Registration No. 333-160515 |
SECURITIES AND EXCHANGE COMMISSION
THE SECURITIES ACT OF 1933
(Exact name of each Registrant as specified in its charter)
11-365048-3 | ||
Delaware | 38-6738618 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Nos.) |
Herndon, VA 20171
(703) 364-7000
(Address, including ZIP code, and telephone number,
including area code, of each Registrant’s principal executive offices)
VW Credit, Inc.
2200 Ferdinand Porsche Drive
Herndon, VA 20171
(703) 364-7000
(Name, address, including ZIP code, and telephone number,
including area code, of agent for service)
Stuart M. Litwin, Esq. Mayer Brown LLP 71 S. Wacker Drive Chicago, IL 60606 (312) 782-0600 | Angela M. Ulum, Esq. Mayer Brown LLP 71 S. Wacker Drive Chicago, IL 60606 (312) 782-0600 |
Large accelerated filero | Accelerated filero | Non-accelerated filerþ (Do not check if a smaller reporting company) | Smaller reporting companyo |
PROPOSED | PROPOSED | |||||||||||||
TITLE OF EACH CLASS | AMOUNT TO | MAXIMUM | MAXIMUM | AMOUNT OF | ||||||||||
OF SECURITIES TO BE | BE | OFFERING PRICE | AGGREGATE | REGISTRATION | ||||||||||
REGISTERED | REGISTERED | PER UNIT (1) | OFFERING PRICE | FEE (4) (5) | ||||||||||
Asset Backed Notes and Certificates | $9,000,000,000 | 100% | $9,000,000,000 | $502,200 | ||||||||||
Special Unit of Beneficial Interest Certificates(2) | (3) | (3) | (3) | (3) | ||||||||||
Total | $9,000,000,000 | 100% | $9,000,000,000 | $502,200 | ||||||||||
(1) | Estimated solely for the purpose of calculating the registration fees pursuant to Rule 457. | |
(2) | Each Special Unit of Beneficial Interest (“Transaction SUBI”) issued by VW Credit Leasing, Ltd. will constitute a beneficial interest in specified assets of VW Credit Leasing, Ltd., including certain leases and the automobiles relating to those leases. The Transaction SUBIs are not being offered to investors hereunder. Each Special Unit of Beneficial Interest Certificate (the“Transaction SUBI Certificate”) issued by VW Credit Leasing, Ltd. and representing the related Transaction SUBI will be transferred to the applicable Issuing Entity. The Transaction SUBI Certificates are not being offered to investors hereunder. | |
(3) | Not applicable. | |
(4) | $55.80 has previously been paid. | |
(5) | $110,421.75 of the registration fee for this Registration Statement is being offset, pursuant to Rule 457(p) of the General Rules and Regulations under the Securities Act of 1933, as amended, by the registration fees paid in connection with unsold Asset Backed Notes and Certificates registered by under Registration Statement No. 333-133770 and amended by Amendment No. 1 to Form S-3 filed on June 9, 2006, Amendment No. 2 to Form S-3 filed on July 11, 2006, and Amendment No. 3 to Form S-3 filed on July 14, 2006. | |
(To Prospectus Dated [ ], [ ])
Issuing Entity
Depositor
Sponsor and Servicer
Final | Expected | |||||||||||||||
Scheduled | Final | |||||||||||||||
Principal Amount | Interest Rate | Payment Date | Maturity Date | |||||||||||||
Class A-1 Notes | $ | % | ||||||||||||||
Class A-2 Notes | $ | % | ||||||||||||||
Class A-3 Notes | $ | % | ||||||||||||||
Class A-4 Notes | $ | [LIBOR +]% | ||||||||||||||
[Class B Notes] | $ | % | ||||||||||||||
Total | $ | |||||||||||||||
Underwriting | Proceeds to the | |||||||||||
Price to Public(1) | Discount | Seller | ||||||||||
Per Class A-1 Note | % | % | % | |||||||||
Per Class A-2 Note | % | % | % | |||||||||
Per Class A-3 Note | % | % | % | |||||||||
Per Class A-4 Note | % | % | % | |||||||||
[Per Class B Note] | % | % | % | |||||||||
Total | $ | $ | $ | |||||||||
(1) | Plus accrued interest, if any, from [ ]. | |
• | The notes are payable solely from the assets of the issuing entity, which consist primarily of retail motor vehicle installment sale contracts and/or installment loans that are secured by new and used automobiles and light-duty trucks, [payments due under an interest rate swap agreement] [and funds on deposit in the reserve account.] [[ ] will be the counterparty to the interest rate swap agreement.] | |
• | The issuing entity will pay interest and principal on the notes on the [ ] day of each month, or, if the [ ] is not a business day, the next business day, starting on [ ]. | |
• | Credit enhancement for the notes offered hereby will consist of [a reserve account with an initial deposit of $[ ],] [subordinated certificates,] [excess interest on the receivables] and [the yield supplement overcollateralization amount] [and, in the case of the Class A notes, by subordination of certain payments to the Class B noteholders]. | |
• | The issuing entity will also issue a certificate representing an equity interest in the issuing entity, which is not being offered hereby. | |
• | [On the closing date, the notes will be “eligible collateral” under and as defined in the Federal Reserve Bank of New York’s Term Asset-Backed Securities Loan Facility, subject to those considerations discussed under “Risk Factors — Loss of TALF Eligibility, the Requirements of the TALF Program or the Lack of Availability of a TALF Loan May Adversely Affect Your Financing Options and the Liquidity and Market Value of Your Notes” in this prospectus |
supplement. If you intend to finance a purchase of notes through the Term Asset-Backed Securities Loan Facility, you should consult your financial and legal advisors before making a purchase. See also “TALF Considerations”.] |
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SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
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* NOTE: Disclose transactions that are not arm’s length or transactions that are outside the ordinary course between sponsor, depositor or issuing entity and any other transaction party. |
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Principal | Interest | Final Scheduled | ||||||||||
Class | Amount | Rate | Payment Date | |||||||||
Class A-1 Notes | $ | % | ||||||||||
Class A-2 Notes | $ | % | ||||||||||
Class A-3 Notes | $ | % | ||||||||||
Class A-4 Notes | $ | [LIBOR +]% | ||||||||||
[Class B Notes | $ | %] |
• | Interest on the [Class A-1 notes and the Class A-4] notes will accrue from and including the prior payment date (or, with respect to the first payment date, from and including the closing date) to but excluding the following payment date. |
• | [Interest on the Class A-2 notes and the Class A-3 notes will accrue from and including the 20th day of each calendar month preceding each payment date (or, with respect to the first payment date, from and including the closing date) to but excluding the 20th day of the following month.] |
• | Interest accrued as of any payment date but not paid on that payment date will be payable on the next payment date, together with interest on such amount at the applicable interest rate (to the extent lawful). |
• | The issuing entity will pay interest on the Class A-1 notes [and the Class A-4 notes] on the basis of the actual number of days elapsed during the period for which interest is payable and a 360-day year. This means that the interest due on each payment date for the Class A-1 notes [and the Class A-4 notes, as applicable] will be the product of (i) the outstanding principal balance on the Class A-1 notes [and the Class A-4 notes, as applicable], (ii) the related interest rate and (iii) the actual number of days from and including the previous payment date (or, in the case of the first payment date, from and including the closing date) to but excluding the current payment date divided by 360. |
• | The issuing entity will pay interest on the Class A-2 notes, the Class A-3 notes, [the Class A-4 notes][and the Class B notes] on |
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the basis of a 360-day year consisting of twelve 30-day months. This means that the interest due on each payment date for the Class A-2 notes, the Class A-3 notes, [the Class A-4 notes][and the Class B notes] will be the product of (i) the outstanding principal balance of the related class of notes, (ii) the applicable interest rate and (iii) 30 (or in the case of the first payment date, [_______]), divided by 360. | ||
• | Interest payments on all classes of Class A notes will have the same priority. [Interest payments on the Class B notes will be subordinated to interest payments and, in specified circumstances, principal payments of the Class A notes.] |
• | The issuing entity will generally pay principal on the notes monthly on each payment date in accordance with the payment priorities described below under “—Priority of Payments.” |
• | The issuing entity will make principal payments of the notes based on the amount of collections and defaults on the receivables during the prior collection period. |
• | This prospectus supplement describes how available funds and amounts on deposit in the reserve account are allocated to principal payments of the notes. |
• | On each payment date, prior to the acceleration of the notes following an event of default, which is described below under “—Interest and Principal Payments after an Event of Default,” the issuing entity will distribute funds available to pay principal of the notes in the following order of priority: |
(1) | first, to the Class A-1 notes, until the Class A-1 notes are paid in full; | |
(2) | second, to the Class A-2 notes, until the Class A-2 notes are paid in full; |
(3) | third, to the Class A-3 notes, until the Class A-3 notes are paid in full; | |
(4) | fourth, to the Class A-4 notes, until the Class A-4 notes are paid in full; and | |
[(5) | fifth, to the Class B notes, until the Class B notes are paid in full.] |
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• | a default in the payment of any interest on any note [of the Controlling Class] when the same becomes due and payable, and such default shall continue for a period of five business days; |
• | default in the payment of the principal of any note at the related final scheduled payment date or the redemption date; |
• | any failure by the issuing entity to duly observe or perform in any material respect any of its material covenants or agreements in the indenture, which failure materially and adversely affects the interests of the noteholders, and which continues |
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unremedied for 90 days after receipt by the issuing entity of written notice thereof from the indenture trustee or noteholders evidencing a majority of the outstanding principal amount of the notes [of the Controlling Class] (it being understood that no servicer replacement event will result from a breach by the servicer of any covenant for which the repurchase of the affected receivable is specified as the sole remedy pursuant to the sale and servicing agreement); | ||
• | any representation or warranty of the issuing entity made in the indenture proves to be incorrect in any material respect when made, which failure materially and adversely affects the rights of the noteholders, and which failure continues unremedied for 90 days after receipt by the issuing entity of written notice thereof from the indenture trustee or noteholders evidencing at least a majority of the notes [of the Controlling Class] (it being understood that any repurchase of a receivable by VCI pursuant to the purchase agreement or the depositor pursuant to the sale and servicing agreement shall be deemed to remedy any incorrect representation or warranty with respect to such receivable); and |
• | the occurrence of certain events (which, if involuntary, remain unstayed for more than 90 days) of bankruptcy, insolvency, receivership or liquidation of the issuing entity. |
• | the receivables, including collections on the receivables after the applicable cut-off date (the cut-off date for the receivables sold to the issuing entity on the closing date is [ ], which we refer to as the [initial] “cut-off date”, [and the cut-off date for the receivables sold to the issuing entity on a Funding Date, the “subsequent cut-off date,” is the date specified in the notice relating to that Funding Date)]; |
• | security interests in the vehicles financed by the receivables, which we refer to as the “financed vehicles”; |
• | all receivable files relating to the original motor vehicle retail installment sales contracts and/or loans evidencing the receivables; |
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• | [rights under the interest rate swap agreement and payments made by the swap counterparty under the interest rate swap agreement;] |
• | any other property securing the receivables; |
• | all rights of the applicable originator under agreements with the dealers relating to receivables; |
• | rights to proceeds under insurance policies that cover the obligors under the receivables or the financed vehicles; |
• | amounts on deposit in the accounts owned by the issuing entity and permitted investments of those accounts; |
• | rights of the issuing entity under the sale and servicing agreement and of the depositor, as buyer, under the purchase agreement; and |
• | the proceeds of any and all of the above. |
• | an aggregate receivables balance of $[_______________]; |
• | a weighted average contract rate of [_______]%; |
• | a weighted average original maturity of [_______] months; and |
• | a weighted average remaining maturity of [_______] months. |
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• | [ ] full calendar months following the closing date; |
• | the date on which the amount in the pre-funding account is $[10,000] or less; or |
• | the occurrence of an event of default under the indenture. |
• | first, to the servicer, for reimbursement of outstanding advances; |
• | second, to the servicer, the servicing fee; |
• | [third, to the swap counterparty, the Net Swap Payment;] |
• | fourth, pro rata, (1) to the Class A noteholders, interest on the Class A notes and [(2) to the Swap Counterparty any Senior Swap Termination Payments payable to the swap counterparty;] |
• | fifth, to the principal distribution account for distribution to the noteholders, the First Allocation of Principal, if any; |
• | [sixth, to the Class B noteholders, interest on the Class B notes;] |
• | [seventh, to the principal distribution account for distribution to the noteholders, the Second Allocation of Principal;] |
• | eighth, to the reserve account, until the amount of funds in the reserve account is equal to the specified reserve account balance; |
• | [ninth, to the swap counterparty, any Subordinate Swap Termination Payment and any other amounts payable by the issuing entity to the swap counterparty and not previously paid;] |
• | tenth, to pay to the owner trustee and the indenture trustee, accrued and unpaid fees and reasonable expenses (including indemnification amounts) permitted under the sale and servicing agreement, the trust agreement and the indenture, as applicable, which have not been previously paid; and |
• | eleventh, any remaining funds will be distributed to the holder of the issuing entity’s certificates. |
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[Class A notes] | [Subordination of principal payments of the Class B notes, which will have an initial note balance of $[ ],] the reserve account and excess interest on the receivables. | |
[Class B notes] | [The reserve account and excess interest on the receivables] |
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Class | [Standard & Poor’s] | [Moody’s] | [Fitch] | ||||||||||||
A-1 | [A-1+] | [Prime-1] | [F1+] | ||||||||||||
A-2 | [AAA] | [Aaa] | [AAA] | ||||||||||||
A-3 | [AAA] | [Aaa] | [AAA] | ||||||||||||
A-4 | [AAA] | [Aaa] | [AAA] | ||||||||||||
[B] | [A] | [A3] | [A] |
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The geographic concentration of the obligors in the receivables pool and varying economic circumstances may increase the risk of losses or reduce the return on your notes. | The concentration of the receivables in specific geographical areas may increase the risk of loss. A deterioration in economic conditions in the states where obligors reside could adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables and may consequently affect the delinquency, loss and repossession experience of the issuing entity with respect to the receivables. An improvement in economic conditions could result in prepayments by the obligors of their payment obligations under the receivables. As a result, you may receive principal payments of your notes earlier than anticipated. See “—Returns on your investments may be reduced by prepayments on the receivables, events of default, optional redemption of the securities or repurchases of receivables from the issuing entity” in the prospectus. As of the [initial][statistical] cut-off date, based on the billing addresses of the obligors, [ ]%, [ ]% and [ ]% of the net pool balance of the receivables were located in [ ], [ ] and [ ], respectively. No other state accounts for more than 5.00% of the net pool balance of the receivables as of the cut-off date. Economic factors like unemployment, interest rates, the price of gasoline, the rate of inflation and consumer perceptions of the economy may affect the rate of prepayment and defaults on the receivables. Further, the effect of natural disasters, such as hurricanes and floods, on the performance of the receivables, is unclear, but there may be a significant adverse effect on general economic conditions, consumer confidence and general market liquidity. Because of the concentration of the obligors in certain states, any adverse economic factors or natural disasters in those states may have a greater effect on the performance of the notes than if the concentration did not exist. | |
