 247,895 182,893 179,425
Delinquencies as a
Percent of Number of
Contracts Outstanding
at end of Period
30-59 Days............ 1.70% 1.30% 1.87% 1.79% 1.85% 2.08%
60-89 Days............ 0.52% 0.35% 0.53% 0.48% 0.37% 0.49%
90 Days and Over...... 0.23% 0.20% 0.23% 0.29% 0.24% 0.33%
--------- --------- --------- --------- --------- ---------
Total Delinquencies as a
Percent of Number of
Contracts Outstanding
at end of Period....... 2.46% 1.86% 2.63% 2.56% 2.46% 2.91%
========= ========= ========= ========= ========= =========
Portfolio Outstanding at
end of Period--$'s in
Thousands.............. 4,344,847 3,371,785 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............ 1.58% 1.14% 1.68% 1.56% 1.65% 1.93%
60-89 Days............ 0.47% 0.30% 0.47% 0.41% 0.35% 0.45%
90 Days and Over...... 0.20% 0.17% 0.20% 0.26% 0.22% 0.29%
--------- --------- --------- --------- --------- ---------
Total Delinquencies as a
Percent of Portfolio
Outstanding at end of
Period................. 2.25% 1.62% 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-13
<PAGE>
AmSouth Bank
Credit Loss and Repossession Experience
<TABLE>
<CAPTION>
During Six Months
Ended June 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--in Thousands
Gross................. 4,222,331 3,103,912 3,422,620 2,169,953 1,822,760 1,736,818
Average Number of
Contracts Outstanding
During Period.......... 348,786 271,543 293,225 205,431 179,992 172,900
Number of Repossessions
During Period.......... 3,573 3,379 7,702 4,308 2,719 2,405
Repossessions as a
Percent of Average
Number of Contracts
Outstanding During
Period (Annualized).... 2.05% 2.49% 2.63% 2.10% 1.51% 1.39%
Gross Charge-Offs..... 31,414 20,372 47,146 27,181 28,801 31,647
Recoveries............ 14,403 8,997 18,819 15,246 16,232 12,615
Net Losses ........... 17,011 11,375 28,327 11,935 12,569 19,032
Net Losses as a Percent
of Average Gross
Portfolio Outstanding
(Annualized)........... 0.81% 0.73% 0.83% 0.55% 0.69% 1.10%
</TABLE>
All gross amounts and percentages are based on the gross amount scheduled
to be paid on each contract including unearned finance and other charges.
Gross Charge-offs represents the outstanding balance of contracts charged-
off that are determined to be uncollectible.
Recoveries represents amounts received on contracts charged off in period
or any prior periods net of recovery expenses.
"Net Losses" are Gross Charge-offs less Recoveries.
The delinquencies and losses show fairly stable trends. The improvement
from the 1996 levels reflects the effect of the current credit policies and
practices. The portfolio began to grow substantially from the second half of
1999. Losses as a percentage of outstandings reached its lowest level in 1998
partly because of improvements in credit controls and partly because of this
growth. Losses increased in 1999. While the two factors mentioned previously
were still in effect, the total losses in 1999 were impacted by additional
losses incurred in the First American Bank portfolio stemming from operational
and integration issues associated with First American Bank's acquisitions.
Portfolio growth is now modest and losses year-to-date in 2000 are more
representative of loss expectations going forward.
Delinquencies and Net Losses are affected by a number of social and
economic factors, including changes in interest rates and unemployment levels,
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, delinquency and net
charge-off experience of the receivables may differ from those shown in the
tables.
S-14
<PAGE>
[Weighted Average Life of the Certificates]
[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. As the rate
of payment of principal of the certificates will depend on the rate of payment,
including prepayments, of the principal balance of the receivables, the final
distribution in respect of the certificates could occur significantly earlier
than the Final Scheduled Distribution Date for the certificates. Reinvestment
risk associated with early payment of the certificates will be borne
exclusively by the certificateholders.
The table captioned "Percent of Original Class A Principal Balance or
Original Class B 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 percentage
of ABS monthly, with no defaults, losses or repurchases,
.each scheduled monthly payment on the receivables is made on the last
day of each month and each month has 30 days,
.distributions on the certificates are made on each Distribution Date,
and each such date is assumed to be the day of each applicable month,
.the balance in the Reserve on each Distribution Date is equal to the
Specified Reserve Balance, and
.the servicer does not exercise its option to purchase the
receivables. The first two pools have an assumed cutoff date of
and the remaining pools have an assumed cutoff date of .
The ABS Table sets forth the percent of the Original Class A Principal Balance
and the percent of the Original Class B Principal Balance that would be
outstanding after each of the Distribution Dates shown and the corresponding
weighted average lives thereof at various constant ABS percentages.
S-15
<PAGE>
The ABS Table also assumes that the receivables have been aggregated into
four 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 four pools, which is based on its aggregate principal
balance, APR, original term to maturity as of the Cutoff Date, will be such
that each pool will fully amortize by the end of its remaining term to
maturity.
[INSERT TABLE]
The actual characteristics and performance of the receivables 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 four 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,
or actual prepayment experience, will affect the percentages of initial
balances outstanding over time and the weighted average lives of the Class A
certificates and the Class B certificates.]
S-16
<PAGE>
Percent of Initial Certificate Balance
At Various ABS Percentages
[INSERT TABLE]
The weighted average life of a Class A certificate is determined by
. multiplying the amount of each principal payment of such Class A
certificate by the number of years from the date of the issuance of such
Class A certificate to the Distribution Date on which such principal
payment is made,
. adding the results and
. dividing the sum by the initial principal balance of such Class A
certificate.
An asterisk "*" means a percent of initial Class A certificate principal
balance of more than zero and less than 0.5%.
The ABS tables have been prepared based on the assumptions described in
this section, including the assumptions regarding the characteristics and
performance of the receivables which will differ from the actual
characteristics and performance of the receivables, and should be read in
conjunction with those assumptions.
S-17
<PAGE>
Percent of Initial Certificate Balance
At Various ABS Percentages
[INSERT TABLE]
The weighted average life of a Class B certificate is determined by
. multiplying the amount of each principal payment of such Class B
certificate by the number of years from the date of the issuance of such
Class B certificate to the Distribution Date on which such principal
payment is made,
. adding the results and
. dividing the sum by the initial principal balance of such Class B
certificate.
An asterisk "*" means a percent of initial Class B certificate principal
balance of more than zero and less than 0.5%.
The ABS tables have been prepared based on the assumptions described in
this section, including the assumptions regarding the characteristics and
performance of the receivables which will differ from the actual
characteristics and performance of the receivables, and should be read in
conjunction with those assumptions.
Use of Proceeds
The net proceeds from the sale of the certificates will be applied by the
seller first, to deposit approximately $ into the Reserve Account and
second, the balance to purchase the receivables and the other trust property
from AmSouth Bank.
Description of the Certificates
The certificates will be issued pursuant to the trust agreement,
substantially in the form filed as an exhibit to the registration statement.
The following information summarizes all material provisions of the
certificates and the trust agreement. The following summary
S-18
<PAGE>
supplements the description of the general terms and provisions of the
certificates of any given series and the related trust agreement set forth in
the prospectus, to which description reference is hereby made.
General
The certificates will evidence fractional undivided interests in the assets
of the trust to be created pursuant to the trust agreement. The Class A
certificates will evidence in the aggregate an undivided ownership interest of
% of the trust and the Class B certificates will evidence in the aggregate an
undivided ownership interest of % of the trust.
The Agreements
Sale and Assignment of the Receivables
Certain information regarding the conveyance of the receivables by AmSouth
Bank to the seller and by the seller to the trust on the Closing Date pursuant
to the sale and servicing agreement is set forth in the prospectus under
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables."
Accounts
[The assets of the trust will not include a Pre-Funding Account.] All other
Accounts referred to under "Description of the Transfer and Servicing
Agreements--Accounts" in the prospectus, will be established by the servicer
and maintained with the trustee in the name of the trustee on behalf of the
certificateholders. The Reserve Fund will be established by the servicer as a
segregated account with the collateral agent on behalf of the
certificateholders.
Servicing Compensation
The servicer will be entitled to receive a servicing fee for each
collection period in an amount equal to the product of one-twelfth of % per
annum for as long as AmSouth Bank or an affiliate thereof is the servicer, and
% per annum if AmSouth Bank or an affiliate thereof is no longer the
servicer and the pool balance as of the first day of the Collection Period. The
"servicing fee" will also include amounts to be paid to the servicer as
described in the prospectus. The servicing fee, together with any portion of
the servicing fee that remains unpaid from prior Distribution Dates, or the
total servicing fee, will be paid from the Total Distribution Amount. The total
servicing fee will be paid prior to the distribution of any portion of the
interest distribution amount to the certificateholders. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the prospectus.
Distributions on Certificates
Deposits to Collection Account. On or before the earlier of the eighth
business day of the month in which a Distribution Date occurs and the
Determination Date, the servicer will
S-19
<PAGE>
provide the trustee with certain information with respect to the preceding
Collection Period, including the amount of aggregate collections on the
receivables, the aggregate amount of liquidated receivables, [the Advances, if
any, to be made by the servicer of interest and principal due on the Actuarial
Receivables,] the amount, if any, to be withdrawn from the Payahead Account and
deposited in the Collection Account, the amount, if any, to be withdrawn from
the Reserve Fund and deposited in the Collection Account, the amount, if any,
to be withdrawn from the Reserve Fund and paid to the seller, in each case,
with respect to such Distribution Date and the aggregate purchase amount of
receivables to be repurchased by the seller or to be purchased by the servicer,
in each case with respect to such Distribution Date.
[On or before each Distribution Date, the servicer will cause the trustee
to withdraw from the Payahead Account and
(1) deposit into the Collection Account in immediately available
funds, the portion of Payaheads constituting scheduled payments on
actuarial receivables or that are to be applied to prepay actuarial
receivables in full and
(2) distribute to the seller, in immediately available funds, all
investment earnings on funds in the Payahead Account with respect to the
preceding Collection Period.]
On or before each Distribution Date the servicer will deposit any advances for
such Distribution Date into the Collection Account. On or before the business
day preceding each Distribution Date, the servicer will cause the Interest
Collections and the Principal Collections for such Distribution Date to be
deposited into the Collection Account.
Monthly Withdrawals from the Collection Account. [On each Distribution
Date, the servicer shall instruct the trustee to withdraw from the Collection
Account and deposit in the Payahead Account in immediately available funds, the
aggregate Payaheads collected during the preceding Collection Period.] On each
Distribution Date, the servicer shall instruct the trustee to make the
following deposits and distributions, to the extent of interest collections,
and, in the case of shortfalls occurring under clause (2) below in the Class A
Interest Distribution, the Class B Percentage of principal collections to the
extent of such shortfalls:
(1) to the servicer, the servicing fee and all unpaid servicing fees
from prior Collection Periods, to the extent not retained by the servicer;
(2) to the Class A Distribution Account, after the application of
clause (1), the Class A Interest Distribution; and
(3) to the Class B Distribution Account, after the application of
clauses (1) and (2), the Class B interest distribution.
On each Distribution Date, the servicer shall instruct the trustee to make
the following deposits and distributions, to the extent of principal
collections and interest collections remaining after the application of clauses
(1), (2) and (3) above:
(4) to the Class A Distribution Account, the Class A Principal
Distribution;
S-20
<PAGE>
(5) to the Class B Distribution Account, after the application of
clause (4), the Class B Principal Distribution; and
(6) to the Reserve Fund, any amounts remaining after the application
of clauses (1) through (5).
To the extent necessary to satisfy the distributions described in the
preceding paragraphs, the servicer shall instruct the trustee to withdraw from
the Reserve Fund and deposit in the Class A Distribution Account or the Class B
Distribution Account as described below in the following order of priority on
each Distribution Date:
(1) an amount equal to the excess of the Class A Interest Distribution
over the sum of interest collections and the Class B percentage of
principal collections will be deposited into the Class A Distribution
Account:
(2) an amount equal to the excess of the Class B Interest Distribution
over the portion of interest collections remaining after the distribution
of the Class A Interest Distribution will be deposited into the Class B
Distribution Account;
(3) an amount equal to the excess of the Class A principal
distribution over the portion of principal collections and interest
collections remaining after the distribution of the Class A interest
distribution and the Class B interest distribution will be deposited into
the Class A Distribution Account; and
(4) an amount equal to the excess of the Class B principal
distribution over the portion of principal collections and interest
collections remaining after the distribution of the Class A interest
distribution, the Class B interest distribution and the Class A principal
distribution will be deposited into the Class B Distribution Account.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A certificateholders and
all amounts on deposit in the Class B Distribution Account will be distributed
to the Class B certificateholders.
Credit Enhancement
Subordination of the Class B Certificates. The rights of the Class B
certificateholders to receive distributions with respect to the receivables
will be subordinated to the rights of the Class A certificateholders to the
extent described below. This subordination is intended to enhance the
likelihood of timely receipt by Class A certificateholders of the full amount
of interest and principal required to be paid to them, and to afford such Class
A certificateholders limited protection against losses in respect of the
receivables.
No interest distribution will be made to the Class B certificateholders on
any Distribution Date in respect of interest until the full amount of interest
on the Class A certificates payable on such Distribution Date has been
distributed to the Class A certificateholders. No principal distribution will
be made to the Class B certificateholders on any Distribution Date in respect
of principal until the full amount of interest on and principal of the Class A
certificates and interest on the Class B certificates payable on such
S-21
<PAGE>
Distribution Date has been distributed to the Class A certificateholders and
the Class B certificateholders, respectively. Distributions of interest on the
Class B certificates, however, to the extent of collections on or in respect of
the receivables allocable to interest and certain available amounts on deposit
in the Reserve Fund, will not be subordinated to the payment of principal of
the Class A certificates.
[Reserve Fund.
In the event of delinquencies or losses on the receivables, the protection
afforded to the Class A certificateholders will be effected both by the
preferential right of the Class A certificateholders to receive current
distributions with respect to the receivables, to the extent described above
under "--Subordination of the Class B Certificates," prior to any distribution
being made on a Distribution Date to the Class B certificateholders, and to
receive amounts on deposit in the Reserve Fund. Amounts on deposit in the
Reserve Fund will also be generally available to cover shortfalls in required
distributions to the Class B certificateholders, in respect of interest, after
payment of interest on the Class A certificates and, in respect of principal,
after payment of interest on and principal of the Class A certificates and
interest on the Class B certificates. The Reserve Fund will not be a part of or
otherwise includible in the trust and will be a segregated trust account held
by the collateral agent for the benefit of the certificateholders.
Pursuant to the sale and servicing agreement, the Reserve Fund will be
created and maintained with the trustee. On the Closing Date, the seller will
deposit $ , which equals % of the initial pool balance, into the
Reserve Fund. The Reserve Fund initial deposit will be augmented on each
Distribution Date by deposit therein of collections remaining after
distribution of the servicing fee and amounts to be paid to Class A
certificateholders and Class B certificateholders as described under "Related
Definition" as "--Distributions on Certificates." Amounts on deposit in the
Reserve Fund will be released to the seller on each Distribution Date to the
extent that the amount on deposit in the Reserve Fund exceeds the Specified
Reserve Balance. Upon any such release to the seller of amounts from the
Reserve Fund, neither the Class A certificateholders nor the Class B
certificateholders will have any further rights in, or claims to, such amounts.
Amounts held from time to time in the Reserve Fund will continue to be held
for the benefit of the certificateholders and may be invested in eligible
investments. Any loss on such investment will be charged to the Reserve Fund.
Any investment earnings, net of losses, will be paid to the seller.
The time necessary for the Reserve Fund to reach and maintain the specified
reserve balance at any time after the date of issuance of the certificates will
be affected by the delinquency, credit loss and repossession and prepayment
experience of the receivables and, therefore, cannot be accurately predicted.
If on any Distribution Date the protection afforded the Class A
certificates by the Class B certificates and by the Reserve Fund is exhausted,
the Class A certificateholders will directly bear the risks associated with
ownership of the receivables. If on any Distribution
S-22
<PAGE>
Date amounts on deposit in the Reserve Fund have been depleted, the protection
afforded the Class B certificates by the Reserve Fund will be exhausted and the
Class B certificateholders will directly bear the risks associated with
ownership of the receivables.
None of the Class B certificateholders, the trustee, the servicer, AmSouth
Bank or the seller will be required to refund any amounts properly distributed
or paid to them, whether or not there are sufficient funds on any subsequent
Distribution Date to make full distributions to the Class A
certificateholders.]
Termination
The servicer will be permitted, at its option, in the event that the pool
balance as of the first day of a Collection Period has declined to % or less
of the initial pool balance, to purchase from the trust, on any Distribution
Date occurring in a subsequent Collection Period, all remaining receivables in
the trust at a purchase price equal to the sum of the Class A principal balance
and the Class B principal balance plus accrued and unpaid interest thereon at
the applicable pass-through rates. The exercise of this right will effect an
early retirement of the Certificates. See "Description of the Transfer and
Servicing Agreements--Termination" in the prospectus.
[Auction Sale
In the event of an auction sale, the certificates will be redeemed at a
redemption price equal to the sum of the Class A principal balance and the
Class B principal balance plus accrued and unpaid interest thereon at the
applicable pass-through rates. See "Description of the Transfer and Servicing
Agreements--Termination" in the prospectus.]
Duties of the Trustee
The trustee will make no representations as to the validity or sufficiency
of the trust agreement, the certificates, other than the execution and
authentication of the certificates, the receivables or any related documents,
and will not be accountable for the use or application by the seller or the
servicer of any funds paid to the seller or the servicer in respect of the
certificates or the receivables, or the investment of any monies by the
servicer before such monies are deposited into the Collection Account. The
trustee will not independently verify the receivables. If no event of servicing
termination has occurred and is continuing, the trustee will be required to
perform only those duties specifically required of it under the sale and
servicing agreement. Generally, those duties are limited to the receipt of the
various certificates, reports or other instruments required to be furnished to
the trustee under the sale and servicing agreement, in which case it will only
be required to examine them to determine whether they conform to the
requirements of the sale and servicing agreement. The trustee will not be
charged with knowledge of a failure by the servicer to perform its duties under
the sale and servicing agreement which failure constitutes an event of
servicing termination unless a responsible officer of the trustee obtains
actual knowledge of such failure as specified in the sale and servicing
agreement.
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<PAGE>
The trustee will be under no obligation to exercise any of the rights or
powers vested in it by the trust agreement 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 certificateholders, unless such certificateholders have offered the trustee
reasonable security or indemnity satisfactory to it against the costs, expenses
and liabilities which may be incurred therein or thereby. No Class A
certificateholder or Class B certificateholder will have any right under the
trust agreement to institute any proceeding with respect to the trust
agreement, unless such holder has given the trustee written notice of default
and unless, with respect to the Class A certificates, the holders of Class A
certificates evidencing not less than a majority of the aggregate outstanding
principal balance of the Class A certificates or, with respect to the Class B
certificates, the holders of Class B certificates evidencing not less than a
majority of the aggregate outstanding principal balance of the Class B
certificates, have made a written request to the trustee to institute such
proceeding in its own name as trustee thereunder and have offered to the
trustee reasonable indemnity, and the trustee for 30 days has neglected or
refused to institute any such proceedings.
The Trustee
, a , will act as trustee under the trust
agreement. The trustee, in its individual capacity or otherwise, and any of its
affiliates, may hold certificates in their own names or as pledgee. In
addition, for the purpose of meeting the legal requirements of certain
jurisdictions, the servicer and the trustee, acting jointly (or in some
instances, the trustee, acting alone), will have the power to appoint co-
trustees or separate trustees of all or any part of the trust. In the event of
such appointment, all rights, powers, duties and obligations conferred or
imposed upon the trustee by the trust agreement will be conferred or imposed
upon the trustee and such co-trustee or separate trustee jointly, or, in any
jurisdiction where the trustee is incompetent or unqualified to perform certain
acts, singly upon such co-trustee or separate trustee who shall exercise and
perform such rights, powers, duties and obligations solely at the direction of
the trustee.
The trustee may resign at any time, in which event the servicer will be
obligated to appoint a successor trustee. The servicer may also remove the
trustee if the trustee ceases to be eligible to serve, becomes legally unable
to act, is adjudged insolvent or is placed in receivership or similar
proceedings. In such circumstances, the servicer will be obligated to appoint a
successor trustee. However, any such resignation or removal of the trustee and
appointment of a successor trustee will not become effective until acceptance
of the appointment by the successor trustee.
The trust agreement will provide that the servicer will pay the trustee's
fees. The trust agreement will also provide that the trustee will be entitled
to indemnification by the seller for, and will be held harmless against, any
loss, liability or expense incurred by the trustee not resulting from the
trustee's own willful misfeasance, bad faith or negligence. Indemnification
will be unavailable to the trustee to the extent that any such loss, liability
or expense results from a breach of any of the trustee's representations or
warranties set forth in
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the trust agreement, and for any tax, other than those for which the seller or
the servicer is required to indemnify the trustee.
The trustee's corporate trust office is located at .
AmSouth Bank, the servicer, the seller and their respective affiliates may have
other banking relationships with the trustee and its affiliates in the ordinary
course of their business.
Material Federal Income Tax Consequences
In the opinion of Mayer, Brown & Platt, special tax counsel, the trust will
be classified as a grantor trust and not as an association taxable as a
corporation for federal income tax purposes. Accordingly, each certificate
owner will be subject to federal income taxation as if it owned directly its
interest in each asset owned by the trust and paid directly its share of
reasonable expenses paid by the trust. Each certificate owner therefore must
report on its federal income tax return the gross income from the portion of
the assets of the trust that is allocable to such certificate and may deduct
the portion of the expenses incurred or accrued by the trust that is allocable
to such certificate, at the same time and to the same extent as such items
would be reported by such certificate owner if it had purchased and held
directly an interest in such assets and received or accrued directly its share
of the payments with respect to such assets and incurred or accrued directly
its share of expenses incurred or accrued by the trust when those amounts are
received, incurred or accrued by the trust.
If the Class B certificate owners receive distributions of less than their
share of the Trust's receipts of principal or interest (the "shortfall amount")
because of the subordination of their certificates, such Class B certificate
owners would probably be treated for federal income tax purposes as if they had
(1) received as distributions their full share of such receipts,
(2) paid over to the Class A certificate owners an amount equal to
such shortfall amount, and
(3) retained the right to reimbursement of such amounts from certain
funds in the Reserve Account. Under this treatment,
(x) Class B certificate owners would be required to accrue as
current income any interest, original issue discount income, or (to
the extent paid on the trust's assets) accrued market discount of the
trust that was a component of the shortfall amount, even though such
amount was in fact paid to the Class A certificate owners,
(y) a loss would only be allowed to the Class B certificate owners
when their right to receive reimbursement of such shortfall amount
became worthless, and
(z) reimbursement of such shortfall amount prior to such a claim
of worthlessness would not be taxable income to a Class B certificate
owner because such amount was previously included in income. Those
results should not significantly affect the inclusion of income for
Class B certificate owners on the accrual method of accounting, but
could accelerate inclusion of income to Class B
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certificate owners on the cash method of accounting by, in effect,
placing them on the accrual method. All Class B certificate owners are
encouraged to consult their tax advisors regarding the character and
timing of loss deductions.
We suggest that each certificate owner review "Material Federal Income Tax
Consequences" in the prospectus for a more detailed discussion of the material
federal income tax consequences of the purchase, ownership and disposition of
the certificates.
State and Local Tax Consequences
The discussion above does not address the tax consequences of purchase,
ownership or disposition of the certificates under any state or local tax law.
We suggest that investors consult their own tax advisors regarding state and
local tax consequences.
ERISA Considerations
If you are a fiduciary of any employee benefit plan or other retirement
plan or arrangement, including individual retirement accounts and annuities,
Keogh plans and collective investment funds, separate accounts and general
accounts in which such plans, accounts or arrangements are invested, that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or
Section 4975 of the Code, each of which we refer to as a "Plan", you should
carefully review with your legal advisors whether the purchase or holding of
the certificates could give rise to a transaction that is prohibited or is not
otherwise permitted either under ERISA or Section 4975 of the Code or whether a
statutory or administrative exemption may be available.
Class A Certificates
The U.S. Department of Labor has issued an individual exemption to the
underwriter which generally exempts from the application of the prohibited
transaction provisions of Sections 406(a) and (b) and 407(a) of ERISA, and the
excise taxes imposed on such prohibited transactions pursuant to Sections
4975(a) and (b) of the Code, the purchase, sale and holding of certificates
underwritten by an underwriter, as defined below, provided that certain
conditions set forth in the exemption are satisfied. For purposes of this
discussion, the term "underwriter" includes
(a) the underwriter,
(b) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with
the underwriter and
(c) any member of the underwriting syndicate or selling group of which
the underwriter or a person described in (b) is a manager or co-manager
with respect to the certificates.
The obligations covered by the exemption include motor vehicle installment
obligations such as the receivables. The exemption would apply to the
acquisition, holding and resale of the certificates by a Plan only if specific
conditions, some of which are described below, are met. It is not clear whether
the exemption applies to participant directed plans as described in Section
404(c) of ERISA or plans that are subject to Section 4975 of the Code but that
are
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not subject to Title 1 of ERISA, such as certain Keogh plans and certain
individual retirement accounts.
The exemption sets forth six general conditions that, among others, must be
satisfied for a transaction involving the purchase, sale and holding of Class A
certificates by a Plan to be eligible for exemptive relief. First, the
acquisition of the certificates by a Plan must be on terms that are at least as
favorable to the Plan as they would be in an arm's-length transaction with an
unrelated party. Second, the rights and interests evidenced by such
certificates must not be subordinated to the rights and interests evidenced by
the other certificates of the same trust. Third, such certificates, at the time
of acquisition by the Plan, must be rated in one of the three highest generic
rating categories by Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc., Duff & Phelps Credit Rating Co., Moody's Investors
Service, Inc. and Fitch IBCA, Inc. Fourth, the trustee cannot be an affiliate
of any other member of the "Restricted Group," which consists of the
underwriter, the seller, the servicer, the trustee, any sub-servicer, and any
borrower with respect to the receivables constituting more than 5.0% of the
aggregate unamortized principal balance of the receivables as of the date of
initial issuance of such certificates. Fifth, the sum of all payments made to
and retained by any underwriter in connection with the distribution or
placement of certificates must represent not more than reasonable compensation
for underwriting such certificates; the sum of all payments made to and
retained by the seller pursuant to the assignment of the receivables to the
trust must represent not more than the fair market value of such obligations;
and the sum of all payments made to and retained by the servicer or any sub-
servicer must represent not more than reasonable compensation for such person's
services under the sale and servicing arrangement and reimbursement of such
person's reasonable expenses in connection therewith. Sixth, the investing Plan
must be an accredited investor as defined in Rule 501(a)(1) of Regulation D of
the Securities and Exchange Commission under the Securities Act.
If you are a fiduciary of a Plan and you are contemplating purchasing a
Class A certificate, you must make your own determination that, at the time of
such purchase, such certificate satisfies the general conditions set forth
above.
The exemption also requires that the trust meet the following requirements:
(i) the trust must consist solely of assets of the type that have been included
in other investment pools; (ii) certificates in such other investment pools
must have been rated in one of the three highest categories of the rating
agencies for at least one year prior to the Plan's acquisition of such
certificates; and (iii) certificates in such other investment pools must have
been purchased by investors other than Plans for at least one year prior to any
Plan's acquisition of such certificates.
If the general conditions of the exemption are satisfied, they may provide
an exemption from the restrictions imposed by Sections 406(a) and 407(a) of
ERISA, as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code, in connection
with (i) the direct or indirect sale, exchange or
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<PAGE>
transfer of Class A Certificates in the initial issuance of Certificates
between the Seller or an Underwriter and a Plan when the seller, an
underwriter, the trustee, the servicer, a sub-servicer or a borrower is a
"party in interest" or "disqualified person", as defined by ERISA and Section
4975 of the Code, with respect to the investing Plan, (ii) the direct or
indirect acquisition or disposition in the secondary market of Class A
certificates by a Plan and (iii) the holding of Class A certificates by a Plan.
However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of such
certificate on behalf of an "Excluded Plan" by any person who has discretionary
authority or renders investment advice with respect to the assets of such
Excluded Plan. For these purposes, an Excluded Plan is a Plan sponsored by any
member of the Restricted Group.
If certain specific conditions of the exemption are also satisfied, the
exemption may provide relief from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code to an obligor acting as a fiduciary with respect to the investment of
a Plan's assets in the Class A certificates, or that obligor's affiliate, only
if, among other requirements (i) that obligor, or its affiliate, is an obligor
with respect to 5% or less of the fair market value of the assets contained in
the Trust and is otherwise not a member of the Restricted Group, (ii) a Plan's
investment in Class A Certificates does not exceed 25% of all of the Class A
certificates outstanding at the time of the acquisition, (iii) immediately
after the acquisition, no more than 25% of the assets of the Plan are invested
in certificates representing an interest in trusts, including the Trust,
containing assets sold or serviced by the seller or the servicer and (iv) in
the case of the acquisition of the Class A certificates in connection with
their initial issuance, at least 50% of the aggregate interest in the trust is
acquired by persons independent of the Restricted Group.
The exemption also applies to transactions in connection with the
servicing, management and operation of the trust, provided that, in addition to
the general requirements described above, (a) such transactions are carried out
in accordance with the terms of a binding pooling and servicing arrangement and
(b) the pooling and servicing agreement is provided to, or described in all
material respects in the prospectus or private placement memorandum provided
to, investing Plans before their purchase of certificates issued by the trust.
The trust agreement and the sale and servicing agreement, collectively, serve
as a pooling and servicing agreement as defined in the exemption. These
agreements provide that all transactions relating to the servicing, management
and operations of the trust must be carried out in accordance with their terms.
If you are a fiduciary of a Plan, before purchasing any Class A
certificate, you must yourself confirm that the specific and general conditions
of the exemption and the other requirements set forth in the exemption would be
satisfied.
Class B Certificates
The characteristics of the Class B certificates do not meet the
requirements of the Exemption. Accordingly, Class B certificates may not be
acquired by a Plan, unless it is an
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acquisition by an insurance company general account that is eligible for the
relief afforded under Sections I and III of PTE 95-60 as discussed below.
Section III of Department of Labor Prohibited Transaction Class Exemption
95-60 provides relief from the application of the prohibited transaction
provisions of Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of
the Code for transactions in connection with the servicing, management and
operation of a trust (such as the Trust) in which an insurance company general
account has an interest as a result of its acquisition of certificates issued
by the trust, provided that certain conditions are satisfied. Section I of PTE
95-60 provides relief from the application of Sections 406(a) and 407(a) of
ERISA and Section 4975 of the Code for transactions between a party in interest
with respect to a Plan and an insurance company general account in which the
Plan has an interest if certain conditions are met. If the conditions of
Sections I and III of PTE 95-60 are met, insurance company general accounts
would be allowed to purchase classes of certificates, such as the Class B
certificates, which do not meet the requirements of the exemptions solely
because they (i) are subordinated to other classes of certificates in the trust
and/or (ii) have not received a rating at the time of the acquisition in one of
the three highest rating categories from one of the rating agencies. All other
conditions of the exemption would have to be satisfied in order for PTE 95-60
to be available. Before purchasing Class B certificates, an insurance company
general account seeking to rely on Sections I and III of PTE 95-60 should
itself confirm that it is eligible for, and has satisfied all applicable
conditions and other requirements of relief under such section.
If you are a Plan fiduciary and you are considering whether to purchase
certificates, you should consult with your counsel about whether the exemption
is applicable, and about other issues in connection with your prospective
purchase. You must determine on your own whether all conditions have been
satisfied and whether the certificates are an appropriate investment for a Plan
under ERISA and the Code or, in the case of governmental plans, under
applicable federal, state or local law. Each purchaser of Class A certificates
with the assets of one or more Plans shall be deemed to represent that each
such Plan qualifies as an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D under the Securities Act. No Plan may purchase or hold Class A
certificates unless such certificates are rated in one of the top three rating
categories by at least one rating agency at the time of such purchase, unless
such Plan is an insurance company general account that represents and warrants
that it is eligible for, and meets all of the requirements of, Sections I and
III of Prohibited Transaction Class Exemption 95-60. Each Purchaser of Class B
certificates shall be deemed to represent that it is eligible for, and meets
all of the requirements of, Sections I and III of Prohibited Transaction Class
Exemption 95-60.
Underwriting
Subject to the terms and conditions set forth in the underwriting agreement
relating to the certificates, the seller has agreed to sell to , and the
underwriter has agreed to purchase, the certificates, subject to the
satisfaction of certain conditions precedent.
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The seller has been advised by the underwriter that it proposes to offer
the certificates to the public initially at the public offering prices set
forth on the cover page of this prospectus, and to certain dealers at such
prices less a concession of % per Class A certificate and % per Class
B certificate; that the underwriter and such dealers may allow a discount of
% per Class A certificate and % per Class B certificate on the sale
to certain other dealers; and that after the initial public offering of the
certificates, the public offering prices and the concessions and discounts to
dealers may be changed by the Underwriter.
Until the distribution of the certificates is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriter and
certain selling group members to bid for and purchase the certificates. As an
exception to these rules, the underwriter is permitted to engage in certain
transactions that stabilize the prices of the certificates. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of such certificates.
In connection with the offering, the underwriter may make short sales of
the certificates and may purchase certificates on the open market to cover
positions created by short sales. Short sales involve the sale by the
underwriters of a greater number of certificates than they are purchasing in
the offering. The underwriter must close out any short position by purchasing
certificates in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the seller nor the underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the certificates. In addition,
neither the seller nor the underwriter makes any representation that the
underwriter will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
The seller has agreed to indemnify the underwriter against certain
liabilities, including civil liabilities under the Securities Act, or
contribute to payments which the underwriter 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.
The trustee or the collateral agent, as applicable, may, from time to time,
invest the funds in the Accounts in eligible investments acquired from the
underwriter.
Legal Matters
Certain legal matters with respect to the certificates will be passed upon
for the seller by Mayer, Brown & Platt. Certain legal matters with respect to
the certificates will be passed upon for the underwriter by .
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<PAGE>
Glossary
[Additional terms to be inserted as necessary]
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Interest for the preceding
Distribution Date and any outstanding Class A Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that
is actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any Distribution
Date, the sum of Class A Monthly Interest for such Distribution Date and the
Class A Interest Carryover Shortfall for such Distribution Date.
"Class A Monthly Interest" means, with respect to any Distribution Date,
the product of (a) one-twelfth of the Class A Pass-Through Rate and (b) the
Class A Principal Balance as of the Distribution Date occurring in the
preceding Collection Period (after giving effect to any payments made on such
Distribution Date) or, in the case of the first Distribution Date, the Original
Class A Principal Balance.
"Class A Monthly Principal" means, with respect to any Distribution Date,
the Class A Percentage of the Principal Distribution Amount for such
Distribution Date plus the Class A Percentage of Realized Losses with respect
to receivables which became Liquidated Receivables during the related
Collection Period.
"Class A Principal Balance" equals the Original Class A Principal Balance,
as reduced by all amounts allocable to principal on the Class A Certificates
previously distributed to Class A certificateholders.
"Class A Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class A Monthly Principal for the preceding
Distribution Date and any outstanding Class A Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that
is actually deposited in the Class A Distribution Account on such preceding
Distribution Date.