Additionally, during periods of economic slowdown or recession, delinquencies, defaults, repossessions and losses generally increase. These periods may also be accompanied by decreased consumer demand for light-duty trucks, SUVs or other vehicles and declining values of automobiles securing outstanding automobile loan contracts, which weakens collateral coverage and increases the amount of a loss in the event of default by an obligor. Significant |
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increases in the inventory of used automobiles during periods of economic slowdown or recession may also depress the prices at which repossessed automobiles may be sold or delay the timing of these sales, which may delay and reduce the amount of recoveries and increase net credit losses. | ||
Credit scores and historical loss experience may not accurately predict the likelihood of losses on the receivables. | Information regarding credit scores for the obligors obtained at the time of acquisition from the originating dealer of their contract is presented in “The Receivables Pool” in this prospectus supplement. A credit score purports only to be a measurement of the relative degree of risk a borrower represents to a lender, i.e., that a borrower with a higher score is statistically expected to be less likely to default in payment than a borrower with a lower score. Neither the depositor, the sponsor nor any other party makes any representations or warranties as to any obligor’s current credit score or the actual performance of any motor vehicle receivable or that a particular credit score should be relied upon as a basis for an expectation that a receivable will be paid in accordance with its terms. | |
Additionally, historical loss and delinquency information set forth in this prospectus supplement under “The Receivables Pool” was affected by several variables, including general economic conditions and market interest rates, that are likely to differ in the future. Therefore, there can be no assurance that the net loss experience calculated and presented in this prospectus supplement with respect to VW Credit’s managed portfolio of contracts will reflect actual experience with respect to the receivables in the receivables pool. There can be no assurance that the future delinquency or loss experience of the servicer with respect to the receivables will be better or worse than that set forth in this prospectus supplement with respect to VW Credit’s managed portfolio. | ||
This prospectus supplement provides information regarding only the receivables as of the statistical cut-off date[, however the initial receivables and the subsequent receivables added to the receivables pool could have different characteristics.] | This prospectus supplement describes only the characteristics of the receivables as of the statistical cut-off date. The [initial] receivables [and any subsequent receivables transferred to the issuing entity during the Funding Period,] will have characteristics that differ somewhat from the characteristics of the receivables as of the statistical cut-off date described in this prospectus supplement. Although we do not expect the characteristics of the [initial] receivables [and subsequent receivables] to differ materially from the receivables as of the statistical cut-off date, and each [initial] receivable [and subsequent |
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receivable] must satisfy the eligibility criteria specified in the sale and servicing agreement, you should be aware that the [initial] receivables [and the subsequent receivables] may have been originated using credit criteria different from the criteria applied to the receivables disclosed in this prospectus supplement and may be of a different credit quality and seasoning. If you purchase a note, you must not assume that the characteristics of the [initial] receivables [and the subsequent receivables] sold to the issuing entity on the closing date will be identical to the characteristics of the receivables in the statistical pool as of the statistical cut-off date disclosed in this prospectus supplement. | ||
[Loss of TALF Eligibility, the Requirements of the TALF Program or the Lack of Availability of a TALF Loan May Adversely Affect Your Financing Options and the Liquidity and Market Value of Your Notes | On the closing date, the notes will be “eligible collateral” under and as defined in the Federal Reserve Bank of New York’s Term Asset-Backed Securities Loan Facility (“TALF”), as described under “TALF Considerations” in this prospectus supplement. Under TALF, subject to the program terms and conditions, the Federal Reserve Bank of New York (the “FRBNY”) may make loans secured by eligible asset-backed securities to eligible borrowers on a limited recourse basis. However, the FRBNY is under no obligation to extend credit to investors requesting TALF loans. | |
The FRBNY has expressly reserved the right to change the terms and conditions of the TALF program, including the size of the program, pricing of loans, loan maturity, collateral haircuts, requirements of the underlying assets and borrower eligibility requirements. | ||
• The Notes May Cease to be “Eligible Collateral” Under TALF, Which May Adversely Affect Your Financing Options and the Liquidity and Market Value of Your Notes. Although the notes will be “eligible collateral” under and as defined in TALF on the closing date, as discussed under “TALF Considerations” in this prospectus supplement, there can be no assurance that the notes will remain “eligible collateral” for new TALF loans sought at any time after the closing date (or TALF loans sought to be assigned after the closing date), including due to changes in the terms and conditions of the TALF program or the characteristics of the notes or the underlying receivables. In particular, the notes could become subject to a ratings downgrade or placed on negative credit watch by one of the rating agencies named in “Summary of Terms—Ratings” in this prospectus supplement. To be | ||
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considered “eligible collateral” under the TALF program, the notes must be rated in the highest long-term or short-term investment-grade rating category from two or more eligible nationally recognized statistical rating organizations (NRSROs) and must not have a credit rating below the highest investment-grade rating category from an eligible NRSRO. If a ratings downgrade or placement on negative credit watch were to occur, the notes would no longer constitute “eligible collateral” and an investor would not be able to obtain a new TALF loan secured by the notes unless and until the Class A notes were to comply with the eligibility criteria under TALF in the future. The automobile industry and financial services industry in the United States and elsewhere, like the broader world economy, are both in a state of hardship. Many automobile manufacturers, part suppliers, captive finance companies, auto dealers and related businesses have experienced declining revenues and higher financing and operating costs. Many financial institutions have experienced declining revenues, increased losses, reductions in market capitalization and higher costs. If, as a result of any financial and business difficulties impacting the automobile industry generally, or VW Credit specifically, the rating agencies rating the notes downgrade the notes, such downgrade could impair your ability to assign your TALF loan or to sell the notes securing your TALF loan. None of the sponsor, the issuing entity, the servicer, the indenture trustee nor the administrator is obligated to monitor the continuing accuracy of the characteristics of the receivables or to recalculate the weighted average life of each class of notes based on actual prepayment experience after the Closing Date or the weighted average FICO score of the receivables or to take actions to cause any ratings assigned to a class of notes to be reinstated or any negative credit watch to be removed. To the extent the notes cannot be pledged as collateral for a TALF loan, it could limit your ability to resell those notes and adversely affect the price of your notes. | ||
If you intend to obtain a TALF loan to finance your investment but are unable to obtain a TALF loan, you may have limited or no alternative financing options and your expected return on your investment in the notes may be significantly reduced. If the notes cease to be eligible collateral under TALF or if the terms of the TALF program change, those |
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changes may cause the notes to become less attractive to potential purchasers of the notes. Further, the FRBNY has indicated that assignment of TALF loans to other eligible borrowers may only occur with the consent of the FRBNY and prior to the expiration of the TALF program on March 31, 2010 (or such later date if extended by the FRBNY). An assignment of a TALF loan may also require the consent of the TALF agent that arranged the TALF loan. In addition, we can give no assurance that any TALF related request by a TALF agent for future documentation, fees or assurances occurring after issuance of the notes with respect to secondary market purchases of the notes will be acceptable to you, and it is expected that none of the sponsor, the depositor, the issuing entity, the underwriters nor any of their subsidiaries or affiliates will have any obligation to comply with any future request made by a TALF agent. As a result of the foregoing, you may not be able to sell your notes when you want to do so or you may not be able to obtain the price that you wish to receive. See also“—The absence of a secondary market for the securities could limit your ability to resell your securities”in the prospectus. | ||
• Investors Financing a Purchase of Notes with a TALF Loan must Access the TALF Program through a TALF Agent. An investor seeking a loan under the TALF program may only gain access to the TALF program as a borrower through a TALF agent. A “TALF agent” is any financial institution that has agreed to be bound by the Master Loan and Security Agreement (the “MLSA”) between the FRBNY, the TALF agents and The Bank of New York Mellon, as custodian and administrator. TALF agents are primary dealers, as well as other dealers who have been specifically designated by the FRBNY to serve in this capacity, as agents on behalf of their customers, the TALF borrowers, in support of the TALF program. Although a TALF borrower will have various obligations and make various representations to the FRBNY, a borrower will not be in direct contractual privity with the FRBNY or any other government entity. The TALF borrower must enter into a customer agreement with a TALF agent that will act on behalf of the borrower in connection with a TALF loan and will receive from the borrower and deliver to the TALF custodian the eligible collateral, collateral haircut and other amounts due in connection with the closing of a |
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TALF loan. Under the TALF program, the “collateral haircut”, which will be delivered by the borrower in connection with a TALF loan, is an amount of cash equal to the market value of the asset-backed securities to be pledged by a borrower to secure the TALF loan multiplied by a percentage set by the FRBNY as the applicable “haircut percentage”, which varies based on the type of asset underlying the asset-backed securities pledged by the related borrower and the weighted average FICO score of the related obligors. Currently, requests for a TALF loan backed by auto loan asset-backed securities may be made once per month on the applicable TALF subscription date. On the TALF loan subscription date, the TALF agent must provide the custodian with the CUSIP numbers and offering documents of all collateral expected to be pledged to secure the TALF loans for which that TALF agent acts on behalf of TALF borrowers, together with other information regarding the prospective borrower and the eligible collateral. On the TALF loan settlement date, the TALF borrower, through its TALF agent, will deliver the pledged collateral, the collateral haircut and the administrative fee due in connection with the TALF Loan to The Bank of New York Mellon, as the TALF custodian. If an investor in the notes failed to successfully subscribe for a TALF loan on the subscription date, or failed to close the TALF loan on the TALF loan settlement date, that investor would not be able to apply for another TALF loan until the next TALF subscription date, at which date the notes may no longer constitute eligible collateral. See“— Terms and Conditions to Obtaining TALF Loans May Change and You May Not Be Able to Pledge the Notes in the Future. ” | ||
An investor in the notes who obtains a loan under the TALF program will not directly receive payments of interest and principal on any notes pledged to secure the TALF loan. Instead, payments with respect to pledged securities under the TALF program will be distributed directly to the TALF custodian, which will then be applied first to pay interest and principal on the TALF loan, and then the remainder is distributed through the TALF agent to the TALF borrower in accordance with the terms of the MLSA and subject to the applicable customer agreement. While certain terms are required by the MLSA to be contained in each customer agreement, the terms of any particular customer agreement may vary depending on the TALF agent or agents selected by an investor. We can make no assurances of the creditworthiness or operations of any particular TALF agent, or that the terms offered under any particular TALF agent’s customer agreement will be acceptable to you. TALF agents may or may not be underwriters of the notes or affiliates of the underwriters. None of the sponsor, the depositor, the issuing entity, the underwriters or any of their subsidiaries or affiliates can give you any assurances that you will be an eligible borrower or that you will be able to borrow any funds under TALF. |
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• The FRBNY May Enforce its Rights in the Collateral and Sell Your Notes. The FRBNY is permitted to assign asset-backed securities pledged as collateral to secure a TALF loan to TALF LLC, a special purpose entity, upon the occurrence of certain defaults (including the failure to repay the TALF loan by the applicable maturity date, which is currently three years for loans secured by auto loan-backed securities) and other events described in the MLSA, and TALF LLC may liquidate the collateral and pursue remedies against the TALF borrower. If TALF LLC were to liquidate collateral or pursue remedies with respect to securities of the same class as the notes you purchased (including as a result of defaults or other actions of other TALF borrowers), or with respect to similar securities, the effect may be to depress the secondary market price of your notes. | ||
If you obtain a TALF loan and the outstanding amount of the loan is not repaid on or before the loan’s three-year maturity date, you must repay the outstanding amount on the maturity date or surrender your notes to the FRBNY. Because the rate of principal payments on each class of notes depends primarily on the rate of payment on the receivables, the final payment on your notes could occur later than the maturity date of the TALF loan. See “Maturity, Prepayment and Yield Considerations” in the accompanying prospectus and “Weighted Average Life of the Notes” in this prospectus supplement. If your notes remain outstanding on the maturity date of the TALF loan and you are unable to repay the outstanding amount of the TALF loan, the FRBNY may enforce its rights against the notes pledged as collateral, including by selling such notes to TALF LLC, as described above. If such an event were to occur, you would lose both your interest in the pledged notes and your equity investment in the notes represented by the collateral haircut. If an investor with a TALF loan defaults on the TALF loan, in most cases, the FRBNY and its designated agents (including TALF LLC) may only exercise remedies against the eligible collateral and the related collateral haircut securing the loan. However, there are certain exceptions to the limited recourse nature of the TALF facility outlined in the MLSA, which may result in a TALF borrower being subject to recourse for amounts in excess of the value of the collateral |
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haircut and the pledged asset-backed securities collateral, as further described in “TALF Considerations—Defaults on TALF Loans” in this prospectus supplement. | ||
• Terms and Conditions to Obtaining TALF Loans May Change and You May Not Be Able to Pledge the Notes in the Future. The FRBNY, the Treasury Department and other agencies of the U.S. government have announced that TALF will be funded with $200 billion, with a possible increase up to $1 trillion. In addition, TALF is capitalized with $20 billion in funds from the U.S. Treasury Department’s Troubled Assets Relief Program (“TARP”). No assurance can be made that the entire amount of funds initially dedicated to TALF or TARP will be available through the maturity of securities pledged as collateral for TALF loans, if the U.S. Congress, Treasury Department or Board of Governors of the Federal Reserve System determines that funding should be reduced or reallocated for other purposes. No assurance can be made that the terms and conditions of TALF loans existing on the closing date will remain the same if TALF borrowers wish to pledge the notes as collateral in the future. Additionally, no assurance can be made that the collateral haircuts initially announced will remain at their present levels, or that all collateral acceptable by the FRBNY at the inception of the TALF program will continue to be acceptable through the duration of the program. No assurance can be made that the FRBNY will refrain from changing (including retroactively) the terms of the MLSA and other terms and conditions of the TALF program. This prospectus supplement does not purport to describe all the requirements of participation in the TALF program or the associated risks or the availability or advisability of financing an investment in the notes with loans from the FRBNY under TALF. The terms of the TALF program are subject to change and more attractive terms could be included for different asset classes, which could cause asset-backed securities backed by prime automobile loans to be less attractive to investors. Further, it is unclear what effect TALF will have on the secondary market for the notes and asset-backed securities generally. Potential investors in the notes should consult with their own financial and legal |
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advisors with respect to the program requirements of, eligibility for, and related legal and economic risk in connection with, TALF loans. For more information about the notes and TALF, see “TALF Considerations” in this prospectus supplement.] | ||
[Payments on the Class B notes are subordinated to payments on the Class A notes.] | Interest payments on the Class B notes on each payment date will be subordinated to servicing fees due to the servicer, fees and expenses due to the trustees, any net swap payment, any Senior Swap Termination Payment and interest on and, in specified circumstances, principal payments of the Class A notes. Principal payments of the Class B notes will be fully subordinated to principal and interest payments of the Class A notes.] | |
[The occurrence of certain events of default under the indenture that result in acceleration of the notes may result in a delay or default in the payment of interest on or principal of the Class B notes.] | [After an event of default under the indenture that results in acceleration of the notes [(other than an event of default that arises from the issuing entity’s breach of a covenant, representation or warranty)], the issuing entity will not make any distributions of principal or interest on the Class B notes until payment in full of principal and interest on the Class A notes. This may result in a delay or default in paying interest on or principal of the Class B notes.] | |
Your share of possible losses may not be proportional. | Principal payments on the notes generally will be made to the holders of the notes sequentially so that no principal will be paid on any class of notes until each class of notes with an earlier final scheduled payment date has been paid in full. As a result, a class of notes with a later maturity may absorb more losses than a class of notes with an earlier maturity. | |
[You may experience reduced returns on your notes resulting from distribution of amounts in the pre-funding account.] | [On one or more occasions following the closing date, the issuing entity may purchase receivables from the seller, which, in turn, will acquire these receivables from VW Credit, with funds on deposit in the pre-funding account. | |
You will receive as a prepayment of principal any amounts remaining in the pre-funding account (excluding investment earnings) that have not been used to purchase receivables by the end of the Funding Period. See “The Purchase Agreement, Sale and Servicing Agreement and the Indenture—Pre-Funding Account,” in this prospectus supplement, this prepayment of principal could have the effect of shortening the weighted average life of your notes. The inability of the seller to obtain receivables meeting the requirements for sale to the issuing entity will increase the |
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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 your notes.] | ||
[Risks associated with the interest rate swap.] | [The issuing entity will enter into an interest rate swap transaction under an interest rate swap agreement because the receivables owned by the issuing entity bear interest at fixed rates while the [Class A-4 notes] will bear interest at a floating rate. The issuing entity may use payments made by the swap counterparty to make interest and other payments on each payment date. | |
During those periods in which the floating rate payable by the swap counterparty is substantially greater than the fixed rate payable by the issuing entity, the issuing entity will be more dependent on receiving payments from the swap counterparty in order to make interest payments on the notes without using amounts that would otherwise be paid as principal on the notes. If the swap counterparty fails to pay a net swap receipt, and collections on the receivables and funds on deposit in the reserve account are insufficient to make payments of interest on the notes, you may experience delays and/or reductions in the interest on and principal payments of your notes. | ||
During those periods in which the floating rate payable by the swap counterparty under the interest rate swap agreement is less than the fixed rate payable by the issuing entity under the interest rate swap agreement, the issuing entity will be obligated to make a net swap payment to the swap counterparty. The issuing entity’s obligation to pay a net swap payment to the swap counterparty is secured by the issuing entity property. | ||
An event of default under the indenture may result in payments on your notes being accelerated. The swap counterparty’s claim for a net swap payment will be higher in priority than all payments on the notes, and the swap counterparty’s claim for any due and unpaid senior swap termination payment will be equal in priority to payments of interest on the notes and higher in priority than all payments of principal on the notes. If a net swap payment is due to the swap counterparty on a payment date and there are insufficient collections on the receivables and insufficient funds on deposit in the reserve account to make payments of interest and principal on the notes, you may experience delays and/or reductions in the interest and principal payments on your notes. |
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The interest rate swap agreement generally may not be terminated except upon the occurrence of specific events, which are described in this prospectus supplement in “The Notes—Interest Rate Swap Agreement.” Depending on the reason for the termination, a termination payment may be due to the issuing entity or to the swap counterparty. Any such termination payment could, if market interest rates and other conditions have changed materially, be substantial. | ||
If the swap counterparty fails to make a termination payment owed to the issuing entity under the interest rate swap agreement, the issuing entity may not be able to enter into a replacement interest rate swap agreement. If this occurs, the amount available to pay principal of and interest on the notes will be reduced to the extent the interest rate on the [Class A-4] notes exceeds the fixed rate the issuing entity would have been required to pay the swap counterparty under the interest rate swap agreement. | ||
If the issuing entity is required to make a Senior Swap Termination Payment to the swap counterparty, that payment will be senior to all payments on the Class [B] notes and principal payments on the Class [A] notes but equal in priority to interest payments on the Class A notes. A Senior Swap Termination Payment to the swap counterparty could cause a shortfall in funds available on any payment date, in which case you may experience delays or reductions on the interest and principal payments of your notes. | ||
If the interest rate swap agreement is terminated and no replacement is entered into and collections on the receivables and funds on deposit in the reserve account are insufficient to make payments of interest and principal on your notes you may experience delays and/or reductions in the interest on and principal payments of your notes.] | ||
[Risk of loss or delay in payment may result from delays in the transfer of servicing due to the servicing fee structure. | Because the servicing fee is structured as a percentage of the net pool balance of the receivables, the amount of the servicing fee payable to the servicer may be considered insufficient by potential replacement servicers if servicing is required to be transferred at a time when much of the net pool balance of the receivables has been repaid. Due to the reduction in servicing fee as described in the foregoing, it may be difficult to find a replacement servicer. Consequently, the time it takes to effect the transfer of servicing to a replacement servicer under such circumstances may result in delays and/or reductions in the interest and principal payments on your notes.] | |
You may suffer losses due to receivables with low contract rates. | The receivables include receivables that have contract rates that are less than the interest rates on your notes. Interest |
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paid on the higher contract rate receivables compensates for the lower contract rate receivables to the extent such interest is paid by the issuing entity as principal on your notes and additional overcollateralization is created. Excessive prepayments on the higher contract rate receivables may adversely impact your notes by reducing the interest payments available. | ||
Prepayments, potential losses and a change in the order of priority of principal payments may result from an event of default under the indenture. | An event of default under the indenture may result in payments on your notes being accelerated. As a result: | |
• you may suffer losses on your notes if the assets of the issuing entity are insufficient to pay the amounts owed on your notes; | ||
• payments on your notes may be delayed until more senior classes of notes are repaid; and | ||
• your notes may be repaid earlier than scheduled, which may require you to reinvest your principal at a lower rate of return. | ||
The absence of a secondary market could limit your ability to resell your notes. | There will be no market for the notes prior to their issuance, and there can be no assurance that a secondary market will develop after such issuance. If a secondary market does develop, there can be no assurance that it will provide holders with liquidity of investment, that it will enable you to realize your desired yield, or that the market will continue for the life of the notes. The underwriters presently expect to make a secondary market in the notes, but have no obligation to do so. Absent a secondary market for the notes, you may experience a delay if you choose to sell your note or the price you receive for your note may be less than you would receive for a comparable liquid security. The market values of the notes are likely to fluctuate. Fluctuations may be significant and could result in significant losses to you. The secondary market for asset-backed securities is experiencing significantly reduced liquidity. Illiquidity can have a severely adverse effect on the prices of securities that are especially sensitive to prepayment, credit or interest rate risk, such as the notes. This period of illiquidity may continue and may adversely affect the market value of your notes. See “Risk Factors—The absence of a secondary market for the securities could limit your ability to resell your securities” in the prospectus | |
The rate of depreciation of certain financed vehicles could exceed the amortization of the outstanding principal amount of the related receivables, which may result in losses. | There can be no assurance at any time that the value of any financed vehicle will be greater than the outstanding principal amount of the related receivable. For example, new vehicles normally experience an immediate decline in value after purchase because they are no longer considered |
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new. As a result, it is highly likely that the principal amount of a receivable will exceed the value of the related financed vehicle during the early years of a receivable’s term. The lack of any significant equity in their vehicles may make it more likely that those obligors will default in their payment obligations if their personal financial conditions change. Defaults during these earlier years are likely to result in losses because the proceeds of repossession of the related financed vehicle are less likely to pay the full amount of interest and principal owed on the related receivable. Further, the frequency and amount of losses may be greater for receivables with longer terms, because these receivables tend to have a somewhat greater frequency of delinquencies and defaults and because the slower rate of amortization of the principal balance of a longer term receivable may result in a longer period during which the value of the related financed vehicle is less than the remaining principal balance of the receivable. Additionally, although the frequency of delinquencies and defaults tends to be greater for receivables secured by used vehicles, loss severity tends to be greater with respect to receivables secured by new vehicles because of the higher rate of depreciation described above and the recent decline in used vehicle prices (especially light-duty truck and SUV prices). | ||
The pricing of used vehicles is affected by the supply and demand for those vehicles, which, in turn, is affected by consumer tastes, economic factors (including the price of gasoline), the introduction and pricing of new vehicle models and other factors. Decisions by a manufacturer with respect to new vehicle production, pricing and incentives may affect used vehicle prices, particularly those for the same or similar models. Further, the insolvency of a manufacturer may negatively affect used vehicle prices for vehicles manufactured by that company. A decrease in the demand for used vehicles may impact the resale value of the financed vehicles securing the receivables. Decreases in the value of those vehicles may, in turn, reduce the incentive of obligors to make payments on the receivables and decrease the proceeds realized by the issuing entity from repossessions of financed vehicles. In any of the foregoing cases, the delinquency and net loss figures, shown in the tables appearing under “The Receivables Pool” in this prospectus supplement might be a less reliable indicator of the rates of delinquencies, repossessions and losses that could occur on the receivables than would otherwise be the case. | ||