"Class A Principal Distribution" means, with respect to any Distribution
Date, the sum of Class A Monthly Principal for such Distribution Date and the
Class A Principal Carryover Shortfall for such Distribution Date; provided,
however, that the Class A Principal Distribution shall not exceed the Class A
Principal Balance immediately prior to such Distribution Date. In addition, on
the Final Scheduled Distribution Date, the principal required to be deposited
in the Class A Distribution Account will include the lesser of
. any principal due and remaining unpaid on each receivable in the trust
as of the Final Scheduled Maturity Date or
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. the portion of the amount required to be deposited under the preceding
clause that is necessary, after giving effect to the other amounts to be
deposited in the Class A Distribution Account on such Distribution Date
and allocable to principal, to reduce the Class A Principal Balance to
zero.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Interest for the preceding
Distribution Date and any outstanding Class B Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that
is actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
"Class B Interest Distribution" means, with respect to any Distribution
Date, the sum of Class B Monthly Interest for such Distribution Date and the
Class B Interest Carryover Shortfall for such Distribution Date.
"Class B Monthly Interest" means, with respect to any Distribution Date,
the product of (a) one-twelfth of the Class B Pass-Through Rate and (b) the
Class B Principal Balance as of the Distribution Date occurring in the
preceding Collection Period (after giving effect to any payments made on such
Distribution Date) or, in the case of the first Distribution Date, the Original
Class B Principal Balance.
"Class B Monthly Principal" means, with respect to any Distribution Date,
the Class B Percentage of the Principal Distribution Amount for such
Distribution Date plus the Class B Percentage of Realized Losses with respect
to Receivables which became Liquidated Receivables during the related
Collection Period.
"Class B Principal Balance" equals the Original Class B Principal Balance,
as reduced by all amounts allocable to principal on the Class B certificates
previously distributed to Class B certificateholders.
"Class B Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of Class B Monthly Principal for the preceding
Distribution Date and any outstanding Class B Principal Carryover Shortfall on
such preceding Distribution Date over the amount in respect of principal that
is actually deposited in the Class B Distribution Account on such preceding
Distribution Date.
"Class B Principal Distribution" means, with respect to any Distribution
Date, the sum of Class B Monthly Principal for such Distribution Date and the
Class B Principal Carryover Shortfall for such Distribution Date; provided,
however, that the Class B Principal Distribution shall not exceed the Class B
Principal Balance immediately prior to such Distribution Date. In addition, on
the Final Scheduled Distribution Date, the principal required to be distributed
to Class B certificateholders will include the lesser of
. any principal due and remaining unpaid on each receivable in the trust
as of the Final Scheduled Maturity Date or
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. the portion of the amount required to be deposited under the preceding
bullet point that is necessary, after giving effect to the other amounts
to be deposited in the Class B Distribution Account on such Distribution
Date and allocable to principal, to reduce the Class B Principal Balance
to zero, and, in the case of these bullet points, remaining after any
required distribution of the amount described in the first bullet point
to the Class A Distribution Account.
"Collection Period" means, with respect to a Distribution Date, (a) in the
case of the initial Distribution Date, the period from and including the Cutoff
Date through and including , and (b) thereafter, the
calendar month preceding the related Distribution Date.
"Collections" for any Distribution Date will equal the sum of Interest
Collections and Principal Collections for the related Distribution Date.
"Cram Down Loss" means, with respect to a receivable if a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such receivable or otherwise
modifying or restructuring the scheduled payments to be made on such
receivable, an amount equal to
. the excess of the principal balance of such receivable immediately prior
to such order over the principal balance of such receivable as so
reduced and/or
. if such court shall have issued an order reducing the effective rate of
interest on such receivable, the net present value, calculated using as
the discount rate the higher of the APR on such receivable or the rate
of interest, if any, specified by the court in such order, of the
scheduled payments as so modified or restructured.
"Interest Collections" for any Distribution Date will equal the sum of the
following amounts with respect to any Distribution Date, computed, with respect
to Simple Interest Receivables, in accordance with the simple interest method,
and with respect to Actuarial Receivables, in accordance with the actuarial
method:
. that portion of all collections on the receivables allocable to interest
in respect of the preceding Collection Period, including, with respect
to Actuarial Receivables, amounts withdrawn from the Payahead Account
and allocable to interest and excluding amounts deposited into the
Payahead Account and allocable to interest, in each case, in respect of
the preceding Collection Period;
. all proceeds, other than any proceeds from any Dealer commission, of the
liquidation of Liquidated Receivables, net of expenses incurred by the
servicer in connection with such liquidation and any amounts required by
law to be remitted to the obligor on such Liquidated Receivables, to the
extent attributable to interest due thereon, which became Liquidated
Receivables during such Collection Period in accordance with the
servicer's customary servicing procedures;
[. all Advances made by the servicer of interest due on the Actuarial
Receivables in respect of the preceding Collection Period;]
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<PAGE>
. the Purchase Amount of each receivable that was repurchased by the
seller or purchased by the servicer during the preceding Collection
Period to the extent attributable to accrued interest thereon;
. all monies collected, from whatever source, other than any proceeds from
any Dealer commission, in respect to Liquidated Receivables during any
Collection Period following the Collection Period in which such
receivable was written off, net of the sum of any amounts expended by
the Servicer for the account of the Obligor and any amounts required by
law to be remitted to the obligor; and
. Investment Earnings for such Distribution Date.
In calculating the Interest Collections, the following shall be excluded:
all payments and proceeds, including Liquidation Proceeds, of any receivables
. a repurchased by the seller or purchased by the servicer, the Purchase
Amount of which has been included in the Interest Collections on a prior
Distribution Date and
. received on Actuarial Receivables and distributed to the servicer, with
respect to such Distribution Date, as reimbursement for any unreimbursed
Advances in accordance with the sale and servicing agreement.
Interest Collections on any Distribution Date shall exclude all payments
and proceeds, including Liquidation Proceeds, of any receivables the Purchase
Amount of which has been included in Collections in a prior Collection Period.
"Liquidated Receivables" means, receivables (a) which have been liquidated
by the servicer through the sale of the related Financed Vehicle, (b) as to
which all or a portion representing 10% or more of a scheduled payment due is
150 or more days delinquent or (c) with respect to which proceeds have been
received which, in the servicer's judgment, constitute the final amounts
recoverable in respect of such receivable.
"Pool Balance" at any time will represent the aggregate principal balance
of the Receivables at the end of the preceding Collection Period, after giving
effect to all payments, other than Payaheads, received from obligors, Purchase
Amounts and Advances to be remitted by AmSouth Bank, the servicer and the
seller, as the case may be, all for such Collection Period, all losses realized
on receivables that became Liquidated Receivables during such Collection Period
and all Cram Down Losses for such Collection Period.
"Principal Collections" for any Distribution Date will equal the sum of the
following amounts with respect to any Distribution Date, computed, with respect
to Simple Interest Receivables, in accordance with the simple interest method,
and with respect to Actuarial Receivables, in accordance with the actuarial
method:
. that portion of all collections on the receivables allocable to
principal in respect of the preceding Collection Period including, with
respect to Actuarial Receivables, amounts withdrawn from the Payahead
Account and allocable to principal and excluding amounts deposited into
the Payahead Account and allocable to principal, in each case, in
respect of the preceding Collection Period;
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. Liquidation Proceeds attributable to the principal amount of Receivables
which became Liquidated Receivables during the preceding Collection
Period in accordance with the Servicer's customary servicing procedures
with respect to such Liquidated Receivables;
[. all Advances made by the Servicer of principal due on the Actuarial
Receivables in respect of the preceding Collection Period;]
. to the extent attributable to principal, the Purchase Amount of each
receivable repurchased by the seller or purchased by the Servicer during
the preceding Collection Period; and
. partial prepayments on receivables in respect of the preceding
Collection Period relating to refunds of extended service contracts, or
of physical damage, credit life, credit accident or health insurance
premium, disability insurance policy premiums, but only if such costs or
premiums were financed by the respective obligor and only to the extent
not included in the first bullet point above.
In calculating the Principal Collections, the following shall be excluded:
all payments and proceeds, including Liquidation Proceeds, of any receivables
. repurchased by the Seller or purchased by the servicer the Purchase
Amount of which has been included in the Principal Collections on a
prior Distribution Date, and
[. received on Actuarial Receivables and distributed to the servicer, with
respect to such Distribution Date, as reimbursement for any unreimbursed
Advances in accordance with the Agreement.]
Principal Collections on any Distribution Date shall exclude all payments
and proceeds, including Liquidation Proceeds, of any receivables the Purchase
Amount of which has been included in Collections in a prior Collection Period.
"Principal Distribution Amount" for a Distribution Date shall be the sum of
the following amounts with respect to the preceding Collection Period:
(1) (a) with respect to Simple Interest Receivables, that portion of all
collections on the Receivable allocable to principal in respect of the
preceding Collection Period and (b) with respect to Actuarial
Receivables the sum of
. the amount of all scheduled payments allocable to principal due
during the preceding Collection Period and
. the portion of all prepayments in full allocable to principal
received during the preceding Collection Period,
in the case of both (a) and (b) without regard to any extensions or
modifications thereof effected alter the Cutoff Date, other than with
respect to any extensions or modifications in connection with Cram Down
Losses during such Collection Period;
S-35
<PAGE>
(2)the principal balance of each receivable that was repurchased by
the seller or purchased by the Servicer in each case during the preceding
Collection Period, except to the extent included in (1) above;
(3)the principal balance of each Liquidated Receivable which became
such during the preceding Collection Period, except to the extent included
in (1) above;
(4)partial prepayments on receivables in respect of the preceding
Collection Period relating to refunds of extended service contracts, or of
physical damage, credit life, credit accident or health insurance premium,
disability insurance policy premiums, but only if such costs or premiums
were financed by the respective obligor and only to the extent not
included in clause (1) above; and
(5)the aggregate amount of Cram Down Losses during such Collection
Period.
"Realized Losses" means, for any period, the excess of the principal
balance of a Liquidated Receivable over Liquidation Proceeds to the extent
allocable to principal.
"Specified Reserve Balance" with respect to any Distribution Date
generally means the greater of
(a) % of the sum of the Class A Principal Balance and Class B
Principal Balance on such Distribution Date, after giving effect to all
distributions with respect to the Certificates to be made on such
Distribution Date, or
(b) % of the sum of the Original Class A Principal Balance and
Original Class B Principal Balance. In no circumstances will the seller be
required to deposit any amounts in the Reserve Fund other than the Reserve
Fund Initial Deposit to be made on the Closing Date.
S-36
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ +
+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 the registration statement +
+filed with the Securities and Exchange Commission is effective. 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Prospectus Supplement To Prospectus Dated July 28, 2000 Form 2(1)
$[ ]
Asset-Backed Securities
[AmSouth Auto Trust 200 - ] [AmSouth Auto 2000 - LLC]
Issuer
AmSouth Auto Receivables LLC
Seller
AmSouth Bank
Servicer
<TABLE>
<CAPTION>
Price Proceeds
Principal Interest to Underwriting to the
Balance Rate Public Discount Seller
---------- -------- ------ ------------ --------
<S> <C> <C> <C> <C> <C>
[Class A-1 Notes].............. $ % % % %
[Class A-2 Notes].............. $ % % % %
[Class A-3 Notes].............. $ % % % %
[Certificates]................. $ % % % %
</TABLE>
The Securities
Neither the
notes [nor . are principally secured by the assets of the issuer, which
the consist primarily of motor vehicle installment sales
certificates] contracts and loans.
issued by . currently have no trading market.
the issuer . are not insured or guaranteed by any governmental agency
represent or any other party.
obligations
of [or
interests
in,] and are
not
guaranteed
by, AmSouth
Bank,
AmSouth Auto
Receivables,
LLC or any
of their
affiliates,
other than
the issuer.
The
prospectus
supplement
may be used
to offer and
sell the
securities
only if
accompanied
by the
prospectus.
Before you purchase any of the securities, you should carefully read the
"risk factors" beginning on page S-[ ] in this prospectus supplement and on
page [ ] in 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 accompanying prospectus are accurate or
complete. Any representation to the contrary is a criminal offense.
[Underwriters]
[ ] [ ], [200 ]
-----
(1) This form of prospectus supplement is representative of the form of
prospectus supplement that may typically be used in a particular
transaction. The provisions in this form may change from transaction to
transaction, whether or not the provisions are bracketed in the form to
reflect the specific parties, the structure of the securities, servicing
provisions, receivables pool and provisions of the transaction documents.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary of Terms......................................................... S-1
The Receivables........................................................ S-1
Interest Distributions................................................. S-2
Principal Distributions................................................ S-2
[Reserve Account]...................................................... S-2
Optional Termination................................................... S-2
Material Federal Tax Consequences...................................... S-2
ERISA Considerations................................................... S-2
Ratings................................................................ S-3
[No] Listing of the Securities......................................... S-3
Risk Factors........................................................... S-3
Risk Factors............................................................. S-4
Features of the Receivables Pool May Result in Losses.................. S-4
Certificates Will Absorb Cash Shortfalls and Losses Before the Notes... S-4
Your Yield to Maturity May Be Reduced by Prepayments................... S-5
You may experience reduced returns and delays on your securities
resulting from changes in delinquency levels and losses.............. S-6
[You may experience reduced returns on your securities resulting from
distribution of amounts in the pre-funding account................... S-6]
Formation of the Issuer.................................................. S-7
The Issuer............................................................. S-7
Capitalization of the Trust............................................ S-7
[The Owner Trustee..................................................... S-8]
The Issuer Property...................................................... S-8
The Receivables Pool..................................................... S-9
Pool Composition....................................................... S-9
The Servicer............................................................. S-13
Size of Servicing Portfolio............................................ S-13
Delinquencies And Loss................................................. S-13
[Weighted Average Life of the Securities................................. S-15]
Use of Proceeds.......................................................... S-17
Description of the Notes................................................. S-17
The Notes.............................................................. S-17
Description of the Certificates.......................................... S-19
The Certificates....................................................... S-19
Description of the Transfer and Servicing Agreements..................... S-20
Sale and Assignment of Receivables..................................... S-20
Accounts............................................................... S-20
Servicing Compensation................................................. S-21
Distributions.......................................................... S-21
Credit Enhancements.................................................... S-23
Material Federal Income Tax Consequences................................. S-24
State and Local Tax Consequences......................................... S-24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ERISA Considerations...................................................... S-24
The Notes............................................................... S-25
Certificates............................................................ S-26
Independent Review and Consultation with Counsel.......................... S-27
Underwriting.............................................................. S-27
Legal Matters............................................................. S-28
Glossary.................................................................. S-29
</TABLE>
ii
<PAGE>
Important Notice About Information Presented In This
Prospectus Supplement And The Accompanying Prospectus
We tell you about the securities in two separate documents that
progressively provide more detail:
. the accompanying prospectus, which provides general information, some of
which may not apply to your securities; and
. this prospectus supplement, which describes the specific terms of your
securities.
You should rely only on the information provided in this prospectus
supplement and the accompanying prospectus, including the information
incorporated by reference. We have not authorized anyone to provide you with
different information.
We include cross-references in this prospectus supplement and in the
accompanying 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 accompanying prospectus
provide the page numbers on which these captions are located.
We are not offering the securities in any state where the offer of the
notes is not permitted.
Capitalized terms are defined in the glossary beginning on page of this
prospectus supplement or in the glossary on page of the prospectus.
----------------
<PAGE>
Summary of Terms
This section outlines the significant terms of the offered securities. As a
summary, we do not attempt to discuss or describe in any detail the terms
outlined here. We recommend that you review carefully the more detailed
information in this prospectus supplement and in the attached prospectus.
<TABLE>
<S> <C>
Issuer.................. , a .
Seller.................. AmSouth Auto Receivables LLC
Servicer................ Am South Bank
[Owner Trustee.......... .]
Indenture Trustee....... .
Closing Date............ On or about , 200 .
Cutoff Date............. The [close] [opening] of business on , 200 .
Distribution Dates...... of each month or the next business day if the
day is not a business day, beginning in
, 200 .
Record Dates............ Last day of the month prior to a distribution date.
Minimum Denominations... [$25,000.]
Form.................... Book-entry.
Interest Accrual Method. [30/360.]
Final Scheduled for the notes [and for the
Distribution Date...... certificates.]
</TABLE>
The Receivables
The receivables are amounts owed by individuals under retail installment
sale contracts and installment loans to purchase or refinance new or used
automobiles, including passenger cars, minivans, sport utility vehicles and
trucks, purchased from motor vehicle dealers. The receivables were originated
by dealers and purchased by AmSouth Bank pursuant to dealer agreements.
The seller expects that the receivables will have the following
characteristics as of , 200 . As of the closing date, no more than 5%
of the receivables will have characteristics that differ from those described
in this prospectus supplement as of , 200 .
<TABLE>
<S> <C>
Number of contracts....................................
Principal Amount....................................... $
Annual Percentage Rates................................ % to %
Weighted Average.......................................
Annual Percentage Rate................................. %
Original term.......................................... months to months
Weighted Average original term......................... months
Remaining term......................................... months to months
Weighted Average remaining term........................ months
New.................................................... %
Used................................................... %
States.................................................
</TABLE>
S-1
<PAGE>
Interest Distributions
On each distribution date, if the issuer has sufficient cash, it will pay
you the interest accrued on your securities during the related interest period.
Interest periods begin on the prior distribution date and run through the day
before the current distribution date. The first interest period, however,
begins on the closing date and runs through the day before the first
distribution date. We will assume that each year has 360 days.
Principal Distributions
The issuer will pay all principal collections to the noteholders until the
notes are paid in full. [The trust will not pay any principal collections to
the certificateholders until the notes are paid in full.]
[Reserve Account
There will be a reserve account to help cover cash flow shortfalls.
Initially, the account will be $ . On each distribution date amounts
remaining after distribution of the total servicing fee and amounts to be paid
to the noteholders [and certificateholders] will be deposited in the reserve
account until the amount equals a specified amount.]
Optional Termination
When the principal amount of the receivables is % or less than it was on
the cutoff date, the servicer may buy the receivables. If the servicer does not
do so, the indenture trustee will try to sell the receivables to another buyer.
In either case, you must receive the principal amount of your securities and
all accrued but unpaid interest or the receivables will not be sold.
Material Federal Tax Consequences
Mayer, Brown & Platt, special federal tax counsel to the issuer, is of the
opinion that, for federal income tax purposes the notes will constitute
indebtedness [and the certificates will constitute interests in a trust fund
that will not be treated as an association taxable as a corporation or publicly
traded partnership taxable as a corporation.] [the issuer will be treated as a
[partnership] [disregarded entity] for federal income tax purposes.]
Generally interest payments will be ordinary income and principal payments
will be a return of principal. However, the tax code is complex, and 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.
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
S-2
<PAGE>
apply. [The certificates may not be purchased by employee benefit plans and
accounts, or other retirement arrangements except for insurance company general
accounts meeting specific requirements.] See "ERISA Considerations" in this
prospectus supplement and the prospectus.
Ratings
It is a condition to the issuance of the securities that [insert applicable
rating agencies] rate the securities [insert applicable rating of securities].
A rating is not a recommendation to purchase, hold or sell the securities,
inasmuch as such rating does not comment as to market price or suitability for
a particular investor. The ratings of the securities address the likelihood of
the payment of principal and interest on the securities according to their
terms. A rating agency may lower or withdraw its rating in the future, in its
discretion.
[No] Listing of the Securities
[The securities will not be listed on any national securities exchange or
on any automated quotation system of a registered securities association. See
"Risk Factors" in the prospectus.] [The securities will be listed on
].
Risk Factors
You should consider the principal risks of an investment in the securities
set forth under the caption "Risk Factors" in this prospectus supplement and
the prospectus.
S-3
<PAGE>
Risk Factors
An investment in the securities involves significant risks. Before you
decide to invest, we recommend that you carefully consider the following risk
factors and the risk factors specified under the heading "risk factors"
beginning on page of the prospectus, which are the principal risks of an
investment in the securities.
There are a number of features of the receivables
Features of the in the pool that create additional risk of loss,
receivables pool may including the following:
result in losses
. The concentration of the receivables in
specific geographic areas may increase the
risk of loss. Economic conditions in the
states where obligors reside may affect the
delinquency, loan loss and repossession
experience of the issuer with respect to the
receivables. As of the cutoff date, the
billing addresses of the obligors with
respect to approximately %, %, and %
of the principal amount of the
receivables were located in ,
and , respectively.
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.
. Newly originated loans may be more likely to
default which may cause losses. Defaults on
automobile loans tend to occur at higher
rates during the early years of the
automobile loans. Substantially all of the
automobile loans will have been originated
within 12 months prior to the sale to the
issuer. As a result, the issuer may
experience higher rates of default than if
the automobile loans had been outstanding
for a longer period of time.
[Certificates will absorb The certificateholders will not receive any
cash shortfalls and losses distribution of interest until the full amount of
before the notes interest on the notes has been paid on each
distribution date. The certificateholders will
not receive any distributions of principal until
the notes have been repaid in full. Holders of
the certificates must rely for repayment upon
payments on the receivables, and, if and to the
extent available, amounts on deposit in the
reserve account. If funds in the reserve account
are exhausted, the issuer will depend solely on
S-4
<PAGE>
current distributions on the receivables to make
payments on the securities. Delinquent payments
on the receivables may result in a shortfall in
the distributions on the certificates on any
distribution date due to the priority of payments
on the notes. Although on each distribution date
distributions of interest on the certificates
ranks senior to payments of principal of the
notes, after an event of default or an
acceleration of the notes, the principal amount
of the notes must be paid in full prior to the
distribution of any amounts on the certificates.]
Your yield to maturity may The pre-tax yield to maturity is uncertain and
be reduced by prepayments will depend on a number of factors including the
following:
. The rate of return of principal is
uncertain. The amount of distributions of
principal of the securities and the time
when you receive those distributions depends
on the amount and the times at which
borrowers make principal payments on the
receivables. Those principal payments may be
regularly scheduled payments or unscheduled
payments resulting from prepayments or
defaults of the receivables.
. You may be unable to reinvest distributions
in comparable investments. Asset backed
securities, like the securities, usually
produce more returns of principal to
investors when market interest rates fall
below the interest rates on the receivables
and produce less returns of principal when
market interest rates are above the interest
rates on the receivables. As a result, you
are likely to receive more money to reinvest
at a time when other investments generally
are producing a lower yield than that on the
securities, and are likely to receive less
money to reinvest when other investments
generally are producing a higher yield than
that on the securities. You will bear the
risk that the timing and amount of
distributions on your securities will
prevent you from attaining your desired
yield.
. 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 or the auction call,
you will receive the principal amount of
your securities plus accrued interest
through the related
S-5
<PAGE>
interest period. Because your securities will
no longer be outstanding, you will not
receive the additional interest payments that
you would have received had the securities
remained outstanding. If you bought your
securities at par or at a premium, your yield
to maturity will be lower than it would have
been if the optional termination or auction
call had not been exercised.
You may experience There can be no assurance that the historical
reduced returns and levels of delinquencies and losses experienced by
delays on your securities AmSouth Bank on its loan portfolio will be
resulting from changes in indicative of the performance of the receivables
delinquency levels and included in the issuer or that the levels will
losses continue 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.
[You may experience
reduced returns on your The issuer has access to a pre-funding account.
securities resulting from The issuer will purchase receivables from the
distribution of amounts seller, which, in turn, will acquire these
in the pre-funding receivables from AmSouth Bank, with funds on
account. deposit in the pre-funding account.
You will receive as a prepayment of principal to
you on the date specified in the prospectus
supplement any amounts remaining in the pre-
funding account that have not been used to
purchase receivables. This prepayment of principal
could have the effect of shortening the weighted
average life of the securities of the related
series. The inability of the seller to obtain
receivables meeting the requirements for sale to
the issuer will increase the likelihood of a
prepayment of principal. In addition, you will
bear the risk that you may be unable to reinvest
any principal prepayment at yields at least equal
to the yield on the securities.]
[Insert any additional risk factors applicable to a particular offering]
S-6
<PAGE>
Capitalized Terms
The capitalized terms used in this prospectus, unless defined elsewhere in
this prospectus supplement, have the meanings set forth in the glossary
starting on page .
Formation of the Issuer
The Issuer
[AmSouth Auto Trust 2000 is a common law trust to be formed by the seller
under the laws of the State of pursuant to the trust agreement]
[AmSouth Auto 200 - LLC is a limited liability company formed by the seller
pursuant to the laws of the State of ] for the transactions
described in this prospectus. After its formation, the issuer will not engage
in any activity other than
(1) acquiring, holding and managing the receivables and the other
assets of the Issuer and proceeds from the receivables and other assets of
the trust,
(2) issuing [the certificates] and the notes,
(3) making payments on [the certificates and] the notes and
(4) engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or
connected therewith.
The issuer will initially be capitalized with equity of $ , excluding
amounts deposited in the Reserve Account, [representing the initial principal
balance of the certificates.] The notes [and certificates] will be transferred
by the issuer to the seller in exchange for the receivables. The [certificates
and the] notes will be sold to the underwriter for cash. The servicer will
initially service the receivables pursuant to a [sale] and servicing agreement,
to be dated as of , 200 , among the seller, the seller, the trust and
the servicer, and will be compensated for acting as the servicer. See
"Description of the Transfer and Servicing Agreements--Servicing Compensation"
herein and "--Servicing Fee" in the prospectus. To facilitate servicing and to
minimize administrative burden and expense, the servicer will be appointed
custodian for the receivables by the issuer, but will not stamp the receivables
to reflect the sale and assignment of the receivables to the issuer, nor amend
the certificates of title of the financed vehicles.
If the protection provided to the investment of the securityholders in the
issuer by the Reserve Account is insufficient, the issuer will look to the
obligors on the receivables, and the proceeds from the repossession and sale of
financed vehicles which secure defaulted receivables. In such event, there may
not be sufficient funds to make distributions with respect to the securities.
The issuer's principal offices are in , [in care of
, as owner trustee, at the address listed below under "--The owner
trustee."]
Capitalization of the Trust
The following table illustrates the capitalization of the issuer as of the
Cutoff Date, as if the issuance and sale of the notes [and the certificates]
had taken place on such date:
<TABLE>
<S> <C>
Notes............................ $
[Certificates.................... $ ]
Total........................ $
</TABLE>
S-7
<PAGE>
[The Owner Trustee
is the owner trustee under the trust agreement.
is a and its principal offices are located at ,
. The owner trustee will perform limited administrative functions
under the trust agreement, including making distributions from the Certificate
Distribution Account. The owner trustee's liability in connection with the
issuance and sale of the certificates and the notes is limited solely to the
express obligations of the owner trustee set forth in the trust agreement.]
The Issuer Property
The notes will be collateralized by the issuer property [(other than the
Certificate Distribution Account).] [Each certificate represents a fractional
undivided interest in the trust. The "issuer property" will include the
receivables, which were originated by dealers and purchased by AmSouth Bank
pursuant to dealer agreements with dealers. On the Cutoff Date, none of the
receivables will be 30 or more days delinquent. On the Closing Date, the seller
will buy the receivables from AmSouth Bank and the seller will sell the
receivables to the issuer. The servicer will, directly or through subservicers,
service the receivables. The issuer property also includes:
.all monies received under the receivables on and after the Cutoff Date
[and, with respect to receivables which are actuarial receivables,
monies received thereunder prior to the Cutoff Date that are due on or
after the Cutoff Date;]
.such amounts as from time to time may be held in the Collection Account,
the Reserve Account, the Payahead Account, the Note Distribution Account
and the Certificate Distribution Account, established and maintained by
the servicer pursuant to the sale and servicing agreement as described
below;
.security interests in the financed vehicles;
.the rights of AmSouth Bank to receive proceeds from claims under certain
insurance policies;
.the rights of the issuer under the sale and servicing agreement;
.the rights of the seller 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;
.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;
.rights with respect to any repossessed financed vehicles; and
.all proceeds within the meaning of the UCC of the foregoing.
[The Reserve Account will be maintained in the name of the indenture trustee
for the benefit of the noteholders [and the certificateholders.]]
S-8
<PAGE>
The Receivables Pool
Pool Composition
The receivables were selected from AmSouth Bank's portfolio by several
criteria, including, as of the Cutoff Date, the following:
1. each receivable has a scheduled maturity of not later than the
final scheduled maturity date;
2. each receivable was originated in the United States of America;
3. each receivable has an original term to maturity of not more than
months and a remaining term to maturity of months or less as of the
Cutoff Date;
4. approximately % of the initial pool balance was secured by new
financed vehicles, and approximately % of the initial pool balance was
secured by used financed vehicles;
5. [each receivable provides for level monthly payments which fully
amortize the amount financed except, in the case of simple interest
receivables, for the last payment, which may be different from the level
payment;]
6.each receivable is not more than 30 days contractually past due as
of the Cutoff Date and is not more than months paid ahead;
7.each receivable has an outstanding principal balance between $
and $ ;
8.and each receivable has an APR of no less than %.
As of the Cutoff Date, no obligor on any receivable was noted in the
related records of the servicer as being the subject of any pending bankruptcy
or insolvency proceeding. The latest scheduled maturity of any receivable is
not later than . No selection procedures believed by the seller to be
material adverse to [certificateholders or] the noteholders were used in
selecting the receivables.
The seller 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.
The composition, distribution by remaining term, distribution by APR,
geographic distribution and distribution by remaining principal of the
receivables, in each case, as of the Cutoff Date are set forth in the tables
below. The percentages in the following tables may not add to 100% due to
rounding.
S-9
<PAGE>
[Composition of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
New Used
Financed Financed
Vehicles Vehicles Total
----------- ----------- -----------
<S> <C> <C> <C>
Aggregate Principal Balance................ $ $ $
Number of Receivables Average Principal
Balance................................... $ $ $
Weighted Average Contract Rate............. % % %
Contract Rate (Range)...................... %- % %- % %- %
Weighted Average Original Term............. months months months
Original Term (Range)...................... to months to months to months
Weighted Average Remaining Term............ months months months
Remaining Term (Range)..................... to months to months to months]
</TABLE>
[Distribution by Remaining Term of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Aggregate Percentage of
Remaining Term Number of Principal Original Pool
(Range) Receivables Balance Balance
-------------- ----------- --------- -------------
<S> <C> <C> <C>
Less than 30 months........................ $ %
30 to 35 months............................
36 to 41 months............................
42 to 47 months............................
48 to 53 months............................
54 to 59 months............................
60 to 65 months............................
66 to 71 months............................
72 to 77 months............................
78 to 89 months............................ %
------- -------- -------
Total.................................. 100%]
======= ======== =======
</TABLE>
[Distribution by Annual Percentage Rate of the Receivables as of the Cutoff
Date
<TABLE>
<CAPTION>
Annual Aggregate Percentage of
Percentage Number of Principal Original Pool
Rate Range Receivables Balance Balance
---------- ----------- --------- -------------
<S> <C> <C> <C>
8.00% to below............................. $ %
8.00% to 8.99%.............................
9.00% to 10.99%............................
11.00% to 11.99%...........................
12.00% to 12.99%...........................
13.00% to 13.99%...........................
14.00% to 14.99%...........................
15.00% to 15.99%...........................
16.00% to 16.99%...........................
17.00% to 17.99%...........................
18.00% to 18.99%...........................
19.00% to 19.99%...........................
20.00% to 20.99%...........................
21.00% to 21.99%...........................
22.00% and above........................... %
------- -------- ----
Total.................................. $ %]
======= ======== ====
</TABLE>
S-10
<PAGE>
[Geographic Distribution of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Aggregate Percentage of
Number of Principal Original Pool
State Receivables Balance Balance
----- ----------- --------- -------------
<S> <C> <C> <C>
................................... $ %
...................................
...................................
...................................
...................................
...................................
...................................
Others (2).................................
------- -------- ------
Total.................................. $ 100.00%
======= ======== ======
</TABLE>
--------
Numbers by state are based on billing addresses of the obligors as of the
Cutoff Date, which may differ from the state of origination of the receivable.
"Other" includes other states, none of which have a concentration of
receivables in excess of % of the aggregate principal balance.]
[Distribution of Principal Balance of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Remaining
Principal Aggregate Percentage of
Balance Number of Principal Original Pool
(Range) Receivables Balance Balance
--------- ----------- --------- -------------
<S> <C> <C> <C>
$ 2,500 to $ 4,999......................... $ %
$ 5,000 to $ 7,999.........................
$ 7,500 to $ 9,999.........................
$10,000 to $12,499.........................
$12,500 to $14,999.........................
$15,000 to $17,499.........................
$17,500 to $19,999.........................
$20,000 to $22,499.........................
$22,500 to $24,999.........................
$25,000 to $27,499.........................
$28,000 to $29,999.........................
$30,000 to $32,499.........................
$32,500 to $34,999.........................
$35,000 to $37,499.........................
$37,500 to $39,999.........................
$40,000 to $41,999.........................
$42,000 to $44,999.........................
$45,000 to $47,499.........................
$47,500 to $49,999.........................
$50,000 to $52,499.........................
$52,500 to $54,999......................... %
---------- -------- ----
Total.................................. $ %]
========== ======== ====
</TABLE>
S-11
<PAGE>
[As of the Cutoff Date, approximately % of the aggregate principal
balance of the Receivables, constituting % of the number of receivables, were
between 1 payment and payments paid-ahead.]
As of the Cutoff Date, approximately % of the aggregate principal
balance of the receivables, constituting % of the number of receivables, are
actuarial receivables. "Actuarial receivables" are receivables that provide for
amortization of the amount financed over a series of fixed, level-payment
monthly installments. Each monthly installment, including the monthly
installment representing the final payment on the receivable, consists of an
amount of interest equal to 1/12 of the "APR" of the amount financed multiplied
by the unpaid principal balance of the amount financed, and an amount of
principal equal to the remainder of the monthly payment.
As of the Cutoff Date, approximately % of the aggregate principal
balance of the receivables, constituting % of the number of receivables, are
simple interest receivables. "Simple interest receivables" are receivables that
provide for the amortization of the amount financed under the receivable over a
series of fixed level monthly payments. However, unlike the monthly payment
under an actuarial receivable, each monthly payment includes an installment of
interest which is calculated on the basis of the outstanding principal balance
of the receivable multiplied by the stated APR and further multiplied by the
period elapsed (as a fraction of a calendar year) since the preceding payment
of interest was made. As payments are received under a simple interest
receivable, the amount received is applied first to interest accrued to the
date of payment and the balance is applied to reduce the unpaid principal
balance. Accordingly, if an obligor pays a fixed monthly installment before its
scheduled due date, the portion of the payment allocable to interest for the
period since the preceding payment was made will be less than it would have
been had the payment been made as scheduled, and the portion of the payment
applied to reduce the unpaid principal balance will be correspondingly greater.
Conversely, if an obligor pays a fixed monthly installment after its scheduled
due date, the portion of the payment allocable to interest for the period since
the preceding payment was made will be greater than it would have been had the
payment been made as scheduled, and the portion of the payment applied to
reduce the unpaid principal balance will be correspondingly less. In either
case, the obligor pays a fixed monthly installment until the final scheduled
payment date, at which time the amount of the final installment is increased or
decreased as necessary to repay the then outstanding principal balance.