Retention of the notes by the depositor or an affiliate of the depositor may reduce the liquidity of such notes. | Some or all of one or more classes of notes may be retained or purchased by the depositor or an affiliate of the depositor. Accordingly, the market for such a retained class of notes may be less liquid than would otherwise be the case. In |
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addition, if any retained notes are subsequently sold in the secondary market, demand and market price for notes of that class already in the market could be adversely affected. |
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• | purchase the receivables from VW Credit, Inc. (which we sometimes refer to as “VW Credit”); and | ||
• | [deposit the pre-funded amount, if any, into the pre-funding account; and] | ||
• | make the initial deposit into the reserve account. |
• | acquiring, holding and managing the receivables and other assets of the issuing entity; | ||
• | issuing the notes and the certificate; | ||
• | making payments on the notes and distributions on the certificate; | ||
• | selling, transferring and exchanging the notes and the certificate to the depositor; | ||
• | [entering into and performing its obligations under the interest rate swap agreement;] | ||
• | acquiring, holding and managing the receivables and other assets of the issuing entity; | ||
• | pledging the receivables and other assets of the issuing entity pursuant to the indenture; | ||
• | entering into and performing its obligations under the transfer agreements; and | ||
• | taking any action necessary, suitable or convenient to fulfill the role of the issuing entity in connection with the foregoing activities or engaging in other activities including, without limitation, entering into the interest rate swap agreements, as may be required in connection |
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with conservation of the assets of the issuing entity and the making of payments on the notes and distributions on the certificate.] |
Class A-1 Asset Backed Notes | $ | |||
Class A-2 Asset Backed Notes | $ | |||
Class A-3 Asset Backed Notes | $ | |||
Class A-4 Asset Backed Notes | $ | |||
[Class B Asset Backed Notes] | $ | |||
Overcollateralization | $ | |||
Yield Supplement Overcollateralization Amount | $ | |||
Initial Reserve Account Balance | $ | |||
Total | $ |
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• | the receivables acquired by the issuing entity from the depositor on the closing date [and on each Funding Date] and payments made on the receivables [on or] after the [applicable] after the cut-off date; | ||
• | the receivable files; | ||
• | any refunds in connection with extended service agreements relating to receivables which became defaulted receivables after the [applicable] cut-off date; | ||
• | the security interests in the financed vehicles; | ||
• | any proceeds from (1) claims on any theft and physical damage insurance policy maintained by an obligor under a receivable providing coverage against loss or damage to or theft of the related financed vehicle or (2) claims on any credit life or credit disability insurance maintained by an obligor in connection with any receivable; | ||
• | any other property securing the receivables; | ||
• | all rights of the applicable originator under agreements with dealers relating to receivables; | ||
[• | rights under the interest rate swap agreement and payments made by the swap counterparty under the interest rate swap agreement;] | ||
• | the rights of the issuing entity to funds on deposit in the reserve account, the collection account, [the pre-funding account] and the principal distribution account and any other accounts established pursuant to the indenture or sale and servicing agreement, and all cash, investment property and other property from time to time credited thereto and all proceeds thereof (including investment earnings, net of losses and investment expenses, on amounts on deposit); | ||
• | rights of the issuing entity under the sale and servicing agreement and of the depositor, as buyer, under the purchase agreement; and | ||
• | the proceeds of any and all of the above. |
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• | had an original term to maturity of [ ] months to [ ] months; | ||
• | had a maturity of no later than [ ]; | ||
• | had a remaining principal balance of at least $[ ]; | ||
• | had a contract rate of [ ]% to [ ]%; | ||
• | was not more than 30 days past due; | ||
• | satisfies the other criteria set forth in the transaction documents, including the criteria set forth under “The Receivables” in the accompanying prospectus. |
1 | FICO® is a federally registered trademark of Fair, Isaac & Company. |
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As of the [Statistical] Cut-off Date
Number of Receivables | ||||
Aggregate Outstanding Principal Balance | ||||
Outstanding Principal Balance | ||||
Average | ||||
Minimum | ||||
Maximum | ||||
Contract Rate | ||||
Average(1) | ||||
Minimum | ||||
Maximum | ||||
Weighted Average Original Term (Months) | ||||
Average(1) | ||||
Minimum | ||||
Maximum | ||||
Weighted Average Remaining Term (Months) | ||||
Average(1) | ||||
Minimum | ||||
Maximum | ||||
Seasoning (Months)(2) | ||||
Average | ||||
Minimum | ||||
Maximum | ||||
Percentage By Principal Balance of New Vehicles | ||||
Percentage By Principal Balance of Used Vehicles | ||||
Percentage of Principal Balance of Volkswagen Vehicles | ||||
Percentage of Principal Balance of Audi Vehicles | ||||
Weighted Average FICO® Score(3) (4) | ||||
Minimum(4) (5) | ||||
Maximum(4) (5) |
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(1) | Weighted by principal balance as of the [statistical] cut-off date. | |
(2) | FICO®is a federally registered trademark of Fair, Isaac & Company. | |
(3) | FICO® scores are calculated excluding accounts for which no FICO score is available. |
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As of the [Statistical] Cut-off Date
Percent of Total | ||||||||||||||||
Percent of Total | Aggregate | Aggregate | ||||||||||||||
Number of | Number of | Outstanding | Outstanding | |||||||||||||
Remaining Term | Receivables | Receivables(1) | Principal Balance | Principal Balance(1) | ||||||||||||
6 Months or less | ||||||||||||||||
7 months to 12 months | ||||||||||||||||
13 months to 18 months | ||||||||||||||||
19 months to 24 months | ||||||||||||||||
25 months to 30 months | ||||||||||||||||
31 months to 36 months | ||||||||||||||||
37 months to 42 months | ||||||||||||||||
43 months to 48 months | ||||||||||||||||
49 months to 54 months | ||||||||||||||||
55 months to 60 months | ||||||||||||||||
61 months to 66 months | ||||||||||||||||
67 months to 72 months | ||||||||||||||||
Total | ||||||||||||||||
(1) | Sum may not equal 100% due to rounding. |
As of the [Statistical] Cut-off Date
Percent of Total | ||||||||
Percent of Total | Aggregate | Aggregate | ||||||
Number of | Number of | Outstanding | Outstanding | |||||
Contract Rate Range | Receivables | Receivables(1) | Principal Balance | Principal Balance(1) | ||||
0.00% to 0.99% | ||||||||
1.00% to 1.99% | ||||||||
2.00% to 2.99% | ||||||||
3.00% to 3.99% | ||||||||
4.00% to 4.99% | ||||||||
5.00% to 5.99% | ||||||||
6.00% to 6.99% | ||||||||
7.00% to 7.99% | ||||||||
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% | ||||||||
Total | ||||||||
(1) | Sum may not equal 100% due to rounding. |
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As of the [Statistical] Cut-off Date
Percent of | Percent of Total | |||||||||||||||
Number of | Total Number of | Outstanding | Outstanding | |||||||||||||
FICO Score Range | Receivables | Receivables(1) | Principal Balance | Principal Balance(1) | ||||||||||||
600 to 660 | 5,023 | 12.38 | % | $ | 108,411,551.97 | 12.85 | % | |||||||||
661 to 700 | 7,308 | 18.01 | 157,814,828.42 | 18.70 | ||||||||||||
701 to 750 | 10,846 | 26.73 | 227,604,563.39 | 26.97 | ||||||||||||
751 to 800 | 9,301 | 22.93 | 191,954,444.22 | 22.75 | ||||||||||||
801 to 884 | 8,091 | 19.94 | 158,065,163.17 | 18.73 | ||||||||||||
Total | 40,569 | 100.00 | % | $ | 843,850,551.17 | 100.00 | % | |||||||||
(1) | Sum may not equal 100% due to rounding. |
As of the [Statistical] Cut-off Date
Percent of Total | ||||||||
Percent of Total | Aggregate | Aggregate | ||||||
Number of | Number of | Outstanding | Outstanding | |||||
State(1) | Receivables | Receivables(2) | Principal Balance | Principal Balance(2) | ||||
Arizona | ||||||||
California | ||||||||
Colorado | ||||||||
Connecticut | ||||||||
Florida | ||||||||
Georgia | ||||||||
Illinois | ||||||||
Indiana | ||||||||
Maryland | ||||||||
Massachusetts | ||||||||
Michigan | ||||||||
Minnesota | ||||||||
Nevada | ||||||||
New Jersey | ||||||||
New York | ||||||||
North Carolina | ||||||||
Ohio | ||||||||
Pennsylvania | ||||||||
Tennessee | ||||||||
Texas | ||||||||
Virginia | ||||||||
Washington | ||||||||
Wisconsin | ||||||||
All Other States | ||||||||
Total | ||||||||
(1) | Based on the billing address of the obligor on the receivables. | |
(2) | Sum may not equal 100% due to rounding. |
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As of the [Statistical] Cut-off Date
Percent of Total | ||||||||||||||||
Percent of Total | Outstanding | |||||||||||||||
Number of | Number of | Outstanding | Principal | |||||||||||||
Original Term Range | Receivables | Receivables(1) | Principal Balance | Balance(1) | ||||||||||||
12 months to 18 months | ||||||||||||||||
19 months to 24 months | ||||||||||||||||
25 months to 30 months | ||||||||||||||||
31 months to 36 months | ||||||||||||||||
37 months to 42 months | ||||||||||||||||
43 months to 48 months | ||||||||||||||||
49 months to 54 months | ||||||||||||||||
55 months to 60 months | ||||||||||||||||
61 months to 66 months | ||||||||||||||||
67 months to 72 months | ||||||||||||||||
Total | ||||||||||||||||
(1) | Sum may not equal 100% due to rounding. |
As of the [Statistical] Cut-off Date
Percent of Total | ||||||||||||||||
Percent of Total | Outstanding | |||||||||||||||
Number of | Number of | Outstanding | Principal | |||||||||||||
Seasoning Range | Receivables | Receivables(1) | Principal Balance | Balance(1) | ||||||||||||
6 months or less | ||||||||||||||||
7 months to 12 months | ||||||||||||||||
13 months to 18 months | ||||||||||||||||
25 months to 30 months | ||||||||||||||||
31 months to 36 months | ||||||||||||||||
37 months to 42 months | ||||||||||||||||
43 months to 48 months | ||||||||||||||||
49 months to 54 months | ||||||||||||||||
55 months to 60 months | ||||||||||||||||
61 months to 66 months | ||||||||||||||||
Total | ||||||||||||||||
(1) | Sum may not equal 100% due to rounding. |
As of the [Statistical] Cut-off Date
Percent of Total | ||||||||||||||||
Percent of Total | Outstanding | |||||||||||||||
Number of | Number of | Outstanding | Principal | |||||||||||||
Vehicle Type | Receivables | Receivables(1) | Principal Balance | Balance(1) | ||||||||||||
Car | ||||||||||||||||
SUV | ||||||||||||||||
Minivan | ||||||||||||||||
Total | ||||||||||||||||
(1) | Sum may not equal 100% due to rounding. |
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Delinquency Experience(1)(2)
(dollars in thousands)
At [ ] | At December 31, | |||||||||||||||||||||||||||
[ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] | ||||||||||||||||||||||
Principal Amount Outstanding | ||||||||||||||||||||||||||||
Number of Receivables Outstanding |
Units % | Units % | Units % | Units % | Units % | Units % | Units % | ||||||||||||||||||||||
Delinquencies(2)(3) | ||||||||||||||||||||||||||||
31-60 days | ||||||||||||||||||||||||||||
61-90 days | ||||||||||||||||||||||||||||
91 or more days | ||||||||||||||||||||||||||||
Total 30+ Delinquencies |
(1) | Data presented in the table is based upon retail principal balances for new and used vehicles serviced by VW Credit. | |
(2) | VW Credit considers a payment to be past due or delinquent when an obligor fails to make at least 75% of the scheduled monthly payment by the related due date. VW Credit measures delinquency by the number of days elapsed from the date a payment is due under the loan contract. | |
(3) | VW Credit generally charges-off a receivable on the earlier of (a) the date on which proceeds from the sale of the vehicle securing that receivable are applied to the contract balance and (b) the month in which the receivable reaches its 120th day of delinquency if the contract has been assigned to a repossession agent for 60 days. |
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(dollars in thousands)
At or for the [ ] | ||||||||||||||||||||||||||||
months ended [ ], | At or for the twelve months ended December 31, | |||||||||||||||||||||||||||
[ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] | ||||||||||||||||||||||
Principal Amount Outstanding | ||||||||||||||||||||||||||||
Average Principal Amount Outstanding(2) | ||||||||||||||||||||||||||||
Number of Receivables Outstanding | ||||||||||||||||||||||||||||
Average Number of Receivables Outstanding(2) | ||||||||||||||||||||||||||||
Number of Receivables Repossessed | ||||||||||||||||||||||||||||
Number of Receivables with a Recovery | ||||||||||||||||||||||||||||
Number of Receivables Repossessed as a percent of the Average Number of Receivables Outstanding(7) | ||||||||||||||||||||||||||||
Charge-Offs(4) | ||||||||||||||||||||||||||||
Recoveries(3) | ||||||||||||||||||||||||||||
Net Losses(5) | ||||||||||||||||||||||||||||
Net Losses as a percent of Average Principal Amount Outstanding(7) | ||||||||||||||||||||||||||||
Average Net Loss or all Receivables with a Net Loss(2)(6) |
(1) | Data presented in the table is based upon retail principal balances for new and used vehicles financed by VCI, including those that have been sold but are serviced by VCI. | |
(2) | Averages are computed by taking a simple average of the month end outstanding amounts for each period presented. | |
(3) | Recoveries generally include the net amounts received with respect to retail contracts previously charged off. | |
(4) | Charge-offs generally represent the total aggregate net outstanding balance of the receivables determined to be uncollectible in the period less proceeds from disposition of the related retail vehicles, other than recoveries described in Note (3). | |
(5) | “Net Losses” generally represent the total aggregate net outstanding balance of receivables determined to be uncollectible during the period less proceeds from the disposition of related vehicles, including net amounts received from customers with respect to accounts previously charged off. | |
(6) | Amounts in absolute dollars; representing a per unit basis. | |
(7) | Percentages have been annualized for the nine months ended September 30 and are not necessarily indicative of the experience for the entire year. |
S-46
Percent of | Percent of Total | |||||||||||||||
Number of | Total Number of | Outstanding | Outstanding | |||||||||||||
Historical Delinquency Status | Receivables | Receivables | Principal Balance | Principal Balance | ||||||||||||
Delinquent no more than once for 31-60 days(1) | ||||||||||||||||
Delinquent more than once for 31-60 days but never for 61 days or more | ||||||||||||||||
Delinquent at least once for 61 days or more |
(1) | Delinquent no more than once for 31-60 days represent accounts that were delinquent 1 time but never exceeded 60 days past due. |
S-47
• | failure of the TALF investor at any time to be an “eligible borrower” as determined by the criteria in effect at the time the TALF loan was made; and | ||
• | the failure of certain representations and warranties of the borrower made in the MLSA to be true, including; |
• | that the MLSA is a binding agreement enforceable against the borrower; | ||
• | that the TALF agent is authorized to enter into the MLSA and act on the borrower’s behalf; | ||
• | that the security interest of the FRBNY in the collateral for the TALF loan is valid, perfected and subject to no adverse claims; and | ||
• | that the ABS collateral pledged at the time the TALF loan is made or assumed is “eligible collateral” under TALF, to the borrower’s knowledge based on its review of the related offering materials. |
• | All of the receivables were motor vehicle installment loans and retail installment sale contracts relating to new and used automobiles, light-duty trucks and other similar vehicles. |
S-48
• | All of the receivables were U.S. dollar-denominated. | ||