If an actuarial receivable is prepaid in full, with minor variations based
upon state law, under the terms of the motor vehicle retail installment sale
contract or loan agreement, as the case may be, a "refund" or "rebate" will be
made to the borrower of the portion of the total amount of payments then due
and payable under such contract or agreement allocable to "unearned" interest,
calculated on the basis of a constant interest rate. If a simple interest
receivable is prepaid, rather than receive a rebate, the borrower is required
to pay interest only to the date of prepayment. The amount of a rebate under an
actuarial receivable generally will be less than the remaining scheduled
payments of interest that would have been due under a simple interest
receivable for which all payments were made on schedule.
S-12
<PAGE>
[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, which are not amounts representing
payaheads, made in advance will be treated as a principal prepayment and will
be distributed as part of the principal distribution amount in the month
following the Collection Period in which the prepayment was made. See "Maturity
and Prepayment Considerations" in the prospectus.]
The Servicer
Size of Servicing Portfolio
As of , the servicer serviced approximately retail
installments sale contracts and installment loans, consisting primarily of new
and used automobile, including passenger car, minivan, sport/utility vehicles
and light truck, receivables, representing an outstanding balance of
approximately $ million. See "AmSouth Bank" in the prospectus.
Delinquencies and Loss
Set forth below is information concerning the historical delinquency and
loss experience of AmSouth Bank pertaining to new and used automobile,
including passenger car, minivan, sport/utility vehicle and light truck, retail
installment sales contracts indirectly by AmSouth Bank through dealers. The
information is presented in a pro forma basis, and includes information with
respect to First American Bank receivables prior to AmSouth Bank's acquisition
of First American Bank on October 1, 1999. The tables also include information
on receivables previously sold by AmSouthBank which AmSouthBank continues to
service. There can be no assurance that the delinquency and loss experience on
the Receivables will be comparable to that set forth below.
AmSouth Auto Trust 2000-1
Pro Forma Delinquency Experience
<TABLE>
<CAPTION>
As of June 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................. 361,352 290,584 327,821 247,895 182,893 179,425
Delinquencies as a
Percent of Number of
Contracts Outstanding
at end of Period
30-59 Days............ 1.70% 1.30% 1.87% 1.79% 1.85% 2.08%
60-89 Days............ 0.52% 0.35% 0.53% 0.48% 0.37% 0.49%
90 Days and Over...... 0.23% 0.20% 0.23% 0.29% 0.24% 0.33%
--------- --------- --------- --------- --------- ---------
Total Delinquencies as a
Percent of Number of
Contracts Outstanding
at end of Period....... 2.46% 1.86% 2.63% 2.56% 2.46% 2.91%
========= ========= ========= ========= ========= =========
Portfolio Outstanding at
end of Period--$'s in
Thousands.............. 4,344,847 3,371,785 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............ 1.58% 1.14% 1.68% 1.56% 1.65% 1.93%
60-89 Days............ 0.47% 0.30% 0.47% 0.41% 0.35% 0.45%
90 Days and Over...... 0.20% 0.17% 0.20% 0.26% 0.22% 0.29%
--------- --------- --------- --------- --------- ---------
Total Delinquencies as a
Percent of Portfolio
Outstanding at end of
Period................. 2.25% 1.62% 2.36% 2.23% 2.22% 2.68%
========= ========= ========= ========= ========= =========
</TABLE>
S-13
<PAGE>
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.
AmSouth Bank
Credit Loss and Repossession Experience
<TABLE>
<CAPTION>
During Six Months Ended
June 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--in Thousands...
Gross................. 4,222,331 3,103,912 3,422,620 2,169,953 1,822,760 1,736,818
Average Number of
Contracts Outstanding
During Period.......... 348,786 271,543 293,225 205,431 179,992 172,900
Number of Repossessions
During Period.......... 3,573 3,379 7,702 4,308 2,719 2,405
Repossessions as a
Percent of Average
Number of Contracts
Outstanding During
Period (Annualized).... 2.05% 2.49% 2.63% 2.10% 1.51% 1.39%
Gross Charge-Offs..... 31,414 20,372 47,146 27,181 28,801 31,647
Recoveries............ 14,403 8,997 18,819 15,246 16,232 12,615
Net Losses............ 17,011 11,375 28,327 11,935 12,569 19,032
Net Losses as a Percent
of Average Gross
Portfolio Outstanding
(Annualized)........... 0.81% 0.73% 0.83% 0.55% 0.69% 1.10%
</TABLE>
--------
(1) All gross amounts and percentages are based on the gross amount scheduled
to be paid on each contract including unearned finance and other charges.
Gross Charge-offs represents the outstanding balance of contracts charged-
off that are determined to be uncollectible.
Recoveries represents amounts received on contracts charged off in period
or any prior periods net of recovery expenses.
"Net Losses" are Gross Charge-offs less recoveries.
The delinquencies and losses show fairly stable trends. The improvement
from the 1996 levels reflects the effect of the current credit policies and
practices. The portfolio began to grow substantially from the second half of
1999. Losses as a percentage of outstandings reached its lowest level in 1998
partly because of improvements in credit controls and partly because of this
growth. Losses increased in 1999. While the two factors mentioned previously
were still in effect, the total losses in 1999 were impacted by additional
losses incurred in the First American Bank portfolio stemming from operational
and integration issues associated with First American Bank's acquisitions.
Portfolio growth is now modest and losses year-to-date in 2000 are more
representative of loss expectations going forward.
S-14
<PAGE>
Delinquencies and net losses are affected by a number of social and
economic factors, including changes in interest rates and unemployment levels,
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.
[Weighted Average Life of the Securities]
[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.
As the rate of payment of principal of the notes and in respect of the
certificate balance will depend on the rate of payment, including prepayments,
of the principal balance of the receivables, final payment of the notes could
occur significantly earlier than the Final Scheduled Maturity Date for the
notes. The final distribution in respect of the certificates also could occur
prior to the Final Scheduled Distribution Date for the certificates.
Reinvestment risk associated with early payment of the notes and the
certificates will be borne exclusively by the noteholders and the
certificateholders, respectively.
The table captioned "Percent of Initial Note Principal Balance or Initial
Certificate Balance at Various ABS Percentages" (the "ABS Table") 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 percentage of
ABS monthly, with no defaults, losses or repurchases,
. 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 and distributions on the certificates are made on
each Distribution Date (and each such date is assumed to be the day
of each applicable month),
. the balance in the Reserve Account on each Distribution Date is equal to
the Specified Reserve Account Balance, and
. the servicer does not exercise its option to purchase the receivables.
The first two pools have an assumed cutoff date of and the
remaining pools have an assumed cutoff date of .
S-15
<PAGE>
The ABS Table sets forth the percent of the initial principal amount of the
Notes and the percent of the initial Certificate Balance that would be
outstanding after each of the Distribution Dates shown and the corresponding
weighted average lives thereof at various constant ABS percentages.
The ABS Table also assumes that the receivables have been aggregated into
four 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 four pools, which is based on its aggregate principal
balance, APR, original term to maturity as of the Cutoff Date, will be such
that each pool will fully amortize by the end of its remaining term to
maturity.
<TABLE>
<CAPTION>
Weighted Weighted
Remaining Average Average
Term to Weighted Original Remaining
Maturity Aggregate Average Term to Term to
Range Principal Contract Maturity Maturity
Pool (in months) Balance Rate (in months) (in months)
---- ----------- --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1........................ $ %
2........................ $ %
3........................ $ %
4........................ $ %
</TABLE>
The actual characteristics and performance of the receivables 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 four 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,
or actual prepayment experience, will affect the percentages of initial
balances outstanding over time and the weighted average lives of the notes and
the certificates.]
[Percent of Initial Note Principal
Balance at Various ABS Percentages
<TABLE>
<S> <C> <C> <C> <C>
Notes................................................... % % % %
Assumed ABS Percentage(2)............................... 100 100 100 100
Distribution Dates......................................
Closing Date............................................
Weighted Average Life (years)(1)........................
</TABLE>
The weighted average life of a note is determined by (i) 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, (ii) adding the results and (iii) dividing the sum
by the initial principal balance of such note.
S-16
<PAGE>
An asterisk "*" means a percent of initial note principal balance of more
than zero and less than 0.5%.
The ABS tables have been prepared based on the assumptions described in
this section, including the assumptions regarding the characteristics and
performance of the receivables which will differ from the actual
characteristics and performance of the receivables, and should be read in
conjunction with those assumptions.]
[Percent of Initial Certificate
Balance at Various ABS Percentages
<TABLE>
<S> <C> <C> <C> <C>
Notes................................................... % % % %
Assumed ABS Percentage(2)............................... 100 100 100 100
Distribution Dates......................................
....................................................
....................................................
....................................................
</TABLE>
The ABS tables have been prepared based on the assumptions described in
this section, including the assumptions regarding the characteristics and
performance of the receivables which will differ from the actual
characteristics and performance of the receivables, and should be read in
conjunction with those assumptions.]
Use of Proceeds
The net proceeds from the sale of the securities will be applied by the
seller first, to deposit approximately $ into the Reserve Account and
second, the balance to purchase the receivables and the other issuer property
from AmSouth Bank.
Description of the Notes
The notes will be issued pursuant to the terms of the indenture,
substantially in the form filed as an exhibit to the registration statement.
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.
The Notes
Payments of Interest. The notes will constitute [fixed rate] securities, as
such term is defined under "Certain Information Regarding the Securities--Fixed
Rate Securities" in the prospectus. Interest on the outstanding principal
amount of the notes will accrue at the interest rate and will be payable to the
noteholders monthly on each Distribution Date, commencing . Interest
will accrue from and including the Closing Date, in the case of the first
Distribution Date, or from and including the most recent Distribution Date
S-17
<PAGE>
on which interest has been paid to but excluding the following Distribution
Date. Interest on the notes will be calculated on the basis of a 360 day year
consisting of twelve 30 day months. Interest payments on the notes will
generally be derived from the total distribution amount remaining after the
payment of the servicing fee for the related Collection Period and all accrued
and unpaid servicing fees for prior Collection Periods. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Credit Enhancement--
Reserve Account" herein. Interest payments to the Noteholders will have the
same priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the notes on any
Distribution Date. 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 interest rate.
Payments of Principal. Principal payments will be made to the noteholders
on each Distribution Date in an amount equal to the noteholders' percentage of
the principal distribution amount in respect of such Collection Period, subject
to certain limitations. Principal payments on the notes will be generally
derived from the total distribution amount remaining after the payment of the
total servicing fee, the noteholders' interest distributable amount and the
certificateholders' interest distributable amount; provided, however, that
following the occurrence and during the continuation of certain events of
default or an acceleration of the notes, the noteholders will be entitled to be
paid in full before the distributions may be made on the certificates. See
"Description of the Transfer and Servicing Agreements--Distributions" and "--
Credit Enhancement--Reserve Account" in this prospectus supplement.
The principal balance of the notes, to the extent not previously paid, will
be due on the Note Final Scheduled Distribution Date. The actual date on which
the aggregate outstanding principal amount of the Notes is paid may be earlier
than the Note Final Scheduled Distribution Date based on a variety of factors.
[Optional Redemption. The 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 has declined to % or less of the initial pool balance. The redemption
price will be equal to the unpaid principal amount of the notes and the
certificates plus accrued and unpaid interest thereon. See "Description of the
Transfer and Servicing Agreements--Termination" in the prospectus.]
[Auction Sale. In the event of an auction sale, the notes will be redeemed
in an amount equal to the unpaid principal amount of the then outstanding notes
plus accrued and unpaid interest thereon at the Interest Rate. See "Description
of the Transfer and Servicing Agreements--Termination" in the prospectus.]
The Indenture Trustee. will be the indenture trustee
under the indenture. The seller maintains normal commercial banking relations
with the indenture trustee.
S-18
<PAGE>
[Description of the Certificates
The certificates will be issued pursuant to the terms of the trust
agreement, substantially in the form filed as an exhibit to the registration
statement. The following information summarizes all material provisions of the
certificates and the trust agreement. The following summary supplements the
description of the general terms and provisions of the certificates of any
given series and the related agreement set forth in the prospectus, to which
description reference is hereby made.
The Certificates
Distributions of Interest. Certificateholders will be entitled to
distributions of interest in an amount equal to accrued interest on the
certificate balance at the pass-through rate. Such amounts will be
distributable monthly on each Distribution Date commencing . [The
certificates will constitute fixed rate securities, as such term is defined
under "Certain Information Regarding the Securities--Fixed Rate Securities"] in
the prospectus. That interest entitlement will accrue from and including the
Closing Date, in the case of the first such Distribution Date, or from the most
recent Distribution Date on which interest distributions have been made to but
excluding such Distribution Date and will be calculated on the basis of a 360-
day year of twelve 30-day months. Interest distributions with respect to the
certificates will be funded from the portion of the total distribution amount
remaining after the distribution of the total servicing fee and the
noteholders' interest distributable amount. On any Distribution Date, the
certificateholders' interest distributable amount will equal 30 days' interest
at the pass-through rate on the certificate balance (or, in the case of the
first Distribution Date, interest accrued from and including the Closing Date
to but excluding the first Distribution Date) plus any amounts due but not paid
on previous Distribution Dates with interest thereon at the pass-through rate.
See "Description of the Transfer and Servicing Agreements--Distributions" and
"--Credit Enhancement--Reserve Account" in this prospectus supplement.
Distributions of Principal Payments. Certificateholders will be entitled to
distributions of principal on each Distribution Date commencing on the
Distribution Date on which the notes have been paid in full, in an amount equal
to the certificateholders' percentage of the principal distribution amount in
respect of the related Collection Period, subject to certain limitations.
Distributions with respect to principal payments will generally be funded from
the portion of the total distribution amount remaining after the distribution
of the total servicing fee, the noteholders' distributable amount, if any, and
the certificateholders' interest distributable amount. See "Description of the
Transfer and Servicing Agreement--Distributions" and "--Credit Enhancement--
Reserve Account" in this prospectus supplement.
On and after any Distribution Date on which the notes have been paid in
full, funds in the Reserve Account will be applied to reduce the certificate
balance to zero if, after giving effect to all distributions to the servicer,
the noteholders and the certificateholders on such Distribution Date, the
amount on deposit in the Reserve Account is equal to or greater than the
certificate balance.
S-19
<PAGE>
Subordination of Certificates. The rights of certificateholders to receive
distributions of interest are subordinated to the rights of noteholders to
receive payments of interest. In addition, the certificateholders have no right
to receive distributions of principal until the principal amount of the notes
has been paid in full. Consequently, funds on deposit in the Collection
Account, including amounts deposited therein from the Reserve Account, will be
applied to the payment of interest on the notes before distributions of
interest on the certificates and will be applied to the payment of principal on
the notes before distributions of principal on the certificates. In addition,
following the occurrence of certain events of default or an acceleration of the
notes, the noteholders will be entitled to be paid in full before the
certificateholders are entitled to any distributions.
[Optional Prepayment. If the servicer exercises its option to purchase the
receivables when the pool balance declines to % or less of the initial pool
balance, certificateholders will receive an amount in respect of the
certificates equal to the certificate balance together with accrued and unpaid
interest thereon, which distribution will effect early retirement of the
certificates. See "Description of the Transfer and Servicing Agreements--
Termination" in the prospectus.]
[Auction Sale. In the event of an auction sale, the certificates will be
prepaid at a price equal to the certificate balance plus accrued and unpaid
interest thereon at the pass-through rate. See "Description of the Transfer and
Servicing Agreements--Termination" in the prospectus.]
Description of the Transfer and Servicing Agreements
The following information summarizes all material provisions of the sale
and servicing agreement, substantially in the form filed as an exhibit to the
registration statement, pursuant to which the issuer is purchasing and the
servicer is undertaking to service the receivables [and the issuer will be
created and the certificates will be issued]. The following summary supplements
the description of the general terms and provisions of the transfer and
servicing agreements set forth in the prospectus, to which description
reference is hereby made.
Sale and Assignment of Receivables
Certain information regarding the conveyance of the receivables by AmSouth
Bank to the seller and by the seller to the issuer on the Closing Date pursuant
to the sale and servicing agreement is set forth in the prospectus under
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables."
Accounts
[The assets of the trust will not include a Pre-Funding Account.] All other
Accounts referred to under "Description of the Transfer and Servicing
Agreements--Accounts" in the prospectus, as well as a Reserve Account, will be
established by the servicer and maintained with the indenture trustee in the
name of the indenture trustee on behalf of the noteholders [and the
certificateholders.]
S-20
<PAGE>
Servicing Compensation
The servicer will be entitled to receive a servicing fee for each
Collection Period in an amount equal to the product of one-twelfth of % per
annum for so long as AmSouth Bank or an affiliate thereof is the servicer, and
a servicing fee rate of % per annum if AmSouth Bank or an affiliate thereof
is no longer the servicer and the pool balance as of the first day of the
Collection Period. The servicing fee will also include such other amounts to be
paid to the servicer as described in the prospectus. The servicing fee,
together with any portion of the servicing fee that remains unpaid from prior
Distribution Dates, or the total servicing fee, will be paid from the total
distribution amount. The total servicing fee will be paid prior to the
distribution of any portion of the interest distribution amount to the
noteholders or the certificateholders. See "Description of the Transfer and
Servicing Agreement--Servicing Compensation and Payment of Expenses" in the
prospectus.
Distributions
Deposits to the Collection Account.
On or before the earlier of the eighth business day of the month in which a
Distribution Date occurs and the fourth business day preceding such
Distribution Date (the "Determination Date"), the servicer will calculate the
total distribution amount, the interest distribution amount, the available
principal, the principal distribution amount, the total servicing fee, the
noteholders' interest distributable amount, the noteholders' principal
distributable amount, the certificateholders' interest distributable amount,
the certificateholders' principal distributable amount, the advances, if any,
to be made by the Servicer of interest and principal due on the actuarial
receivables, the amount, if any, to be withdrawn from the Payahead Account and
deposited in the Collection Account, the amount, if any, to be withdrawn from
the Reserve Account and deposited in the Collection Account and the amount, if
any, to be withdrawn from the Reserve Account and paid to the seller, in each
case, with respect to such Distribution Date.