• | At least 95% of the aggregate principal balance of the receivables are receivables that are both (a) originated by U.S. organized entities or institutions or U.S. branches or agencies of foreign banks and (b) made to U.S. domiciled obligors. | ||
• | The principal balance of the receivables originated on or after October 1, 2007 is at least 85% of the aggregate principal balance of the receivables. | ||
• | The weighted average FICO score of the receivables (weighted by the principal balance) is 680 or greater (assuming for purposes of calculating the weighted average that any receivable without an available credit score has a credit score of 300); which is “prime” for automobile loans under TALF. | ||
• | The receivables are not exposures to “cash-backed ABS” or “synthetic ABS” within the meaning of the TALF program. |
• | The notes will be U.S. dollar-denominated cash (not synthetic) asset-backed securities. | ||
• | Each class of notes will have received the ratings specified in “Summary of Terms of the Notes—Ratings” above. None of the notes will have received a credit rating below the highest investment-grade rating category from any of Standard & Poor’s, Moody’s or Fitch. Such ratings will be obtained without the benefit of any third-party guarantee, and no class has been placed on review or watch for downgrade. | ||
• | The notes will be issued in book-entry form and cleared through The Depository Trust Company or “DTC”, in the name of Cede & Co., as nominee of DTC. | ||
• | The notes will not bear interest payments that step up or step down to predetermined levels on specific dates. | ||
• | The notes will be obligations of the issuing entity only, and no payments of principal of or interest on the notes will be guaranteed by any third-party. | ||
• | The notes are not subject to an optional redemption other than a customary clean-up call, as described in “Description of the Transfer Agreements and the Administration Agreement—Optional Redemption”. | ||
• | The weighted average life to maturity (in years) of each class of notes (assuming 1.3% ABS and the assumptions described under “Weighted Average Life of the Notes”) will be five years or less. The weighted average life to maturity for the notes calculated in accordance with the TALF prepayment assumptions is as follows: |
Class | Weighted Average Life to Maturity | |||
Class A-1 Notes | ||||
Class A-2 Notes | ||||
Class A-3 Notes | ||||
Class A-4 Notes |
• | The CUSIP number for each class of notes will be as set forth in “Summary of Terms—CUSIP Numbers” in this prospectus supplement. |
S-49
• | A nationally recognized certified public accounting firm that is registered with the Public Company Accounting Oversight Board has delivered an accountants’ report to the FRBNY in a form prescribed by the FRBNY within the time frame required by the FRBNY. | ||
• | The sponsor will execute and deliver an undertaking to the FRBNY, in the form prescribed by the FRBNY, no later than four days before the closing date, under which the sponsor will agree to indemnify FRBNY and TALF LLC and their respective affiliates for certain losses. | ||
• | Each of the sponsor and the issuing entity will execute the “Certification as to TALF Eligibility” in the most recent form prescribed by the FRBNY as of the date of this prospectus supplement, a copy of which is attached to this prospectus supplement as [Appendix A]. | ||
• | The sponsor will submit to the FRBNY the final credit rating letters from each of [Standard & Poor’s][,] [and] [Moody’s] [and Fitch] no later than 10:00 a.m. on the closing date. |
S-50
• | the issuing entity holds [12] pools of receivables with the following characteristics: |
Original | Remaining | |||||||||||||||
Term to | Term to | |||||||||||||||
Outstanding | Gross Contract | Maturity | Maturity | |||||||||||||
Pool | Principal Balance | Rate | (in Months) | (in Months) | ||||||||||||
1 | $ | % | ||||||||||||||
2 | $ | % | ||||||||||||||
3 | $ | % | ||||||||||||||
4 | $ | % | ||||||||||||||
5 | $ | % | ||||||||||||||
6 | $ | % | ||||||||||||||
7 | $ | % | ||||||||||||||
8 | $ | % | ||||||||||||||
9 | $ | % | ||||||||||||||
10 | $ | % | ||||||||||||||
11 | $ | % | ||||||||||||||
12 | $ | % | ||||||||||||||
Total | $ |
• | all prepayments on the receivables each month are made in full at the specified constant percentage of ABS and there are no defaults, losses or repurchases; | ||
• | interest accrues on the notes at the following coupon rates: Class A-1 notes, [ ]%; Class A-2 notes, [ ]%; Class A-3 notes, [ ]%; Class A-4 notes, [ ]%; [and Class B notes, [ ]%]; | ||
• | each scheduled payment on the receivables is made on the last day of each month commencing in [ ], and each month has 30 days; | ||
• | the original outstanding balance of each class of notes is equal to the applicable original outstanding balance set forth on the front cover of this prospectus supplement; |
S-51
• | payments on the notes are paid in cash on each payment date commencing [ ],and on the [ ] calendar day of each subsequent month whether or not that day is a business day; | ||
• | the notes are purchased on [ ]; | ||
• | the Class A-1 notes will be paid interest on the basis of the actual number of days elapsed during the period for which interest is payable and a 360-day year; | ||
• | the Class A-2 notes, the Class A-3 notes, the Class A-4 notes [and the Class B notes] will be paid interest on the basis of a 360-day year consisting of twelve 30-day months; | ||
• | the scheduled payment for each receivable was calculated on the basis of the characteristics described in the ABS Tables and in such a way that each receivable would amortize in a manner that would be sufficient to repay the receivable balance of that receivable by its indicated remaining term to maturity; | ||
• | except as indicated in the tables, the “clean-up call” option to redeem the notes will be exercised at the earliest opportunity. | ||
• | the servicing fee will be [1.00]% per annum; | ||
[• | $[ ] will be deposited in the pre-funding account on the closing date; ] and | ||
[• | all of the funds in the pre-funding account are used to purchase additional receivables.] | ||
• | the cut-off date is [ ]. |
• | multiplying the amount of each principal payment on a note by the number of years from the date of the issuance of the note to the related payment date; | ||
• | adding the results; and | ||
• | dividing the sum by the related original outstanding balance of the note. |
S-52
Class A-1 Notes
Payment Date | 0.00% | 0.50% | 1.00% | 1.30% | 1.50% | 2.00% | ||||||||||||||||||
Weighted Average Life (Years) to Call | ||||||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
S-53
Class A-2 Notes
Payment Date | 0.00% | 0.50% | 1.00% | 1.30% | 1.50% | 2.00% | ||||||||||||||||||
Weighted Average Life (Years) to Call | ||||||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
S-54
Class A-3 Notes
Payment Date | 0.00% | 0.50% | 1.00% | 1.30% | 1.50% | 2.00% | ||||||||||||||||||
Weighted Average Life (Years) to Call | ||||||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
S-55
Class A-4 Notes
Payment Date | 0.00% | 0.50% | 1.00% | 1.30% | 1.50% | 2.00% | ||||||||||||||||||
Weighted Average Life (Years) to Call | ||||||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
S-56
[Class B Notes]
Payment Date | 0.00% | 0.50% | 1.00% | 1.30% | 1.50% | 2.00% | ||||||||||||||||||
Weighted Average Life (Years) to Call | ||||||||||||||||||||||||
Weighted Average Life (Years) to Maturity |
S-57
S-58
• | Actual/360.Interest on the Class A-1 notes [and the Class A-4 notes] will be calculated on the basis of actual days elapsed during the applicable interest period, but assuming a 360-day year. This means that the interest due on each payment date for the Class A-1 notes [and the Class A-4 notes] will be the product of (i) the outstanding principal balance on the Class A-1 notes [and the Class A-4 notes], (ii) the related interest rate and (iii) the actual number of days since the previous payment date (or, in the case of the first payment date, since the closing date), divided by 360. | ||
• | 30/360.Interest on the Class A-2 notes, the Class A-3 notes, [the Class A-4 notes] [and the Class B notes] will be calculated on the basis of a 360-day year of twelve 30-day months. This means that the interest due on each payment date for the Class A-2 notes, the Class A-3 notes, [the Class A-4 notes] [and the Class B notes] will be the product of (i) the outstanding principal balance of the related class of notes, (ii) the applicable interest rate and (iii) 30 (or in the case of the first payment date, ________), divided by 360. | ||
• | Interest Accrual Periods.Interest will accrue on the outstanding principal amount of each class of notes [(a) with respect to the Class A-1 notes and the floating rate notes,] from the prior payment date (after giving effect to all payments made on that date) (or in the case of the first payment date, the closing date) to but excluding the following payment date [or (b) with respect to the Class A-2 notes the Class A-3 notes and the Class A-4 notes, from the [ ]th day of each calendar month (after giving effect to all payments made on that date) (or in the case of first payment date, the closing date) to but excluding the [ ]th day of the following month]. Interest accrued as of any payment date but not paid on that payment date will be payable on the next payment date, together with interest on such amount at the applicable interest rate (to the extent lawful). |
S-59
• | first, to the Class A-1 notes, until the Class A-1 notes are paid in full; | ||
• | second, to the Class A-2 notes, until the Class A-2 notes are paid in full; | ||
• | third, to the Class A-3 notes, until the Class A-3 notes are paid in full; [and] | ||
• | fourth, to the Class A-4 notes, until the Class A-4 notes are paid in full; [and] | ||
• | [fifth, to the Class B notes, until the Class B notes are paid in full.] |
• | for the Class A-1 notes, [ ] payment date; | ||
• | for the Class A-2 notes, [ ] payment date; | ||
• | for the Class A-3 notes, [ ] payment date; and | ||
• | for the Class A-4 notes, [ ] payment date; and | ||
[• | for the Class B notes, [ ] payment date.] |
S-60
(other than Payment Dates after the Notes Have Been Accelerated
Following the Occurrence of an Event of Default)
S-61
Amount Payable to | Amount Payable to | |||||||||
Class [A-4] Notes | Swap Counterparty | Issuing Entity | ||||||||
• | failure to make payments due under the interest rate swap agreement; or | ||
• | the occurrence of certain bankruptcy events of the issuing entity or bankruptcy and insolvency events of the swap counterparty. | ||
• | any breach of the interest rate swap agreement or related agreements by the swap counterparty; | ||
• | failure to post collateral or return collateral pursuant to the terms of the credit support annex by the swap counterparty or the issuing entity (solely with respect to the return of collateral); | ||
• | misrepresentation by the swap counterparty; or | ||
• | merger by the swap counterparty without assumption of its obligations under the interest rate swap agreement. |
• | illegality of the transactions contemplated by the interest rate swap agreement; | ||
• | any commencement of the liquidation of the issuing entity property following an event of default under the indenture; | ||
• | failure of the swap counterparty to provide the financial information required by Regulation AB and other requested information or to assign the interest rate swap agreement to an eligible counterparty that is able to provide the information; | ||
• | certain tax events; | ||
• | any amendment to the sale and servicing agreement or the indenture by the issuing entity that has a material and adverse affect on the swap counterparty without the prior written consent of the swap counterparty to the extent such consent is required under the related agreement; |
S-62
• | a merger or consolidation of the swap counterparty into an entity with materially weaker creditworthiness; or | ||
• | failure of the swap counterparty (or its credit support provider, if any) to maintain its credit rating at certain levels required by the interest rate swap agreement, which failure may not constitute a termination event if the swap counterparty maintains certain minimum credit ratings and, among other things: | ||
• | at its own expense obtains an unconditional guarantee or similar assurance from a guarantor with the appropriate credit rating, along with a legal opinion regarding the guarantee; |
• | posts collateral; or | ||
• | assigns its rights and obligations under the interest rate swap agreement to a substitute swap counterparty that satisfies the eligibility criteria set forth in the interest rate swap agreement. |
S-63
S-64
• | the collection account; | ||
• | the principal distribution account; | ||
• | the reserve account[; and | ||
• | the pre-funding account]. |
S-65
S-66
S-67
(1) | first, to the servicer (or any predecessor servicer, if applicable), for reimbursement of outstanding advances; | ||
(2) | second,to the servicer, the servicing fees and all prior unpaid servicing fees with respect to prior periods; | ||
(3) | [third,to the swap counterparty, the Net Swap Payment, if any, for such payment date;] | ||
(4) | fourth,pro rata [based on amounts due, (i) to the swap counterparty, any Senior Swap Termination Payments for such payment date and (ii)]to the [Class A] noteholders, pro rata, the accrued [Class A] note interest, which is the sum of (a) the aggregate amount of interest due and accrued for the related interest period on each class of the [Class A] notes at their respective interest rates on the respective note balances as of the previous payment date (after giving effect to all payments of principal to the [Class A] noteholders on prior payment dates); and (b) the excess, if any, of the amount of interest due and payable to the noteholders on prior payment dates over the amounts actually paid to the [Class A] noteholders on those prior payment dates, plus interest on any such shortfall at the respective interest rates on each class of the [Class A] notes (to the extent permitted by law); | ||
(5) | fifth,to the principal distribution account for distribution pursuant to “The Notes—Payments of Principal” above, the First Allocation of Principal; | ||
(6) | [sixth,to the Class B noteholders, the accrued Class B note interest, which is the sum of (a) the aggregate amount of interest due and accrued for the related interest period on the Class B notes at the Class B notes at the Class B interest rate on the Note Balance as of the previous payment date after giving effect to all payments of principal to the Class B noteholders on the preceding payment date; and (b) the excess, if any, of the amount of interest due and payable to the Class B noteholders on prior payment dates over the amounts actually paid to the Class B noteholders on those prior payment dates, plus interest on any such shortfall at the interest rate on the Class B notes (to the extent permitted by law);] | ||
(7) | [seventh,to the Principal Distribution Account for distribution pursuant to “The Notes—Payments of Principal” above, the Second Allocation of Principal;] | ||
(8) | eighth, reserve account, any additional amount required to increase the amount on deposit in the reserve account up to the specified reserve account balance; | ||
(9) | [ninth,to the swap counterparty, any Subordinated Swap Termination Payments for such payment date;] |
S-68
(10) | tenth, to the owner trustee and the indenture trustee, accrued and unpaid fees and reasonable expenses (including indemnification amounts) due and owing under the trust agreement and the indenture, as applicable, which have not been previously paid; and | ||
(11) | eleventh, to or at the direction of the certificateholder, any funds remaining. |
S-69
Recipient | Fees and Expenses Payable* | |
Servicer | The servicing fee as described below under “—Servicing Compensation and Expenses” | |
Administrator | $[ ] per annum | |
Indenture Trustee | $[ ] per annum plus reasonable expenses** | |
Owner Trustee | $[ ] per annum plus reasonable expenses** |
* | The fees and expenses described above do not change upon an event of default. | |
** | The [servicer] has the primary obligation to pay the fees and expenses of both the indenture trustee and the owner trustee. |
Yield Supplement | ||||||||
Overcollateralization Amount | ||||||||
Payment Date | Amount | |||||||
Closing Date | $ |
S-70
S-71
S-72
• | any failure by the servicer to deliver or cause to be delivered any required payment to the indenture trustee for distribution to the noteholders, which failure continues unremedied for ten business days after discovery thereof by an officer of the servicer or receipt by the servicer of written notice thereof from the indenture trustee or noteholders evidencing a majority of the aggregate outstanding principal amount of the notes, voting together as a single class; | ||
• | any failure by the servicer to duly observe or perform in any material respect any other of its covenants or agreements in the sale and servicing agreement, which failure materially and adversely affects the rights of the issuing entity or the noteholders, and which continues unremedied for 90 days after discovery thereof by an officer of the servicer or receipt by the servicer of written notice thereof from the indenture trustee or the noteholders evidencing a majority of the aggregate outstanding principal amount of the notes, voting together as a single class; | ||
• | any representation or warranty of the servicer made in any transaction document to which the servicer is a party or by which it is bound or any certificate delivered pursuant to the sale and servicing agreement proves to have been incorrect in any material respect when made, which failure materially and adversely affects the rights of the issuing entity or the noteholders, and which failure continues unremedied for 90 days after discovery thereof by an officer of the servicer or receipt by the servicer of written notice thereof from the indenture trustee or the noteholders evidencing a majority of the aggregate outstanding principal amount of the notes, voting together as a single class; and | ||
• | the occurrence of certain events (which, if involuntary, remain unstayed for more than 90 days) of bankruptcy, insolvency, receivership or liquidation of the servicer. |
S-73
• | a default in the payment of any interest on any note [of the Controlling Class] when the same becomes due and payable, and that default continues for a period of five business days or more; | ||
• | a default in the payment of the principal of any note at the related final scheduled payment date or the redemption date; |
S-74
• | any failure by the issuing entity to duly observe or perform in any material respect any of its material covenants or agreements in the indenture, which failure materially and adversely affects the interests of the noteholders, and which failure continues unremedied for 90 days after receipt by the issuing entity of written notice thereof from the indenture trustee or noteholders evidencing a majority of the aggregate outstanding principal amount of the notes; | ||
• | any representation or warranty of the issuing entity made in the indenture proves to be incorrect in any material respect when made, which failure materially and adversely affects the rights of the noteholders, and which failure continues unremedied for 90 days after receipt by the issuing entity of written notice thereof from the indenture trustee or noteholders evidencing a majority of the aggregate outstanding principal amount of the notes; or | ||
• | the occurrence of certain events (which, if involuntary, remain unstayed for a period of 90 consecutive days) of bankruptcy, insolvency, receivership or liquidation of the issuing entity. |
• | the holders of 100% of the aggregate outstanding principal amount [of the Controlling Class] of the notes [and the swap counterparty] consent to a sale; | ||
• | the proceeds of the sale are sufficient to pay in full the principal of and the accrued interest on all outstanding notes [and all amounts owed to the swap counterparty at the date of such sale]; or |
S-75
• | the default relates to the failure to pay interest or principal when due (a “payment default”), the indenture trustee determines that the Collections on the receivables would not be sufficient on an ongoing basis to make all payments on the notes as those payments would have become due if those obligations had not been declared due and payable, and the indenture trustee obtains the consent of the holders of 662/3% of the aggregate outstanding principal amount of the notes [of the Controlling Class] [and the swap counterparty]. |
(1) | first, to the indenture trustee and the owner trustee, any accrued and unpaid fees and reasonable expenses (including indemnification amounts) permitted under the trust agreement and the indenture, provided, that the amounts payable pursuant to this clause will be limited to $[ ] per annum in the aggregate; | ||
(2) | second, to the servicer (or any predecessor servicer, if applicable), for reimbursement of outstanding advances; | ||
(3) | third,to the servicer, the servicing fee and all unpaid servicing fees with respect to prior periods; | ||
(4) | [fourth, to the swap counterparty, any due and unpaid Net Swap Payments]; | ||
(5) | fifth, [pro rata, (A) to the swap counterparty for any due and unpaid Senior Swap Termination Payments and (B)] to the [Class A] noteholders, pro rata, the accrued [Class A] note interest; if there are not sufficient funds to pay the entire amount of the accrued note interest, the amount available shall be applied to the payment of such interest on |
S-76
each class of [Class A] notes on a pro rata basis based on the amount of interest payable to each class of [Class A] notes; | |||
(6) | sixth, if an Event of Default has occurred [that arises from (a) a default in the payment of any interest on any note of the Controlling Class when the same becomes due and payable, (b) a default in the payment of the principal of or any installment of the principal of any note when the same becomes due and payable or (c) the occurrence of certain events of bankruptcy, insolvency, receivership or liquidation of the issuing entity,] in the following order of priority: |
• | to the Class A-2 noteholders, the Class A-3 noteholders and the Class A-4 noteholders, pro rata, until all classes of the Class A notes have been paid in full; | ||
• | [to the Class B noteholders, the accrued Class B note interest;] | ||
• | [to the Class B noteholders, until the Class B notes have been paid in full;] |
(7) | [seventh, if an Event of Default has occurred that arises from any event other than those events described above in clause [sixth], in the following order of priority: |
• | [to the Class B noteholders, the accrued Class B note interest;] | ||
• | to the Class A-1 noteholders until the Class A-1 notes have been paid in full; | ||
• | to the Class A-2 noteholders, the Class A-3 noteholders and the Class A-4 noteholders, pro rata, until all classes of the Class A notes have been paid in full; | ||
• | [to the Class B noteholders, until the Class B notes have been paid in full;]] |
(8) | [eighth, to the swap counterparty, any due and unpaid Subordinated Swap Termination Payments]; | ||
(9) | ninth, to the owner trustee and the indenture trustee, any accrued and unpaid fees, reasonable expenses and indemnity payments not previously paid; | ||
(10) | tenth, any remaining funds to or at the direction of the certificateholder. |
S-77
• | changes the final scheduled payment date of any note or reduces the principal amount thereof, the interest rate thereon or the redemption price with respect thereto or changes any place of payment where, or the coin or currency in which, any note or any interest thereon is payable; | ||
• | changes the provision of the indenture relating to the application of or collections on, or the proceeds of the sale of, the issuing entity property to payment of principal and interest on the notes; | ||
• | impairs the right to institute suit for the enforcement of the provisions of the indenture regarding payment; | ||
• | reduces the percentage of the aggregate principal amount of the outstanding notes, 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 certain provisions of the |
S-78
indenture or of certain defaults thereunder and their consequences as provided for in the indenture; | |||
• | modifies or alters the provisions of the indenture regarding the voting of notes held by the issuing entity, any other obligor on the notes, the depositor or an affiliate of any of them; | ||
• | reduces the percentage of the aggregate outstanding principal amount of the notes, the consent of the holders of which is required to direct the indenture trustee to sell or liquidate the receivables and other issuing entity property if the proceeds of the sale would be insufficient to pay the principal amount of and accrued but unpaid interest on the outstanding notes; | ||
• | decreases the percentage of the aggregate principal amount of the notes required to amend the sections of the indenture which specify the applicable percentage of aggregate principal amount of the notes necessary to amend the indenture or the other transaction documents; | ||
• | provides that additional provisions of the indenture or the other transaction documents may be modified or waived without the consent of the holder of each outstanding note affected thereby; | ||
• | affects the calculation of the amount of interest on or principal of any note payable on any payment date or to affect the rights of noteholders to the benefit of any provisions for the mandatory redemption of the notes; or | ||
• | permits the creation of any lien ranking prior to or on a parity with the lien of the indenture with respect to any of the collateral for the notes or, except as otherwise permitted or contemplated in the transaction documents, 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. |
S-79
• | based on the terms of the notes and the transactions relating to the receivables as set forth herein, the [Class A notes and the Class B] notes (other than any notes, if any, retained by the issuing entity or a person considered to be the same person as the issuing entity for United States federal income tax purposes) will be characterized as indebtedness for federal income tax purposes; and | ||
• | based on the applicable provisions of the trust agreement and related documents, for federal income tax purposes, the issuing entity will not be classified as an association taxable as a corporation and the issuing entity will not be treated as a publicly traded partnership taxable as a corporation. |
S-80
S-81
S-82
S-83
Class A-1 | Class A-2 | Class A-3 | Class A-4 | [Class B | ||||||||||||||||||||
Underwriter | Notes | Notes | Notes | Notes | Notes] | Total | ||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Selling | Reallowance | |||||||
Class | Concession | Discount | ||||||
Class A-1 Notes | % | % | ||||||
Class A-2 Notes | % | % | ||||||
Class A-3Notes | % | % | ||||||
Class A-4 Notes | % | % | ||||||
[Class B Notes | % | %] |
S-84
S-85
• | it will not offer or sell any notes within the United States, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities, bank regulatory or other applicable law; and | ||
• | it will not offer or sell any notes in any other country, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities law. |
• | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) received by it in connection with the issue or sale of any notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuing entity; and | ||
• | it has complied and will comply with all applicable provisions of the Regulations and the FSMA with respect to anything done by it in relation to any notes in, from or otherwise involving the United Kingdom.] |
S-86
(a) | to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; or | ||
(b) | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than€43,000,000 and (3) an annual net turnover of more than€50,000,000, as shown in its last annual or consolidated accounts, |
S-87
S-88
S-89
S-90
S-91
S-92
[statistical] cut-off date | S-11 | |||
ABS | S-52 | |||
ABS Tables | S-52 | |||
adjusted pool balance | S-14 | |||
Adjusted Pool Balance | S-90 | |||
administration agreement | S-64 | |||
administrator | S-6, S-32 | |||
advance | S-68 | |||
Asset-Backed Securities | B-1 | |||
authorised persons | S-3 | |||
Available Funds | S-90 | |||
benefit plan | S-83 | |||
business day | S-60 | |||
certificate | S-7 | |||
clean-up call | S-9 | |||
closing date | S-7 | |||
Code | S-83 | |||
collection period | S-65 | |||
Collections | S-90 | |||
Controlling Class | S-90 | |||
cut-off date | S-10 | |||
Defaulted Receivable | S-90 | |||
depositor | S-6, S-35 | |||
DTC | S-49 | |||
ERISA | S-83 | |||
European Economic Area | S-88 | |||
event of default | S-9, S-75 | |||
excess interest | S-15 | |||
Exchange Act | S-86 | |||
final scheduled payment date | S-61 | |||
financed vehicles | S-11 | |||
First Allocation of Principal | S-70 | |||
floating rate notes | S-7 | |||
FSMA | S-3, S-87 | |||
Funding Date | S-12, S-90 | |||
Funding Period | S-90 | |||
indenture | S-64 | |||
indenture trustee | S-7, S-35, S-59 | |||
interest rate swap agreement | S-62 | |||
Investment Company Act | S-80 | |||
issuing entity | S-6 | |||
issuing entity property | S-10 | |||
LIBOR | S-91 | |||
LIBOR Determination Date | S-91 | |||
Liquidation Proceeds | S-91 | |||
London Business Day | S-91 | |||
monthly remittance condition | S-66 | |||
net pool balance | S-9 | |||
net swap payment | S-15 |
Net Swap Payment | S-92 | |||
Net Swap Receipts | S-92 | |||
noteholders | S-60 | |||
obligors | S-10 | |||
offer of notes to the public | S-88 | |||
OID | S-81 | |||
originator | S-6, S-33 | |||
owner trustee | S-7, S-34 | |||
payment date | S-7 | |||
payment default | S-77 | |||
payment waterfall | S-69 | |||
Permitted Investments | S-92 | |||
pre-funding account | S-11 | |||
Principal Distribution Amount | S-92 | |||
Prospectus Directive | S-88 | |||
PTCE | S-83 | |||
purchase agreement | S-64 | |||
Rating Agency Condition | S-92 | |||
receivables | S-10 | |||
receivables pool | S-10 | |||
record date | S-7, S-60 | |||
regulation | S-83 | |||
Relevant Implementation Date | S-88 | |||
Relevant Member State | S-88 | |||
Retained Notes | S-87 | |||
sale and servicing agreement | S-64 | |||
SEC | S-2, S-59 | |||
Second Allocation of Principal | S-70 | |||
Securities Act | S-85 | |||
securitized pool | S-47 | |||
senior swap termination payment | S-15 | |||
Senior Swap Termination Payment | S-92 | |||
servicer | S-6, S-36 | |||
servicer replacement events | S-74 | |||
servicing fee | S-6, S-73 | |||
similar law | S-84 | |||
Simple Interest Receivable | S-92 | |||
specified reserve account balance | S-14 | |||
Specified Reserve Account Balance | S-93 | |||
sponsor | S-6 | |||
subordinated swap termination payment | S-15 | |||
Subordinated Swap Termination Payment | S-93 | |||
subsequent cut-off date | S-11 | |||
subsequent receivables | S-12 | |||
Supplemental Servicing Fees | S-93 | |||
swap counterparty | S-7 | |||
Swap Termination Payment | S-93 | |||
TALF Rules | B-1 | |||
transfer agreements | S-64 |
I-1
Treasury | B-2 | |||
Volkswagen AG | S-36 | |||
Volkswagen Group of America | S-36 | |||
VW Credit | S-2, S-6, S-32 |
Warranty Breach | B-2 | |||
weighted average life | S-53 | |||
yield supplement overcollateralization amount | S-71 |
I-2
SECURITIZATIONS
A-1
Retail Securitization | VALET 20[ ]-[ ] | VALET 20[ ]-[ ] | VALET 20[ ]-[ ] | |||||||||
Closing Date | ||||||||||||
Cutoff Date | ||||||||||||
Number of Receivables | ||||||||||||
Aggregate Outstanding Principal Balance | ||||||||||||
Outstanding Principal Balance | ||||||||||||
Average | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Contract Rate | ||||||||||||
Average(1) | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Weighted Average Original Term (Months) | ||||||||||||
Average(1) | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Weighted Average Remaining Term (Months) | ||||||||||||
Average(1) | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Seasoning (Months)(2) | ||||||||||||
Average | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Percentage By Principal Balance of New Vehicles | ||||||||||||
Percentage By Principal Balance of Used Vehicles | ||||||||||||
Percentage of Principal Balance of Volkswagen Vehicles | ||||||||||||
Percentage of Principal Balance of Audi Vehicles | ||||||||||||
Weighted Average FICO® Score(3) (4) | ||||||||||||
Minimum(4) (5) | ||||||||||||
Maximum(4) (5) |
(1) | Weighted by outstanding principal balance as of the cut-off date. | |
(2) | FICO® is a federally registered trademark of Fair, Isaac & Company. | |
(3) | FICO® scores are calculated excluding accounts for which no FICO score is available. | |
(4) | Less than 5% of the obligor FICO® scores (based on the aggregate [outstanding principal balance of the receivables]) exceeds the stated maximum and less than 5% of the obligor FICO® scores (based on the aggregate [outstanding principal balance of the receivables]) falls below the stated minimum. The range of FICO® scores represents approximately 90% of the aggregate outstanding principal balance as of origination. |
A-2
Retail Securitization | VALET 20[ ]-[ ] | VALET 20[ ]-[ ] | VALET 20[ ]-[ ] | |||||||||
Closing Date | ||||||||||||