On or before each Distribution Date, the servicer will cause the indenture
trustee to withdraw from the Payahead Account and
. deposit into the Collection Account in immediately available funds, the
portion of payaheads constituting scheduled payments on actuarial
receivables or that are to be applied to prepay actuarial receivable in
full and
. distribute to the seller, in immediately available funds, all investment
earnings on funds in the Payahead Account with respect to the preceding
Collection Period. On or before each Distribution Date the servicer will
deposit any advances for such Distribution Date into the Collection
Account.
On or before the business day preceding each Distribution Date, the servicer
will cause the interest distribution amount and the available principal for
such Distribution Date to be deposited into the Collection Account. On or
before each Distribution Date, the servicer
S-21
<PAGE>
shall cause the indenture trustee to withdraw from the Reserve Account and
deposit in the Collection Account an amount, or the Reserve Account Transfer
Amount equal to the lesser of
. the amount of cash or other immediately available funds in the Reserve
Account on such Distribution Date, before giving effect to any
withdrawals therefrom relating to such Distribution Date or
. the amount, if any, by which
(a) the sum of the total servicing fee, the noteholders' interest
distributable amount, the certificateholders' interest distributable
amount, the noteholders' principal distributable amount and the
certificateholders' principal distributable amount for such
Distribution Date exceeds
(b) the sum of the interest distribution amount and the available
principal for such Distribution Date.
Monthly Withdrawals from Collection Account. On each Distribution Date, the
servicer shall instruct the indenture trustee to withdraw from the Collection
Account and deposit in the Payahead Account in immediately available funds, the
aggregate payaheads collected during the preceding Collection Period. On each
Distribution Date, the servicer shall instruct the indenture trustee to make
the following withdrawals, based upon the calculations set forth in "Deposits
to the Collection Account" above, deposits and distributions, in the amounts
and in the order of priority specified below, to the extent of the sum of the
interest distribution amount and the available principal in respect of such
Distribution Date and the Reserve Account transfer amount in respect of such
Distribution Date, which is the total distribution amount:
. from the Collection Account to the servicer, from the total distribution
amount, the total servicing fee;
. from the Collection Account to the Note Distribution Account, from the
total distribution amount remaining after the application of the above,
the noteholders' interest distributable amount;
[. from the Collection Account to the Certificate Distribution Account,
from the total distribution amount remaining after the application of
the above clauses, the Certificateholders' Interest Distributable
Amount;]
. from the Collection Account to the Note Distribution Account, from the
total distribution amount remaining after the application of the above
clauses, the noteholders' principal distributable amount;
[. from the Collection Account to the Certificate Distribution Account,
from the total distribution amount remaining after the application of
the above clauses, the certificateholders' principal distributable
amount; and]
. from the Collection Account to the Reserve Account, any amounts
remaining after the application of the above clauses.
S-22
<PAGE>
Notwithstanding the foregoing, following the occurrence and during the
continuation of certain Events of Default or an acceleration of the notes, the
Total Distribution Amount remaining after the application of the first two
clauses above will be deposited in the Note Distribution Account to the extent
necessary to reduce the principal balance of the notes to zero.
On each Distribution Date, all amounts on deposit in the Note Distribution
Account will be paid in the following order of priority:
(a) to the noteholders, accrued and unpaid interest on the outstanding
principal balance of the notes at the interest rate; and
(b) to the noteholders in reduction of principal until the principal
balance of the notes has been reduced to zero;
[On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the certificateholders in the
following order of priority:
(a) to the certificateholders, accrued and unpaid interest on the
certificate balance at the pass-through rate; and
(b) to the certificateholders in reduction of principal until the
principal balance of the certificates has been reduced to zero.]
Credit Enhancement
[Reserve Account. Pursuant to the sale and servicing agreement, the Reserve
Account will be created and maintained with the indenture trustee. On the
Closing Date, the seller will deposit $ ( % of aggregate initial
principal balance of the notes plus the initial certificate balance, which is
in the Reserve Account. The Reserve Account initial deposit will be augmented
on each Distribution Date by the deposit in the Reserve Account of amounts
remaining after distribution of the total servicing fee and amounts to be paid
to the noteholders [and certificateholders.] If the amount on deposit in the
Reserve Account on any Distribution Date, after giving effect to all deposits
or withdrawals therefrom on such Distribution Date, is greater than the
specified Reserve Account balance for such Distribution Date, the servicer will
instruct the indenture trustee to distribute the amount of the excess to the
seller. Upon any distribution to the seller of amounts from the Reserve
Account, neither the noteholders [nor the certificateholders] will have any
rights in, or claims to, such amounts. [In certain circumstances, funds in the
Reserve Account will be used to reduce the certificate balance to zero.]
[Subordination of the Certificates. The rights of the certificateholders to
receive distributions will be subordinated to the rights of the noteholders
following the occurrence of certain Events of Default or an acceleration of the
notes. The subordination of the certificates is intended to enhance the
likelihood of receipt by noteholders of amounts due them and to decrease the
likelihood that the noteholders will experience losses. In addition, the
Reserve Account is intended to enhance the likelihood of receipt by noteholders
and
S-23
<PAGE>
certificateholders of amounts due them and to decrease the likelihood that the
noteholders and certificateholders will experience losses. However, in certain
circumstances, the Reserve Account could be depleted. If the amount required to
be withdrawn from the Reserve Account to cover shortfalls in collections on the
receivables exceeds the amount on deposit in the Reserve Account a temporary
shortfall in the amounts distributed to the noteholders or the
certificateholders could result. In addition, depletion of the Reserve Account
ultimately could result in losses to noteholders and certificateholders.]
Material Federal Income Tax Consequences
Mayer, Brown & Platt 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
federal income tax purposes and
. based on the applicable provisions of the trust agreement and related
documents, for federal income tax purposes, the issuer will not be
classified as an association taxable as a corporation and the issuer
will not be treated as a publicly traded partnership taxable as a
corporation. The notes will not be issued will original issue discount
("OID"). See "Material Federal Income Tax Consequences" in the
prospectus.]
State and Local Tax Consequences
The discussion above does not address the tax consequences of purchase,
ownership or disposition of the securities under any state or local tax law. We
suggest that investors consult their own tax advisors regarding state and local
tax consequences.
ERISA Considerations
Except as described below, the certificates may not be purchased by any
"employee benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, whether or not subject to
ERISA, and including, without limitation, foreign or government plans, by any
"plan" described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended, or any entity whose underlying assets include plan assets of any
employee benefit plan or other plan by reason of an employee benefit plan's or
other plan's investment in such entity. We refer to each of these as a "Benefit
Plan Investor".
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
S-24
<PAGE>
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.
The Notes
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 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.
S-25
<PAGE>
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 (i) 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 (ii) the acquisition and holding of the Note by the
purchaser or transferee, throughout the period that it holds that Note, will
not result in a nonexempt prohibited transaction under ERISA or Section 4975 of
the Code or, in the case of a governmental plan, any substantially similar
applicable law. 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.
Certificates
The certificates are unlikely to be treated as indebtedness for purposes of
the Regulation. Under one exception to the regulation, however, the assets of
the issuer will not be treated as Plan assets if participation in the issuer by
Benefit Plan Investors is not "significant." Benefit Plan Investor
participation will not be "significant" for purposes of the Regulation if less
than 25% of each class of equity interests is held by Benefit Plan Investors,
excluding interests held by persons other than Benefit Plan Investors that have
discretionary authority or control with respect to the assets of issuer, or who
provide investment advice for a fee (direct or indirect) with respect to those
assets, or any affiliate of such a Person. We refer to each of these as a
"Controlling Person". The Department of Labor has taken the position that in
determining whether equity participation in an entity is "significant" for
purposes of the regulation, only the proportion of an insurance company general
account's investment that represents Benefit Plan Investor assets should be
taken into account.
Accordingly, the certificates may not be purchased by or transferred to, on
behalf of or using the assets of any Benefit Plan Investor, including, except
as provided below, an insurance company general account, and each purchaser of
the certificates will be required to represent and warrant that, except as
provided below, no portion of the assets it uses to acquire certificates
constitutes assets of any Benefit Plan Investor.
However, an insurance company investor will be permitted to acquire an
interest in the certificates with assets from its general account if it
represents, warrants and covenants that at the time of acquisition and
throughout its holding of the Certificates, (A) it is not a Controlling Person
and (B) each of the accounts to which the certificates are allocated by such
insurance company investor is an insurance company general account (i) that is
eligible for and meets the requirements of Department of Labor Prohibited
Transaction Class Exemption 95-60 and (ii) of which less than 25% of the assets
are, or represent, assets of a Benefit Plan Investor. No certificate may be
transferred to a Benefit Plan Investor or an
S-26
<PAGE>
entity using Benefit Plan Investor assets, except for insurance company general
accounts meeting the requirements discussed above. Each investor in a
certificate will be deemed to represent, warrant and covenant that it will not
sell, pledge or otherwise transfer the certificate in violation of these
requirements.
Independent Review and Consultation with Counsel
Any person proposing to purchase notes or certificates 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 or certificates 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 or certificates.
Underwriting
Subject to the terms and conditions set forth in the underwriting agreement
relating to the notes [and the certificates], the seller has agreed to sell to
the underwriter, and the underwriter has agreed to
purchase, the notes [and the certificates], subject to the satisfaction of
certain conditions precedent.
The seller has been advised by the underwriter that the underwriter
proposes to offer the notes to the public initially at the public offering
prices set forth on the cover page of this prospectus supplement, and to
certain dealers at such prices less a concession of % per note, that the
underwriter and such dealers may allow a discount of % per note on the sale
to certain other dealers; and that after the initial public offering of the
notes, the public offering prices and the concessions and discounts to dealers
may be changed by the underwriter.
[The seller has been advised by the underwriter that the underwriter
proposes to offer the certificates to the public initially at the public
offering price set forth on the cover page of this prospectus supplement, and
to certain dealers at such price less a concession of % per certificate;
that the underwriter and such dealers may allow a discount of % per
certificate on the sale to certain other dealers; and that after the initial
public offering of the certificates, the public offering price and the
concession and discount to dealers may be changed by the underwriter.]
Until the distribution of the securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriter and
certain selling group members to bid for and purchase the securities. As an
exception to these rules, the underwriter is permitted to engage in certain
transactions that stabilize the prices of the securities. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of such securities.
S-27
<PAGE>
In connection with the offering, the underwriter may make short sales of
the securities and may purchase securities on the open market to cover
positions created by short sales. Short sales involve the sale by the
underwriters of a greater number of securities than they are purchasing in the
offering. The underwriter must close out any short position by purchasing
securities in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.
Neither the seller nor the underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the securities. In addition, neither
the seller nor the underwriter makes any representation that the underwriter
will engage in such transactions or that such transactions, once commenced,
will not be discontinued without notice.
AmSouth Bank and the issuer have agreed to indemnify the underwriter
against certain liabilities, including civil liabilities under the Securities
Act, or contribute to payments which the underwriter may be required to make in
respect thereof. In the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and, may, therefore,
be unenforceable.
The issuer may, from time to time, invest the funds in the Trust Accounts
and the Certificate Distribution Account in eligible investments acquired from
the underwriter.
[The closing of the sale of the notes is conditioned on the closing of the
sale of the certificates, and the closing of the sale of the certificates is
conditioned on the closing of the sale of the notes.]
Legal Matters
Certain legal matters with respect to the notes [and the certificates] will
be passed upon for the seller by Mayer, Brown & Platt. Certain legal matters
with respect to the [notes and the certificates] will be passed upon for the
underwriter by .
S-28
<PAGE>
Glossary
[Additional terms to be inserted as necessary]
The "Interest Distribution Amount" for a Distribution Date will be the sum
of the following amounts with respect to any Distribution Date, computed, with
respect to Simple Interest Receivables, in accordance with the simple interest
method, and with respect to Actuarial Receivables, in accordance with the
actuarial method:
. that portion of all collections on the Receivables allocable to interest
in respect of the preceding Collection Period, including, with respect
to Actuarial Receivables, amounts withdrawn from the Payahead Account
and allocable to interest and excluding amounts deposited into the
Payahead Account and allocable to interest, in each case, in respect of
the preceding Collection Period;
. all proceeds, other than any proceeds from any Dealer commission, of the
liquidation of Liquidated Receivables, net of expenses incurred by the
Servicer in connection with such liquidation and any amounts required by
law to be remitted to the obligor on such Liquidated Receivables, to the
extent attributable to interest due thereon, which became Liquidated
Receivables during such Collection Period in accordance with the
Servicer's customary servicing procedures;
. [all Advances made by the servicer of interest due on the Actuarial
Receivables in respect of the preceding Collection Period;]
. the Purchase Amount of each receivable that was repurchased by AmSouth
Bank or purchased by the servicer during the preceding Collection Period
to the extent attributable to accrued interest thereon;
. all monies collected, from whatever source, other than any proceeds from
any Dealer commission, in respect to Liquidated Receivables during any
Collection Period following the Collection Period in which such
receivable was written off, net of the sum of any amounts expended by
the servicer for the account of the obligor and any amounts required by
law to be remitted to the obligor; and
. Investment Earnings for such Distribution Date;
In calculating the Interest Distribution Amount, the following shall be
excluded: all payments and proceeds (including Liquidation Proceeds) of any
receivables
(1) repurchased by AmSouth Bank or purchased by the servicer, the
Purchase Amount of which has been included in the Interest
Distribution Amount on a prior Distribution Date and
(2) received on Actuarial Receivables and distributed to the
servicer, with respect to such Distribution Date, as reimbursement for
any unreimbursed Advances in accordance with the sale and servicing
agreement.
"Available Principal" for a Distribution Date will be the sum of the
following amounts with respect to any Distribution Date, computed, with respect
to Simple Interest Receivables,
S-29
<PAGE>
in accordance with the simple interest method, and, with respect to Actuarial
Receivables, in accordance with the actuarial method:
. that portion of all collections on the Receivables allocable to
principal in respect of the preceding Collection Period including, with
respect to Actuarial Receivables, amounts withdrawn from the Payahead
Account and allocable to principal and excluding amounts deposited into
the Payahead Account and allocable to principal, in each case, in
respect of the preceding Collection Period;
. Liquidation Proceeds attributable to the principal amount of receivables
which became Liquidated Receivables during the preceding Collection
Period in accordance with the servicer's customary servicing procedures
with respect to such Liquidated Receivables;
. all Advances made by the servicer of principal due on the Actuarial
Receivables in respect of the preceding Collection Period;
. to the extent attributable to principal, the Purchase Amount of each
receivable repurchased by the seller or purchased by the servicer during
the preceding Collection Period; and
. partial prepayments on receivables in respect of the preceding
Collection Period relating to refunds of extended service contracts, or
of physical damage, credit life, credit accident or health insurance
premium, disability insurance policy premiums, but only if such costs or
premiums were financed by the respective obligor and only to the extent
not included in the first bullet point above.
In calculating the Available Principal, the following shall be excluded: all
payments and proceeds, including Liquidation Proceeds, of any receivables:
. repurchased by AmSouth Bank or purchased by the servicer, the Purchase
Amount of which has been included in the Available Principal on a prior
Distribution Date, and
. [received on Actuarial Receivables and distributed to the servicer, with
respect to such Distribution Date, as reimbursement for any unreimbursed
Advances in accordance with the Sale and Servicing Agreement.]
The "Principal Distribution Amount" for a Distribution Date will be the sum
of the following amounts with respect to the preceding Collection Period:
(1) (a) with respect to Simple Interest Receivables, that portion of all
collections on the receivable allocable to principal in respect of the
preceding Collection Period, and
(b) with respect to Actuarial Receivables the sum of
. the amount of all scheduled payments allocable to principal due
during the preceding Collection Period and
. the portion of all prepayments in full allocable to principal
received during the preceding Collection Period,
S-30
<PAGE>
in the case of both (a) and (b) without regard to any extensions or
modifications thereof effected after the Cutoff Date, other than with
respect to any extensions or modifications in connection with Cram
Down Losses during such Collection Period;
(2) the principal balance of each receivable that was repurchased by
AmSouth Bank or purchased by the servicer in each case during the
preceding Collection Period, except to the extent included in (1)
above;
(3) the principal balance of each Liquidated Receivable which became such
during the preceding Collection Period, except to the extent included
in (1) above;
(4) partial prepayments on receivables in respect of the preceding
Collection Period relating to refunds of extended service contracts,
or of physical damage, credit life, credit accident or health
insurance premium, disability insurance policy premiums, but only if
such costs or premiums were financed by the respective obligor and
only to the extent not included in clause (1) above; and
(5) the aggregate amount of Cram Down Losses during such Collection
Period.
"Collection Period" means, with respect to a Distribution Date, (x) in the
case of the initial Distribution Date, the period from and including the Cutoff
Date through and including , and (y) thereafter, the
calendar month preceding the related Distribution Date.
"Cram Down Loss" means, with respect to a receivable if a court of
appropriate jurisdiction in a bankruptcy or insolvency proceeding shall have
issued an order reducing the amount owed on such receivable or otherwise
modifying or restructuring the scheduled payments to be made on such
receivable, an amount equal to
(1) the excess of the principal balance of such receivable immediately
prior to such order over the principal balance of such receivable as
so reduced and/or
(2) if such court shall have issued an order reducing the effective rate
of interest on such receivable, the net present value, using as the
discount rate the higher of the APR on such receivable or the rate of
interest, if any, specified by the court in such order, of the
scheduled payments as so modified or restructured.
A "Cram Down Loss" shall be deemed to have occurred on the date of issuance of
such order.