Cutoff Date | ||||||||||||
By Original Term(1) | % | % | % | |||||||||
12 - 18 months | % | % | % | |||||||||
19 - 23 months | % | % | % | |||||||||
24 - 30 months | % | % | % | |||||||||
31 - 36 months | % | % | % | |||||||||
37 - 42 months | % | % | % | |||||||||
43 - 48 months | % | % | % | |||||||||
49 - 60 months | % | % | % | |||||||||
By Remaining Term(1) | ||||||||||||
12 - 18 months | % | % | % | |||||||||
19 - 23 months | % | % | % | |||||||||
24 - 30 months | % | % | % | |||||||||
31 - 36 months | % | % | % | |||||||||
37 - 42 months | % | % | % | |||||||||
43 - 48 months | % | % | % | |||||||||
49 - 60 months | % | % | % | |||||||||
By Contract Rate(1) | ||||||||||||
0.00% - 0.00% | % | % | % | |||||||||
1.00% - 1.99% | % | % | % | |||||||||
2.00% - 2.99% | % | % | % | |||||||||
3.00% - 3.99% | % | % | % | |||||||||
4.00% - 4.99% | % | % | % | |||||||||
5.00% - 5.99% | % | % | % | |||||||||
6.00% - 6.99% | % | % | % | |||||||||
7.00% - 7.99% | % | % | % | |||||||||
8.00% - 8.99% | % | % | % | |||||||||
9.00% - 9.99% | % | % | % | |||||||||
10.00%-10.99% | % | % | % | |||||||||
11.00% - 11.99% | % | % | % | |||||||||
12.00% - 12.99% | % | % | % | |||||||||
13.00% - 13.99% | % | % | % | |||||||||
14.00% - 14.99% | % | % | % | |||||||||
15.00% - 15.99% | % | % | % | |||||||||
16.00% - 16.99% | % | % | % | |||||||||
17.00% - 17.99% | % | % | % | |||||||||
18.00% - 18.99% | % | % | % | |||||||||
By State, States Representing More than 5%(1) | ||||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % |
(1) | As a Percent of Total Original Aggregate Outstanding Principal Balance |
A-3
Period | VALET 20[ ]-[ ] | VALET 20[ ]-[ ] | VALET 20[ ]-[ ] | |||||||||
1 | ||||||||||||
2 | ||||||||||||
3 | ||||||||||||
4 | ||||||||||||
5 | ||||||||||||
6 | ||||||||||||
7 | ||||||||||||
8 | ||||||||||||
9 | ||||||||||||
10 | ||||||||||||
11 | ||||||||||||
12 | ||||||||||||
13 | ||||||||||||
14 | ||||||||||||
15 | ||||||||||||
16 | ||||||||||||
17 | ||||||||||||
18 | ||||||||||||
19(2) |
(1) | The “Prepayment Amount” is defined as the non-scheduled amortization of the pool of receivables for the applicable period. This includes voluntary prepayments, voluntary early payoffs, payments from third parties, repurchases, aggregate amount of Defaulted Receivables and servicer advances. | |
This prepayment amount is converted into a monthly Single Month Mortality Rate “SMM” expressed as a percentage which is the Prepayment Amount divided by the previous month’s actual month-end aggregate net pool balance less the scheduled payments made during the month. | ||
The “Prepayment Speeds” shown in the chart are derived by converting the SMM into the ABS Speed by dividing (a) the SMM by (b) the sum of (i) one and (ii) the SMM multiplied by the age of the pool, in months, minus one. The age of the pool is assumed to be the weighted average age of the pool at cut-off date plus the number of months since the cut-off date. | ||
(2) | Optional clean-up call exercised in month [ ]. |
A-4
Aggregate | ||||||||||||||
Outstanding | 31 - 90 Days | % of Ending Pool | 90+ Days | % of Ending Pool | ||||||||||
Principal Balance | Delinquent | Balance | Delinquent | Balance |
(1) | VW Credit considers an account delinquent when an obligor fails to make at least 75% of the scheduled monthly payment by the due date. The period of delinquency is based on the number of days payments are contractually past due. |
A-5
[Original Aggregate Outstanding Principal Balance [$________]
Cumulative Net | |||||||||||
Aggregate | Charge-off as % | ||||||||||
Outstanding | Original Aggregate | ||||||||||
Principal Balance on | Outstanding | ||||||||||
Charged-off(1) Units | Recoveries(2) | Net Charge-off | Principal Balance |
(1) | Charge-offs generally represent the total aggregate net outstanding principal balance of the loan contracts determined to be uncollectible in the period less proceeds from disposition of the related vehicles, other than recoveries described in Note (2). | |
(2) | Recoveries generally include the net amounts received with respect to a loan contract previously charged off. |
A-6
FOR NON-MORTGAGE-BACKED ABS]
1. | We have reviewed the terms and conditions of the Term Asset-Backed Securities Loan Facility (“TALF”) provided by the Federal Reserve Bank of New York (“FRBNY”). Terms used below that are defined or explained in such terms and conditions, or in FAQs or other interpretative material issued by the FRBNY, shall have the meanings provided in such terms and conditions, FAQs or other interpretative material (such terms and conditions, FAQs or other interpretative material, the “TALF Rules”). |
2. | After due inquiry by our appropriate officers, agents and representatives, we have determined that the securities offered hereby designated as the (a) Class A-1 Notes, CUSIP #: [•], (b) Class A-2 Notes, CUSIP #: [•], (c) Class A-3 Notes, CUSIP #: [•], (d) Class A-4 Notes, CUSIP #: [•], and (e) Class B Notes, CUSIP #: [•], constitute eligible collateral under TALF. In particular: |
• | The securities are U.S. dollar-denominated cash (that is, not synthetic) asset-backed securities (“ABS”) that have (or have been provided on a preliminary basis, expected to be confirmed no later than the closing date) a credit rating in the highest long-term or short-term investment-grade rating category from two or more eligible nationally recognized statistical rating organizations (NRSROs) and do not have (including on a preliminary basis) a credit rating below the highest investment-grade rating category from an eligible NRSRO. Such ratings were obtained without the benefit of any third-party guarantee and are not on review or watch for downgrade. | ||
• | The securities are cleared through The Depository Trust Company. | ||
• | The securities do not bear interest payments that step up or step down to predetermined levels on specific dates. | ||
• | The securities are not subject to an optional redemption other than a customary clean-up call (as defined in the TALF Rules). | ||
• | All or substantially all (defined as at least 95% of the dollar amount) of the credit exposures underlying the securities are exposures that are both (a) originated by U.S.-organized entities or institutions or U.S. branches or agencies of foreign banks and (b) made to U.S.-domiciled obligors. The underlying credit exposures are auto loans and do not include exposures that are themselves cash ABS or synthetic ABS. The average life of the securities is less than or equal to five years. | ||
• | All or substantially all of the credit exposures underlying the securities were originated on or after October 1, 2007. “Substantially all” for purposes of this paragraph means 85% or more of the dollar amount. |
3. | Pursuant to the TALF Rules, the independent accounting firm that is performing certain procedures for the benefit of the FRBNY in connection with this offering is required, in certain circumstances where fraud or illegal acts are suspected to have occurred, to make reports to the TALF Compliance fraud hotline. We hereby provide our consent to such accounting firm to make such reports and waive any client confidentiality provisions we would otherwise be entitled to under applicable law, rules of accountant professional responsibility or contract. |
4. | We understand that purchasers of the securities offered hereby that are affiliates of either the |
B-1
originators of assets that are securitized in this offering or the issuing entity or sponsor of this offering will not be able to use these securities as TALF collateral. |
5. | We hereby undertake that, until the maturity of the securities offered hereby, we will issue a press release and notify the FRBNY and all registered holders of the securities if we determine that the statements set forth in Item 2 above were not correct when made or have ceased to be correct. We will issue such press release and make such notification no later than 9:00 a.m. on the fourth Business Day after we make such determination;providedthat we undertake to provide same business-day notice of any change in credit rating issued by any major NRSRO (including any change in the final rating compared to a preliminary rating) that occurs after pricing of this offering and on or prior to the closing date. |
6. | We hereby undertake that, until the maturity of the securities offered hereby, we will provide, as promptly as practicable, upon the request of the FRBNY, copies of (i) the Governing Documents for the securities and (ii) the servicer and/or trustee reports or any other similar reports provided or made available to investors in connection with the securities issued. Governing Documents include the instruments and agreements (including any indenture, pooling and servicing agreement, trust agreement, servicing agreement, other similar agreement and other operative document), however denominated, pursuant to which the securities were issued, the assets backing such securities are serviced and collections on such assets are applied, remitted and distributed. |
7. | We hereby represent and warrant to the FRBNY and TALF LLC that (i) this prospectus supplement and the accompanying prospectus and (ii) this prospectus supplement and the accompanying prospectus, when taken as whole together with all information provided by us or on our behalf to any nationally recognized statistical rating organization in connection with this offering, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. |
8. | We acknowledge that the FRBNY and TALF LLC (in accepting the securities offered hereby as collateral), will rely upon this certification and will suffer damages if such certification is incorrect. The sponsor (and, if required by the terms of the form referred to below, the sponsor’s direct or indirect ultimate parent) has executed and delivered to the FRBNY an undertaking, in the form prescribed by the FRBNY, under which the sponsor (and, if applicable, its direct or indirect ultimate parent) has agreed to indemnify FRBNY and TALF LLC and their respective affiliates against losses incurred or suffered by them arising out of any misrepresentation or breach of warranty made or to be performed by us in this certification. |
9. | We hereby jointly and severally agree that, should the securities be pledged to the FRBNY under the Master Loan and Security Agreement established under TALF or purchased by TALF LLC and at any time fail to constitute eligible collateral under TALF (provided that, solely for purposes of the foregoing, the only failure to satisfy the ratings eligibility criteria that shall be considered shall be a failure that arises as a result of the final rating on the securities, upon issuance, being lower than the required ratings for TALF eligibility, not any subsequent downgrades) under the TALF Rules as in effect at the time the securities are issued (a “Warranty Breach”), we shall permit (i) the United States Department of the Treasury (“Treasury”) and its agents, consultants, contractors and advisors, (ii) the Special Inspector General of the Troubled Asset Relief Program, and (iii) the Comptroller General of the United States access to personnel and any books, papers, records or other data in our possession, custody or control to the extent relevant to ascertaining the cause and nature of the Warranty Breach, during normal business hours and upon reasonable notice to the issuing entity or the sponsor, as the case may be; provided that prior to disclosing any information pursuant to clause (i), (ii) or (iii), the Treasury, the Special Inspector General of the Troubled Asset Relief Program and the Comptroller General of the United States shall have agreed, with respect to documents obtained under this agreement in furtherance of their respective functions, to follow applicable law and regulation (and the applicable customary policies and procedures, including those for inspectors general) regarding the dissemination of confidential materials, including redacting confidential information from the public version of its reports, as appropriate, and soliciting input from the sponsor or the issuing entity, as applicable, as to information that should be afforded confidentiality. In making this agreement, we understand that Treasury has represented that it has been informed by the Special Inspector General of the Troubled Asset Relief Program and the Comptroller General of the United States that they, before making any request for access or information pursuant to their oversight and audit functions, will establish a protocol to avoid, to the extent reasonably possible, duplicative requests. Nothing in this |
B-2
VW Credit, Inc. | Volkswagen Auto Loan Enhanced Trust 20[•]-[•] | |||||||||||||
By: | VW Credit, Inc., | |||||||||||||
as Administrator on behalf of the Issuing Entity | ||||||||||||||
By: | By: | |||||||||||||
Name: | Name: | |||||||||||||
Title: | Title:] |
B-3
Issuing Entity
Class A-1 Notes | $ | |||
Class A-2 Notes | $ | |||
Class A-3 Notes | $ | |||
Class A-4 Notes | $ | |||
[Class B Notes] | $ |
Depositor
Sponsor and Servicer
SUPPLEMENT
(To Prospectus Dated [ ], [ ])
$[ ]
Issuing Entity
Depositor
Sponsor and Servicer
Final | Expected | |||||||||||||||
Scheduled | Final | |||||||||||||||
Principal | Payment | Maturity | ||||||||||||||
Amount | Interest Rate | Date | Date | |||||||||||||
Class A-1 Notes | $ | % | ||||||||||||||
Class A-2 Notes | $ | % | ||||||||||||||
Class A-3 Notes | $ | % | ||||||||||||||
Class A-4 Notes | $ | [LIBOR + ]% | ||||||||||||||
[Class B Notes] | $ | |||||||||||||||
Total | $ | |||||||||||||||
Underwriting | Proceeds to the | |||||||||||
Price to Public(1) | Discount | Seller | ||||||||||
Per Class A-1 Note | % | % | % | |||||||||
Per Class A-2 Note | % | % | % | |||||||||
Per Class A-3 Note | % | % | % | |||||||||
Per Class A-4 Note | % | % | % | |||||||||
[Per Class B Note] | % | % | % | |||||||||
Total | $ | $ | $ |
(1) | Plus accrued interest, if any, from [ ]. |
• | The notes are payable solely from the assets of the issuing entity, which consist primarily of a special unit of beneficial interest in a portfolio of retail automobile leases and the related Volkswagen and Audi leased vehicles, payments due on the lease contracts, proceeds from the sale of the leased vehicles, [payments due under an interest rate swap agreement] [and funds on deposit in the reserve account]. [[ ]] will be the counterparty to the interest rate swap agreement. | ||
• | The issuing entity will pay interest and principal on the notes on the [ ] day of each month, or, if the [ ] is not a business day, the next business day, starting on [ ]. |
• | Credit enhancement for the notes offered hereby will consist of [a reserve account with an initial deposit of $[ ],] [subordinated certificates,] [overcollateralization,][and, in the case of the Class A notes, by subordination of certain payments to the Class B noteholders]. The certificates are not being offered hereby. | ||
• | [On the closing date, the notes will be “eligible collateral” under and as defined in the Federal Reserve Bank of New York’s Term Asset-Backed Securities Loan Facility, subject to those considerations discussed under“Risk Factors — Loss of TALF Eligibility, the Requirements of the TALF Program or the Lack of Availability of a TALF Loan May Adversely Affect Your Financing Options and the Liquidity and Market Value of Your Notes”in this prospectus supplement. If you intend to finance a purchase Class A notes through the Term Asset-Backed Securities Loan Facility, you should consult your financial and legal advisors before making a purchase. See also “TALF Considerations”.] |
Page | ||||
S-4 | ||||
S-6 | ||||
S-18 | ||||
S-31 | ||||
S-32 | ||||
S-32 | ||||
S-32 | ||||
S-33 | ||||
S-34 | ||||
S-34 | ||||
S-34 | ||||
S-35 | ||||
S-35 | ||||
S-36 | ||||
S-36 | ||||
S-36 | ||||
S-37 | ||||
S-37 | ||||
S-37 | ||||
S-38 | ||||
S-39 | ||||
S-39 | ||||
S-39 | ||||
S-40 | ||||
S-49 | ||||
S-49 | ||||
S-51 | ||||
S-52 | ||||
S-52 | ||||
S-55 | ||||
S-56 | ||||
S-56 | ||||
S-58 | ||||
S-58 | ||||
S-59 | ||||
S-59 | ||||
S-60 | ||||
S-64 | ||||
S-64 | ||||
S-65 | ||||
S-65 | ||||
S-65 | ||||
S-68 | ||||
S-70 | ||||
S-70 | ||||
S-72 | ||||
S-75 |
i
Page | ||||
S-75 | ||||
S-75 | ||||
S-77 | ||||
S-77 | ||||
S-77 | ||||
S-78 | ||||
S-79 | ||||
S-80 | ||||
S-81 | ||||
S-83 | ||||
S-83 | ||||
S-84 | ||||
S-85 | ||||
S-87 | ||||
S-87 | ||||
S-87 | ||||
S-88 | ||||
S-88 | ||||
S-88 | ||||
S-88 | ||||
S-90 | ||||
S-92 | ||||
S-93 | ||||
S-94 | ||||
S-94 | ||||
A-95 | ||||
A-1 | ||||
A-1 | ||||
1 | ||||
1 |
ii
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
S-1
S-2
S-3
• | The special unit of beneficial interest, or SUBI, represents a beneficial interest in specific Origination Trust assets. | |