The "Pool Balance" at any time will represent the aggregate principal
balance of the Receivables at the end of the preceding Collection Period, after
giving effect to all payments, other than Payaheads, received from obligors,
Purchase Amounts and Advances to be remitted by AmSouth Bank, the Servicer and
the Seller, as the case may be, all for such Collection Period, all losses
realized on Receivables that became Liquidated Receivables during such
Collection Period and all Cram Down Losses for such Collection Period.
"Realized Losses" means the excess of the principal balance of a Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
S-31
<PAGE>
"Liquidated Receivables" means, receivables (1) which have been liquidated
by the Servicer through the sale of the related financed vehicle, (2) as to
which all or a portion representing % or more of a scheduled payment due is
[ ] or more days delinquent or (3) with respect to which proceeds have been
received which, in the servicer's judgment, constitute the final amounts
recoverable in respect of such receivable.
"Noteholders' Distributable Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, the product of (x) one-twelfth of the Interest Rate, or,
in the case of the first Distribution Date, the Interest Rate multiplied by a
fraction, the numerator of which is the number of days elapsed from and
including the Closing Date to but excluding such Distribution Date and the
denominator of which is 360, and (y) the outstanding principal balance of the
notes on the immediately preceding Distribution Date, after giving effect to
all distributions of principal to the noteholders on such Distribution Date or,
in the case of the first Distribution Date, on the Closing Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Noteholders' Interest Carryover Shortfall on such preceding Distribution Date
over the amount in respect of interest that is actually deposited in the Note
Distribution Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to noteholders on the preceding
Distribution Date, to the extent permitted by law, at the Interest Rate borne
by the notes from such preceding Distribution Date through the current
Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding Distribution Date; provided,
however, that the Noteholders' Principal Distributable Amount shall not exceed
the outstanding principal balance of the notes. In addition, on the Note Final
Scheduled Distribution Date, the principal required to be deposited in the Note
Distribution Account will include the amount necessary, after giving effect to
the other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal, to reduce the outstanding
principal balance of the notes to zero.
"Noteholders' Monthly Principal Distributable Amount" means, with respect
to any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
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<PAGE>
"Noteholders' Percentage" means (a) for each Distribution Date until the
principal balance of the Notes is reduced to zero, 100%, and (b) zero for each
Distribution Date thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account.
["Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount. ]
["Certificateholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.]
["Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, the product of (x) one-twelfth of the Pass-
Through Rate or, in the case of the first Distribution Date, the Pass-Through
Rate multiplied by a fraction, the numerator of which is the number of days
elapsed from and including the Closing Date to but excluding such Distribution
Date, and the denominator of which is 360, and (y) the Certificate Balance on
the immediately preceding Distribution Date, after giving effect to all
payments of principal to the Certificateholders on or prior to such
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date.]
["Certificateholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest at the Pass-Through Rate that is
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on such excess, to the extent permitted by
law, at the Pass-Through Rate from and including such preceding Distribution
Date to but excluding the current Distribution Date.]
["Certificateholders' Principal Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Certificateholders' Principal Distributable
Amount shall not exceed the Certificate Balance. In addition, on the
Certificate Final Scheduled Distribution Date, the principal required to be
distributed to Certificateholders will include the lesser of
(a) any payments of principal due and remaining unpaid on each receivable
in the trust as of the Final Scheduled Maturity Date or
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<PAGE>
(b) the portion of the amount that is necessary, after giving effect to
the other amounts to be deposited in the Certificate Distribution
Account on such Distribution Date and allocable to principal, to
reduce the Certificate Balance to zero, in either case after giving
effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account. In addition, on
any Distribution Date on which, after giving effect to all
distributions to the servicer, the noteholders and the
certificateholders on such Distribution Date,
(1) the outstanding principal balance of the notes is zero and
(2) the amount on deposit in the Reserve Account is equal to or
greater than the Certificate Balance, the Certificateholders'
Principal Distributable Amount shall include an amount equal to
such Certificate Balance.]
["Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution Amount or, with respect to any Distribution Date on or
after the Distribution Date on which the outstanding principal balance of the
notes is reduced to zero, 100% of the Principal Distribution Amount, less any
amount required on the first such Distribution Date to reduce the outstanding
principal balance of the Notes to zero, which shall be deposited into the Note
Distribution Account.]
["Certificateholders' Percentage" means 100% minus the Noteholders'
Percentage.]
["Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders'
Principal Carryover Shortfall from the preceding Distribution Date, over the
amount in respect of principal that is actually deposited in the Certificate
Distribution Account on such Distribution Date.]
["Certificate Balance" equals, initially, $ and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.]
["Pass-Through Rate" means, with respect to the certificates, % per
annum.]
"Specified Reserve Account Balance" with respect to any Distribution Date
generally means the greater of
(a) % of the sum of the aggregate outstanding principal amount of the
notes [and the outstanding Certificate Balance] on such Distribution
Date (after giving effect to all payments on the Notes [and
distributions with respect to the certificates] to be made on such
Distribution Date) or
(b) % of the aggregate initial principal balance of the notes [plus
the initial Certificate Balance.] In no circumstances will the seller
be required to deposit any amounts in the Reserve Account other than
the Reserve Account Initial Deposit to be made on the Closing Date.]
S-34
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY +
+NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN +
+OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE +
+SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject To Completion, dated July 28, 2000
Amsouth Auto Asset Backed Securities
AmSouth Auto Receivables LLC
Seller
AmSouth Bank
Servicer
The Issuers:
You should . may periodically issue asset-backed notes and/or certificates
consider in one or more series with one or more classes; and
carefully
the risk
factors
beginning
on page
in this
prospectus
and the
risk
factors in
the
prospectus
supplement.
. will own:
. motor vehicle retail installment sales contracts and
installment loans secured by new and used automobiles and
trucks;
. collections on the receivables;
. liens on the financed vehicles and the rights to receive
proceeds from claims on insurance policies;
. funds in the accounts of the issuer; and
The notes . any credit enhancements issued in favor of the issuer.
and the
certificates
will
represent
obligations
of or
interests
in, the
issuer
only and
are not
guaranteed
by,
AmSouth
Bank,
AmSouth
Auto
Receivables
LLC or any
of their
affiliates,
other than
the
issuer.
The Securities:
. will represent indebtedness of the issuer that issued those
securities, in the case of the notes, or beneficial interests
in the trust that issued those securities, in the case of the
certificates;
. will be paid only from the assets of the issuer that issued
those securities;
. will represent the right to payments in the amounts and at
the times described in the accompanying prospectus
supplement;
. may benefit from one or more forms of credit enhancement; and
. will be issued as part of a designated series, which may
include one or more classes of notes and one or more classes
of certificates.
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 July , 2000
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Overview of the Information in this Prospectus and the Prospectus
Supplement............................................................... 1
Risk Factors.............................................................. 1
Description of the Issuers................................................ 10
Description of the Trustees............................................... 11
Description of the Receivables............................................ 11
The Receivables......................................................... 11
The Receivables Pool.................................................... 12
Calculation Methods..................................................... 13
AmSouth Bank's Origination and Servicing Procedures....................... 14
Delinquency and Loss Information........................................ 18
Prefunding Arrangement.................................................... 19
Maturity and Prepayment Considerations.................................... 20
Pool Factor and Pool Information.......................................... 20
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
Book-Entry Registration................................................. 25
Global Clearance, Settlement and Tax Documentation Procedures........... 29
Definitive Securities................................................... 34
List of Securityholders................................................. 35
Statements to Securityholders........................................... 35
Description of the Transfer and Servicing Agreements...................... 36
Sale and Assignment of the Receivables.................................. 37
The Collection Account and Eligible Investments......................... 39
Other Accounts.......................................................... 39
Payments on Receivables................................................. 39
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Payments and Distributions on the Securities............................. 40
Credit and Cash Flow Enhancement......................................... 40
Insurance on Financed Motor Vehicles..................................... 41
Servicer Reports......................................................... 41
Optional Purchase of Receivables......................................... 42
Servicing Fee............................................................ 42
Waivers and Extensions................................................... 42
Realization Upon Defaulted Receivables................................... 43
Evidence as to Compliance................................................ 43
Material Matters Regarding the Servicer.................................. 44
Defaults by the Servicer................................................. 44
Rights Upon Default by the Servicer...................................... 45
Amendment................................................................ 46
Termination.............................................................. 47
The Trustee and Indenture Trustee........................................ 48
Description of the Administration Agreement.............................. 49
Description of the Indenture............................................... 50
Modification of Indenture................................................ 50
Events of Default Under the Indenture; Rights Upon Event of Default...... 51
Material Covenants....................................................... 52
Annual Compliance Statement.............................................. 53
Indenture Trustee's Annual Report........................................ 53
Satisfaction and Discharge of Indenture.................................. 53
The Indenture Trustee.................................................... 53
Material Legal Aspects of the Receivables.................................. 54
Security Interests in the Financed Motor Vehicles........................ 54
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Repossession............................................................. 56
Notice of Sale; Redemption Rights........................................ 57
Deficiency Judgments and Excess Proceeds................................. 57
Consumer Protection Laws................................................. 58
Repurchase Obligation.................................................... 61
Other Limitations........................................................ 62
Material Federal Income Tax Considerations................................. 62
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
State and Local Tax Considerations......................................... 77
ERISA Considerations....................................................... 77
Underwriting............................................................... 79
Reports to Securityholders................................................. 81
Where You Can Find More Information........................................ 81
Legal Matters.............................................................. 82
Glossary................................................................... 83
</TABLE>
<PAGE>
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.
You can find a glossary where capitalized terms are defined beginning on
page in this prospectus.
To understand the structure of these securities, you must read carefully
this prospectus and the prospectus supplement in their entirety.
<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 the seller and 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
<PAGE>
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 us or the
servicer, as a result of breaches of
representations and warranties, and/or
breaches of particular covenants;
. the application of any remaining amounts on
deposit in any pre-funding accounts not
applied to the purchase of additional
receivables; and
. the purchase by the seller, the servicer or
one of their affiliates 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
issuer will experience.
The issuer's interest in
the receivables could be The servicer will maintain possession of the
defeated because the original contracts for each of the receivables.
contracts will not be If the servicer sells or pledges and delivers the
delivered to the issuer. original contracts for the receivables to another
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 by AmSouth Bank to the
seller,
2
<PAGE>
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 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 name of AmSouth Bank in the financed
vehicle securing the receivable. All repurchases
by AmSouth Bank or the servicer 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 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
comply with consumer Federal and state consumer protection laws
protection laws may result regulate the creation, collection and enforcement
in losses on your of consumer loans such as the receivables. These
investment. laws impose specific statutory liabilities upon
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
3
<PAGE>
"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.
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
4
<PAGE>
. 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.
If the FDIC were to assert a different position,
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 "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 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 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
5
<PAGE>
"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 purchase a receivable if these
your securities. 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 "Legal Aspects of the
Receivables--Security Interests in the Financed
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 the monthly
or less frequent deposits as may be
required by the applicable rating agencies
and described in the prospectus supplement
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 funds, the
6
<PAGE>
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
of payments on receivables In some circumstances, the servicer may permit an
could increase the average extension on or deferral of payments due on
life of the securities. receivables on a case-by-case basis. In addition,
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 securities.
If AmSouth Bank is no If AmSouth Bank were removed as servicer or was
longer the servicer, you no longer able to act as the servicer, there may
may experience delays in be 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.
7
<PAGE>
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.
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 DTC
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
8
<PAGE>
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 DTC
and its participating organizations. See "Certain
Information Regarding 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
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.
9
<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
.
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 the jurisdiction 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 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 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);
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. 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.
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 herein, in the
prospectus supplement and in the owner trust agreement. Each issuer will not
acquire any receivables or assets other than the Issuer Property.
The principal offices of each issuer and any trustee or indenture trustee
will be specified in the prospectus supplement.
Description of the Trustees
Any trustee and indenture trustee will be specified in the prospectus
supplement. A trustee's or indenture trustee's liability in connection with the
issuance and sale of the related securities will be limited solely to the
express obligations of the trustee or indenture trustee as set forth in the
related trust agreement or indenture. A trustee or indenture trustee with
respect to a series of securities may resign or be removed under the
circumstances specified in the prospectus supplement. Any resignation or
removal of a trustee or indenture trustee and appointment of a successor
trustee will not become effective until acceptance of the appointment by that
successor.
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
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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 made by AmSouth Bank or an affiliate directly to borrowers.
In addition, some of the receivables may have been originated by First American
National Bank or purchased by AmSouth Bank. We refer you to "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.
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.
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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 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
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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 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.
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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 a 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.
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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 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 would be offered. Credit underwriting relies 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 guidelines. A vehicle more than
seven years old will be 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. Caps are placed on all policy rule exceptions.
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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.
The services places great emphasis on the collection of delinquent
accounts. The commencement of such efforts are governed by an obligor's payment
history profile, which takes into account both the obligor's payment history
and risk score. 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 have failed, 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
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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 changing 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 change of a due date is not deemed to be
an extension and no extension fee is charged.
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.
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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 pooling and servicing or 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.
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.
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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 the percentage of the original Pool Balance specified in the
prospectus supplement. See "Description of the Transfer and Servicing
Agreements--Optional Purchase of Receivables."
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.
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)
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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
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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.
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 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.
Unless the prospectus supplement specifies that the notes are offered in
definitive form, the notes will be available for purchase in denominations of
$25,000 and integral multiples of $1,000 in excess thereof 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
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more classes of notes of a series may be redeemable in whole or in part under
the circumstances specified in the prospectus supplement, including as a result
of the servicer's exercising 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.
Payments to noteholders of all classes within a series generally will have
the same priority regarding interest payments. Under certain 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 class of
noteholders will receive its ratable share, based upon the aggregate amount of
interest due to such class of noteholders, of the aggregate amount of interest
payments 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. Generally, the related rating agencies, the
credit enhancer, 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 a successor thereto 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 thereby.
Unless the prospectus supplement specifies that certificates are offered in
definitive form, the certificates will be available for purchase in minimum
denominations of $25,000 and integral multiples of $1,000 in excess thereof in
book-entry form only, other than the certificates sold to the seller, as
described in the prospectus supplement.
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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. 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 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. Generally the related rating agencies, the credit enhancer, 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,
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. 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 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 "--Definitive Securities" in
this prospectus.
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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 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
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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 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
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. 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.
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
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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 Owner 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
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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.
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
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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.
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
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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:
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).
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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
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
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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 or pooling 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 owner 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
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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.
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
owner trust agreement or under the certificates.
Neither the trust agreement or pooling and servicing agreement, as
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;
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. 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 premiums payable to the related third-party insurer pursuant to the
related financial guarantee insurance policy, if any, the balance of any
fund or account 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;
. 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 insurer pursuant to the related insurance policy 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."
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
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. 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 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 notes and/or certificates representing the related
securities.
Representations and Warranties of the Seller. 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 trustee, if any, for the benefit of holders of securities
and any applicable insurer 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;
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. 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 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;
. 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
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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 of the receivable, AmSouth Bank, unless it cures
the failed criterion, will repurchase the receivable from the applicable
trustee at the price specified in the prospectus supplement 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, pooling
and servicing 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;
. the proceeds paid by any insurer under a comprehensive and collision
insurance policy related to a receivable, other than funds used for the
repair of the related
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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.
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 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,
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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: a surety bond or financial guarantee insurance policy provided
by a third-party insurer, 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, 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. 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 insurer, including the
preparation and delivery on a specified periodic date set forth in the related
sale and servicing agreement of a statement
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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 the seller.
Purchase of Receivables Upon a Breach of Representations
AmSouth Bank will be required to repurchase receivables, at a price equal
to the amount of principal plus accrued interest on the receivables calculated
in accordance with the servicer's customary practice, in the event that
representations and warranties regarding the receivables made by AmSouth Bank
are incorrect in any manner that materially and adversely affects the interest
of the securityholders, the applicable issuer or any applicable insurer in the
receivable. Additionally, the servicer will be required to purchase
receivables, at a price equal to the amount of principal plus accrued interest
on the receivables calculated in accordance with the servicer's customary
practice, 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 insurer.
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,
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. 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.
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 insurer, 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 insurer,
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
insurer, 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.
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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 "--The Trustee and
Indenture Trustee."
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 or pooling 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 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
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servicing agreement or pooling 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 securities
evidencing not less than 25% in principal amount of those securities,
acting together as a single 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 the pooling and servicing agreement, as applicable, 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 described in the accompanying
prospectus supplement under "Description of the Transfer and Servicing
Agreements--Default by the Servicer; Rights Upon Default by the Servicer."
Obligations of the Trustee or Indenture Trustee
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 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
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which may be incurred therein or thereby. No securityholder will have any right
under the sale and servicing agreement, trust agreement or indenture to
institute any proceeding with respect thereto, unless the securityholder
previously has given to the trustee or indenture trustee, as applicable,
written notice of default and unless
. holders of notes of the related series evidencing not less than 25% of
the principal amount of those notes then outstanding and
. holders of certificates of the related series evidencing not less than
25% of the principal amount of those certificates then outstanding, in
either case with the consent of the related credit enhancement provider,
if any, have made written request upon the trustee or indenture trustee
to institute a proceeding in its own name as trustee or indenture
trustee thereunder and have offered to the trustee or indenture trustee
reasonable indemnity and the trustee or indenture trustee for 30 days
has neglected or refused to institute any proceedings.
Notwithstanding any other provisions in this Indenture, each noteholder
shall have the right, which is absolute and unconditional, to receive payment
of the principal of and interest, if any, on their note on or after the
respective due dates thereof expressed in such note or the Indenture or, in the
case of redemption, on or after the date of redemption, and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of the noteholder.
Amendment
Each of the sale and servicing agreement and the 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, correct or supplement any provisions
therein which may be inconsistent with any other provisions therein, or add any
other provisions with respect to matters or questions arising thereunder which
are not inconsistent with the provisions of the sale and servicing agreement
and the administration agreement; provided that any action will not materially
and adversely affect the interest of any of the securityholders. Any amendment
will be deemed not to materially and adversely affect the interest of any
securityholder if the person requesting the amendment obtains (1) a letter from
each rating agency rating the applicable securities to the effect that the
amendment would not result in a downgrading or withdrawal of the ratings then
assigned to the applicable securities by that rating agency and (2) the consent
of the related credit enhancement provider, if any.
The sale and servicing 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
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. 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,
. 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 or
. result in a taxable event to any of the securityholders for federal
income tax purposes or result in the issuer being taxable as a
corporation for federal income tax purposes.
It is intended that the issuer will not constitute a separate entity for
federal income tax purposes during the time that the seller holds the entire
equity interest in the issuer; provided, however, that at any time that equity
interests in the issuer are held by more than one holder, the sale and
servicing agreement and the administration agreement may be amended, as
necessary and in accordance with the preceding paragraph, to reflect the
appropriate treatment of the issuer as a partnership for federal income tax
purposes. See "Material Federal Income Tax Consequences" below.
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
and the administration agreement 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, the pooling 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, the related administration agreement, the related
indenture, the securities or any related receivables or related documents. As
of the applicable Closing Date, neither the applicable 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, the trust agreement, the related
administration agreement or the related 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, the related pooling and
servicing agreement, the related administration agreement, the related
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.
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
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the servicer, will have the 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, the related administration agreement, the
related 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 may resign at any time, in
which event a successor trustee will be appointed pursuant to the terms of the
related sale and servicing agreement, the related administration agreement, the
related indenture, as applicable. Each applicable trustee and indenture trustee
may be removed if it ceases to be eligible to continue in its capacity under
the related sale and servicing agreement, the related pooling and servicing
agreement, the related administration agreement, the related indenture, as
applicable, or if the trustee or indenture trustee becomes insolvent. Any
resignation or removal of the trustee or indenture trustee and appointment of a
successor will not become effective until acceptance of the appointment by the
successor 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, the related administration agreement, the related 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, the related pooling and servicing agreement, the related
administration agreement, the related 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.
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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 insurer 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 insurer, 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.
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
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,
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 of the series;
. decrease the percentage of the aggregate principal amount of the 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;
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. 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;
. result in a taxable event to any noteholder for federal income tax
purposes; 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 insurer, 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 (a) as evidenced by an opinion of counsel,
materially and adversely affect the interest of any noteholder or (b) as
confirmed by each rating agency rating the notes of the related series,
cause the then current rating assigned to any class of notes to be
withdrawn or reduced and
. an opinion of counsel as to applicable tax matters is delivered.
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;
. 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 after notice thereof
is given to the issuer by the applicable indenture trustee or, if
applicable, the related insurer, or to the issuer and the indenture
trustee by the holders of at least 25% of the principal amount of the
notes of that series then outstanding acting together as a single class;
. 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
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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 insurer, or to the issuer, the
related insurer, if any, and the indenture trustee by the holders of at
least 25% of the principal amount of the notes of that series then
outstanding acting together as a single 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 insurer, 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;
. 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; 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 pooling and
servicing agreement, the applicable owner 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;
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. 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.
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;
. 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
Additional matters relating to the indenture trustee are described under
"Description of the Transfer and Servicing Agreements--The Trustee and
Indenture Trustee."
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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
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
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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 related 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 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 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
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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 in 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.
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
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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 aspect of
the sale or other
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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 obligor the right to recover in
any event an amount not less than the credit servicer 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 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.
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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.
The seller will represent in each sale and servicing 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.
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
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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 adequate consideration in the
ordinary course of business and the secured party is neither an insider nor an
affiliate of AmSouth Bank. As a result, in such circumstances, 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 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. If, the FDIC, as conservator or receiver for AmSouth Bank were to assert
a contrary position, or 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
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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.
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 party arising out of a claim
against an Alabama bank in receivership, whether the claim arises from
repudiation or otherwise, and contain 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.
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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.
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 federal tax counsel for
each issuer, subject to the qualifications set forth in this section. There are
no cases or
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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.
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 Class A Certificates. Each
issuer will be provided with an opinion of Tax Counsel specified in the related
prospectus supplement regarding certain federal income tax matters discussed
below, a copy of which will be filed with the SEC in a current report on Form
8-K or in a post-effective amendment to the registration statement. 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 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, Tax Counsel will
deliver its opinion to the effect that the notes will be treated as debt for
federal income tax purposes.
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The following discussion also addresses certificates falling into three
general categories:
(1) 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. Upon the issuance of each series of
certificates, Tax Counsel will deliver its opinion to the effect that the
trust will not be taxable as an association or publicly traded partnership
taxable as a corporation, but should be classified as a grantor trust
under Sections 671 through 679 of the Internal Revenue Code. Tax Counsel
will also deliver its opinion that the trust will not be subject to United
States federal income tax.
(2) Certificates or membership interests--including Strip
Certificates--and Strip Notes ("Partnership Certificates"), representing
interests in a trust which the seller, the servicer and the applicable
holders will agree to treat as equity interests in a partnership. Upon the
issuance of the Partnership Certificates, Tax Counsel will deliver its
opinion to the effect that the trust will be classified as a partnership
and not as an association or publicly traded partnership taxable as a
corporation.
(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.
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.
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, Tax Counsel will deliver its opinion to
the effect 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. 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.
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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 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
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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
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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.
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.
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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, Tax
Counsel will deliver its opinion to the effect that the Tax Trust will not be
taxable as an association or publicly traded partnership taxable as a
corporation, but should be classified as a grantor trust under Sections 671
through 679 of the Internal Revenue Code. 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.
Although Tax Counsel has opined that each Tax Trust should properly be
characterized 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 Tax Counsel's opinion that a Tax Trust should 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 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
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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 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, 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
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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.
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.
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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
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.
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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, Tax Counsel will deliver its opinion
generally to the effect that the Tax Partnership will not be classified as an
association taxable as a corporation.
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 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 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
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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;
. 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.
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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.
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
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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 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.
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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 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.
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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. 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--Classification of Partnerships and
Partnership Certificates."
State and Local Tax Considerations
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.
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
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retirement accounts, some types of Keogh Plans, other retirement plans,
accounts and arrangements, and entities deemed to hold "plan assets" in 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 benefit
plans. Under ERISA, any person who exercises any authority or control with
respect to the management or disposition of the assets of a 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. 25103-101 (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.
Based on the reasoning of the United States Supreme Court in John Hancock
Life Ins. Co. v. Harris Trust and Sav. Bank, 114 S. Ct. 517 (1993), an
insurance company's general account may be deemed to include assets of any
plans investing in the general account (e.g., through the purchase of an
annuity contract), and the insurance company might be treated as a "party-in-
interest" with respect to a plan by virtue of the investment. Any purchaser
that is an insurance company using the assets of an insurance company general
account should also note that the Small Business Job Protection Act of 1996
added new Section 401(c) of ERISA relating to the status of the assets of
insurance company general accounts under ERISA and Section 4975 of the Internal
Revenue Code. Pursuant to Section 401(c), the Department of Labor was required
to issue final regulations not later than December 31, 1997 with respect to
insurance policies issued on or before December 31, 1998 that are supported by
an insurer's general account. These regulations are to provide guidance on
which assets held by the insurer constitute "plan assets" for purposes of the
fiduciary responsibility provisions of ERISA and Section 4975 of the Internal
Revenue Code. Section 401(c) also provides that, except in the case of
avoidance of these regulations and actions brought by the Secretary of Labor
relating to breaches of fiduciary duties that also constitute breaches of state
or federal criminal law, until the date that is 18 months after these
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regulations become final, no liability under the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 may result on the
basis of a claim that the assets of the general account of an insurance company
constitute the plan assets of any plan.
As of the date hereof, proposed regulations have been issued by the
Department of Labor and final regulations are expected to be issued in the near
future, although the timing and nature of any final regulation is uncertain. It
should be noted that if these regulations are adopted substantially in the form
in which proposed, these regulations may not exempt assets of insurance company
general accounts from treatment as "plan assets" after December 31, 1998. The
plan asset status of insurance company separate accounts is unaffected by new
Section 401(c) of ERISA, and separate account assets continue to be treated as
the plan assets of any plan invested in a separate account.
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 benefit 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 benefit 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
benefit plan or that the investment is appropriate for any particular benefit
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 benefit 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 to the underwriter(s) named therein and 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 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 therein, 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.
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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, 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. Stabilizing transactions permit bids
to purchase the security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
securities in the open market after the distribution has been completed in
order to cover syndicate short positions. Syndicate short positions occur when
the underwriters sell a greater number of securities than they purchase in the
offering. 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.
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
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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
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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 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: ( ) - .
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.
"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 insurer, 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).
"Due Date" means, with respect to a receivable, the date upon which a
payment on that receivable is due.
"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 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;
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. 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;
. 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 or
pooling and servicing agreement, as applicable;
. 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, 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.
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"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 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.
"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 Counsel" means Mayer, Brown & Platt, as special tax counsel to the
seller.
"Tax Non-entity" means a trust in which all of the certificates in that
trust which 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.
"Tax Partnership" means a trust in which the seller, the servicer and the
applicable holders agree to treat certificates, including Strip Certificates,
and Strip Notes as equity interests in a partnership for purposes of federal,
state and local income and franchise taxes.
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"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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Part II
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
<TABLE>
<S> <C>
Registration Fee..................................................... $
Printing and Engraving...............................................
Trustees' Fees.......................................................
Legal Fees and Expenses..............................................
Blue Sky Fees and Expenses...........................................
Accountants' Fees and Expenses.......................................
Rating Agency Fees...................................................
Miscellaneous Fees...................................................
----------
Total...........................................................
==========
</TABLE>
Item 15. Indemnification of Directors and Officers
Section 18-108 of the Delaware Limited Liability Company Act provides that,
subject to the standards and restrictions, if any, as are described in its
limited liability company agreement, a limited liability company may, and shall
have the power to, indemnify and hold harmless any member or manager or other
person from and against any and all claims and demands whatsoever.
The Registrant was formed under the laws of Delaware. The limited liability
company agreement of the Registrant provides, in effect, that, subject to
certain limited exceptions, it will indemnify its members, directors or
officers and may indemnify any employee or agent of the Registrant who was or
is a party or is threatened to be made a party to a threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative and whether formal or informal, other than an action by or in
the right of the Registrant, where such person is a party because such person
is or was a member, director, officer, employee, or agent of the Registrant.
The Registrant's limited liability company agreement also provides that it will
generally indemnify its members and directors against expenses, including,
attorney fees, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by a director in connection with an action,
suit or proceeding relating to acts or omissions of that director regarding
specified items relating to bankruptcy and insolvency.
In general, the Registrant will indemnify its members, directors or
officers and may indemnify its employees or agents against expenses, including
attorneys fees, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by a director in connection with an action,
suit or proceeding. To the fullest extent permitted by law, the
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Registrant will also indemnify such member, director or officer and may
indemnify such employee or agent if the person acted in good faith and did not
engage in willful misconduct or gross negligence. With respect to a criminal
action or proceeding, the person must have had no reasonable cause to believe
his misconduct was unlawful. Unless ordered by a court, certain
indemnifications shall be made by the Registrant only as it authorizes in the
specific case after
. determining that the indemnification is proper under the circumstances
because the person to be indemnified has met the applicable standard of
conduct and
. evaluating the reasonableness of the expenses and of the amounts paid in
settlement.
This determination and evaluation shall be made by a majority vote of the
disinterested members or, if there is only one member, director, officer,
employee, or agent of the Registrant for or in connection with
. the receipt of a financial benefit to which the person is not entitled;
. voting for or assenting to a distribution to members in violation of the
limited liability company agreement or the Delaware Limited Liability
Company Act;
. a knowing violation of law; or
. acts or omissions of such person constituting willful misconduct or
gross negligence.
To the extent that a member, director, officer, employee, or agent of the
Registrant has been successful on the merits or otherwise in defense of an
action, suit, or proceeding or in defense of any claim, issue, or other matter
in such action, suit or proceeding, such person shall be indemnified against
actual and reasonable expenses, including reasonable attorney fees, incurred by
such person in connection with the action, suit, proceeding and any action,
suit or proceeding brought to enforce such mandatory indemnification.
In addition, no member, director or officer of the Registrant shall be
liable to the Registrant or any other person who has an interest in the
Registrant for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such member, director or officer in good faith
on behalf of the Registrant and in a manner reasonably believed to be within
the scope of the authority conferred on such member, director or officer by the
limited liability company agreement of the Registrant, except that a member,
director or officer shall be liable for any such loss, damage or claim incurred
by reason of such member's director's or officer's willful misconduct or gross
negligence.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.
AmSouth Bank also maintains insurance providing for payment, subject to
certain exceptions, on behalf of officers, directors and managers of the
Registrant and its subsidiaries of money damages incurred as a result of legal
actions instituted against them in their capacities as such officers, directors
or managers (whether or not such person could be indemnified against such
expense, liability or loss under the Delaware Limited Liability Company Act).
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Each underwriting agreement will provide that the underwriter will
indemnify the Registrant against specified liabilities, including liabilities
under the Securities Act of 1933. The Registrant has been advised that in the
opinion of the Securities and Exchange Commission, this indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Item 16. Exhibits and Financial Statement Schedules
(a) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
<TABLE>
<CAPTION>
Sequential
Exhibit Page
No. Description of Exhibit Number
------- ---------------------- ----------
<C> <S> <C>
1.1 Form of Underwriting Agreement.
3.1 Limited Liability Company Agreement of AmSouth Auto
Receivables LLC.***
4.1 Form of Indenture between the Issuer and the Indenture
Trustee (including forms of Notes).
4.2 Form of Trust Agreement, among the Registrant and the
Trustee (including forms of Certificates).
5.1 Opinion of Mayer, Brown & Platt with respect to legality.
8.1 Opinion of Mayer, Brown & Platt with respect to federal
tax matters.
10.1 Form of Sale and Servicing Agreement among the
Registrant, the Servicer and the Issuer.
10.2 Form of Purchase Agreement between an Originator and the
Registrant.
10.3 Form of Administration Agreement.
10.4 Form of Limited Liability Company Agreement of AmSouth
Auto 200 - LLC.
23.1 Consent of Mayer, Brown & Platt (included in its opinions
filed as Exhibits 5.1 and 8.1).
24.1 Powers of Attorney (included in the signature page
hereto).*
25.1 Statement of Eligibility and Qualification of Indenture
Trustee (Form T-1)**
99.1 Form of Limited Liability Agreement of the Issuer.
</TABLE>
--------
*Previously filed.
**To be filed pursuant to Section 305 (b)(2) of the Trust Indenture Act.
***To be filed by Amendment.
Item 17. Undertakings
(a) As to Rule 415 and Rule 430A:
The undersigned registrant hereby undertakes:
. To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to
this registration statement:
II-3
<PAGE>
(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(b) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the
most recent post-effective amendment hereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this registration statement; and
(c) to include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that the undertakings set forth in clauses (i)
and (ii) above do not apply if the information required to be
included in a post-effective amendment by those clauses is
contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended, that are incorporated by reference in this
registration statement.
. For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall
be deemed to be part of this registration statement as of the time
it was declared effective.
. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) As to documents subsequently filed that are incorporated by reference:
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended, that is incorporated by
reference in this registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) As to Equity Offerings of Nonreporting Registrants:
The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as
required by the underwriter to permit prompt delivery to each purchaser.
II-4
<PAGE>
(d) As to indemnification:
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item
15 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(e) As to qualification of Trust Indentures under Trust Indenture Act of
1939 for delayed offerings:
The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
II-5
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Birmingham, State of Alabama on the
27th day of July 2000.
AmSouth Auto Receivables LLC
/s/ R. Mark Graf
By:__________________________________
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ R. Mark Graf
________________ Director and President
R. Mark Graf (Principal Executive Officer) July 27, 2000
*
________________ Director and Treasurer
John D. (Principal Financial Officer and
Kottmeyer Principal Accounting Officer) July 27, 2000
* Director and Secretary July 27, 2000
________________
T. Kurt Miller
</TABLE>
* The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 1 to the Registration Statement on behalf of each of the
above indicated officers and directors of the Registrant pursuant to the
power of attorney signed by such officers and directors.
/s/ R. Mark Graf
By:_____________________________
R. Mark Graf
Attorney-in-fact
II-6
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Sequential
Exhibit Page
No. Description of Exhibit Number
------- ---------------------- ----------
<C> <S> <C>
1.1 Form of Underwriting Agreement.
3.1 Amended and Restated Limited Liability Company
Agreement of AmSouth Auto Receivables LLC.***
4.1 Form of Indenture between the Issuer and the Indenture
Trustee (including forms of Notes).
4.2 Form of Trust Agreement, among the Registrant and the
Trustee (including forms of Certificates).
5.1 Opinion of Mayer, Brown & Platt with respect to
legality.
8.1 Opinion of Mayer, Brown & Platt with respect to federal
tax matters.
10.1 Form of Sale and Servicing Agreement among the
Registrant, the Servicer and the Issuer.
10.2 Form of Receivables Purchase Agreement between an
Originator and the Registrant.
10.3 Form of Administration Agreement.
23.1 Consent of Mayer, Brown & Platt (included in its
opinions filed as Exhibits 5.1 and 8.1).
24.1 Powers of Attorney (included in the signature page
hereto).*
25.1 Statement of Eligibility and Qualification of Indenture
Trustee
(Form T-1)**
99.1 Form of Limited Liability Agreement of the Issuer.
</TABLE>
--------
*Previously filed.
**To be filed pursuant to Section 305(b)(2) of the Trust Indenture Act.
***To be filed by amendment.