• | The SUBI represents a beneficial interest in a pool of closed-end Volkswagen and Audi vehicle leases and the related Volkswagen and Audi leased vehicles. | |
• | The UTI represents Origination Trust assets not allocated to the SUBI or any other special unit of beneficial interest similar to the SUBI and the issuing entity has no rights in the UTI, the UTI assets or the assets related to any other SUBI of the Origination Trust. |
S-4
(Prior to an Acceleration after an Event of Default)
* | For more information regarding priority of payments, see “Description of the Transfer Agreements and the Administration Agreement — Priority of Payments”. |
S-5
* | NOTE: Disclose transactions that are not arm’s length or transactions that are outside the ordinary course between sponsor, depositor or issuing entity and any other transaction party. |
S-6
Principal | Interest | Final Scheduled | ||||||||||
Class | Amount | Rate | Payment Date | |||||||||
Class A-1 Notes | $ | % | ||||||||||
Class A-2 Notes | $ | % | ||||||||||
Class A-3 Notes | $ | % | ||||||||||
Class A-4 Notes | $ | [LIBOR +] % | ||||||||||
[Class B Notes | $ | %] |
• | Interest on the notes will accrue from and including the prior payment date (or, with respect to the first payment date, from and including the closing date) to but excluding the current payment date. | ||
• | Interest accrued as of any payment date but not paid on that payment date will be payable on the next payment date, together with interest on such amount at the applicable interest rate (to the extent lawful). | ||
• | The issuing entity will pay interest on the Class A-1 notes [and the Class A-4 notes] on the basis of the actual number of days elapsed during the period for which interest is payable and a 360-day year. This means that the interest due on each payment date for the Class A-1 notes [and the Class A-4 notes, as applicable] will be the product of (i) the outstanding principal balance on the Class A-1 notes [and the Class A-4 notes, as applicable], (ii) the related interest rate and (iii) the actual number of days from and including the previous payment date (or, in the case of the first payment date, from and |
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including the closing date) to but excluding the current payment date divided by 360. | |||
• | The issuing entity will pay interest on the Class A-2 notes, the Class A-3 notes, [the Class A-4 notes] [and the Class B notes] on the basis of a 360-day year consisting of twelve 30-day months. This means that the interest due on each payment date for the Class A-2 notes, the Class A-3 notes, [the Class A-4 notes] [and the Class B notes] will be the product of (i) the outstanding principal balance of the related class of notes, (ii) the applicable interest rate and (iii) 30 (or in the case of the first payment date, [ ]), divided by 360. | ||
• | Interest payments on all classes of Class A notes will have the same priority. [Interest payments on the Class B notes will be subordinated to interest payments and, in specified circumstances, principal payments of the Class A notes.] |
• | The issuing entity will generally pay principal on the notes monthly on each payment date in accordance with the payment priorities described below under “—Priority of Payments.” | ||
• | The issuing entity will make principal payments of the notes based on the amount of collections and defaults on the leases during the prior collection period. | ||
• | This prospectus supplement describes how available funds and amounts on deposit in the reserve account are allocated to principal payments of the notes. | ||
• | On each payment date, prior to the acceleration of the notes following an event of default, which is described below under “—Interest and Principal Payments after an Event of Default,” the issuing entity will distribute funds available to pay principal of the notes in the following order of priority: |
(1) | first, to the Class A-1 notes, until the Class A-1 notes are paid in full; | ||
(2) | second, to the Class A-2 notes, until the Class A-2 notes are paid in full; | ||
(3) | third, to the Class A-3 notes, until the Class A-3 notes are paid in full; | ||
(4) | fourth, to the Class A-4 notes, until the Class A-4 notes are paid in full; and | ||
[(5) | fifth, to the Class B notes, until the Class B notes are paid in full.] |
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• | a default for five days or more in the payment of interest on any note [of the controlling class] after the same becomes due; | ||
• | a default in the payment of principal of a note on the related final scheduled payment date or the redemption date; | ||
• | a default in the observance or performance of any covenant or agreement of the issuing entity in the indenture, or any representation or warranty of the issuing entity made in the indenture or any related certificate or writing delivered pursuant to the indenture proves to have been incorrect in any material respect at the time made, which default or inaccuracy materially and adversely affects the interests of the noteholders, and the continuation of that default or inaccuracy for a period of 60 days after written notice thereof is given to the issuing entity by the indenture trustee or to the issuing entity and the indenture trustee by the holders of not |
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less than a majority of the outstanding principal amount of the notes [of the controlling class] (excluding any notes owned by the issuing entity, the depositor, the servicer, the administrator or any of their respective affiliates); and | |||
• | the occurrence of certain events (which, if involuntary, remain unstayed for more than 90 days) of bankruptcy, insolvency, receivership or liquidation of the issuing entity; |
• | Transaction SUBI Certificate; | ||
• | [rights under the interest rate swap agreement and payments made by the swap counterparty under the interest rate swap agreement;] | ||
• | amounts on deposit in the accounts owned by the issuing entity and permitted investments of those accounts; | ||
• | rights under certain transaction documents; and | ||
• | the proceeds of any and all of the above, except thatactualsales proceeds will not constitute part of the issuing entity property. |
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• | See “The Transaction Documents—Like Kind Exchange Program” in the accompanying prospectus. |
• | an aggregate securitization value of $[ ], of which $[ ] (approximately [ ]%) represented the discounted base residual values of the leased vehicles; | ||
• | a weighted average original lease term of approximately [ ] months; and | ||
• | a weighted average remaining term to scheduled maturity of approximately [ ] months. |
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• | [ ] full calendar months following the closing date; | |
• | the date on which the amount in the pre-funding account is $[10,000] or less; or | |
• | the occurrence of an event of default under the indenture. |
• | first, to the servicer, the sum of all outstanding advances made by the servicer prior to that payment date; | ||
• | second,pro rata, to the servicer and the administrator, the servicing fee and administration fee, respectively, together with any unpaid servicing fees and administration fee in respect of one or more prior collections periods; | ||
• | [third, to the swap counterparty, the net swap payment;] | ||
• | fourth,pro rata, to (1) the Class A noteholders, to pay interest due on the outstanding notes on that payment date, and, to the extent permitted under applicable law, interest on any overdue interest thereon at the applicable interest rate [and (2) to the Swap Counterparty any Seller swap termination payments payable to the Swap Counterparty;] | ||
• | fifth, to the principal distribution account, the“first priority principal distribution amount”, which will generally be an amount not less than zero, equal to the excess of: (x) the aggregate principal amount of the Class A notes as of the preceding payment date, over (y) the aggregate securitization value of the leases and leased vehicles allocated to the Transaction SUBI as of the end of the related collection period, which amount will be allocated to pay principal on the notes in the amounts and order of priority described under “The Notes—Payments of Principal”; | ||
• | [sixth, to the Class B noteholders, interest on the Class B notes;] | ||
• | [seventh, to the principal distribution account, the“second priority principal |
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distribution amount”, which will generally be an amount not less than zero, equal to the excess of: (x) the aggregate principal amount of the notes as of the preceding payment date, over (y) the aggregate securitization value of the leases and leased vehicles allocated to the Transaction SUBI as of the end of the related collection period;provided,that this amount will be reduced by any amounts previously deposited in the principal distribution account in accordance with the[fifth]clause above, which amount will be allocated to pay principal on the notes in the amounts and order of priority described under “The Notes—Payments of Principal”; | |||
• | eighth, to the reserve account, until the amount of funds in the reserve account is equal to the amount specified in “Description of the Transfer Agreements and the Administration Agreement —The Accounts—The Reserve Account;” | ||
• | ninth, to the principal distribution account, the“regular principal distribution amount”, which will generally be an amount not less than zero equal to the excess of: | ||
• | the aggregate outstanding principal amount of the notes as of the preceding payment dateover | ||
• | the difference between |
• | [tenth, to the Swap Counterparty, any Subordinate Swap Termination Payment and any other amounts payable by the issuing entity to the Swap Counterparty and not previously paid;] |
• | eleventh, to pay any required fees or indemnification amounts due to the indenture trustee, the SUBI trustee or the owner trustee which have not been paid by VW Credit, Inc.; and | ||
• | twelfth, any remaining funds will be distributed to or at the direction of the holder of the issuing entity’s certificate (which initially will be the seller). |
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[Class A notes] | [Subordination of principal payments of the Class B notes, which will have an initial note balance of $[ ],] overcollateralization and the reserve account. | |
[Class B notes] | [Overcollateralization and the reserve account] |
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Class | [Standard & Poor’s] | [Moody’s] | [Fitch] | |||
A-1 | [A-1+] | [Prime-1] | [F1+] | |||
A-2 | [AAA] | [Aaa] | [AAA] | |||
A-3 | [AAA] | [Aaa] | [AAA] | |||
A-4 | [AAA] | [Aaa] | [AAA] | |||
[B] | [A] | [A3] | [A] |
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Class | CUSIP Number | |||
A-1 | ||||
A-2 | ||||
A-3 | ||||
A-4 | ||||
[B] | ] |
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Prepayments, potential losses and a change in the order of priority of principal payments may result from an event of default under the indenture. | An event of default under the indenture may result in payments on your notes being accelerated. As a result: | |
• you may suffer losses on your securities if the assets of the issuing entity are insufficient to pay the amounts owed on your notes; | ||
• payments on your notes may be delayed until more senior classes of notes are repaid; and | ||
• your notes may be repaid earlier than scheduled, which may require you to reinvest your principal at a lower rate of return. | ||
Your share of possible losses may not be proportional. | Principal payments on the notes generally will be made to the holders of the notes sequentially so that no principal will be paid on any class of notes until each class of notes with an earlier final scheduled payment date has been paid in full. As a result, a class of notes with a later maturity may absorb more losses than a class of notes with an earlier maturity. | |
[Payments on the Class B notes are subordinated to payments on the Class A notes.] | [The Class B notes bear greater risk than the Class A notes because certain payments on the Class B notes are subordinated, to the extent described herein, to payments on the Class A notes. | |
Interest payments on the Class B notes on each payment date will be subordinated to servicing fees due to the servicer, fees and expenses due to the trustees, any net swap payment, any Senior Swap Termination Payment and interest on and, in specified circumstances, principal payments of the Class A notes. Principal payments of the Class B notes will be fully subordinated to principal and interest payments of the Class A notes.] | ||
[The occurrence of certain events of default under the indenture that result in acceleration of the notes may result in a delay or default in the payment of interest on or principal of the Class B notes.] | [After an event of default under the indenture that results in acceleration of the notes [(other than an event of default that arises from the issuing entity’s breach of a covenant, representation or warranty)], the issuing entity will not make any distributions of principal or interest on the Class B notes until payment in full of principal and interest on the Class A notes. This may result in a delay or default in paying interest on or principal of the Class B notes.] |
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[You may experience reduced returns on your notes resulting from distribution of amounts in the pre-funding account.] | [On one or more occasions following the closing date, the issuing entity may purchase the beneficial interest in additional leases and leased vehicles from the seller, which, in turn, will acquire the beneficial interest in additional leases and leased vehicles from VW Credit, with funds on deposit in the pre-funding account. | |
You will receive as a prepayment of principal any amounts remaining in the pre-funding account (excluding investment earnings) that have not been used to purchase the beneficial interest in additional leases and leased vehicles by the end of the Funding Period. See “Description of the Transfer Agreements and the Administration Agreement —Pre-FundingAccount” in this prospectus supplement. This prepayment of principal could have the effect of shortening the weighted average life of your notes. The inability of the seller to obtain assets meeting the requirements for sale to the issuing entity 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 your notes.] | ||
[Risk of loss or delay in payment may result from delays in the transfer of servicing due to the servicing fee structure. | Because the servicing fee is structured as a percentage of the aggregate securitization value of the leases and leased vehicles, the amount of the servicing fee payable to the servicer may be considered insufficient by potential replacement servicers if servicing is required to be transferred at a time when much of the aggregate outstanding securitization value of the leases and leased vehicles has been repaid. Due to the reduction in servicing fee as described in the foregoing, it may be difficult to find a replacement servicer. Consequently, the time it takes to effect the transfer of servicing to a replacement servicer under such circumstances may result in delays and/or reductions in the interest and principal payments on your notes.] | |
[Risks associated with the interest rate swap.] | [The issuing entity will enter into an interest rate swap transaction under an interest rate swap agreement because the receivables owned by the issuing entity bear interest at fixed rates while the [Class A-4] notes will bear interest at a floating rate. The issuing entity may use payments made by the swap counterparty to make interest payments on each payment date. | |
During those periods in which the floating rate payable by the swap counterparty is substantially greater than the fixed rate payable by the issuing entity, the issuing entity will be more dependent on receiving payments from the swap counterparty in order to make interest payments on the notes without using amounts that would otherwise be paid as |
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principal on the notes. If the swap counterparty fails to pay a net swap receipt, and collections on the receivables and funds on deposit in the reserve account are insufficient to make payments of interest on the notes, you may experience delays and/or reductions in the interest on and principal payments of your notes. | ||
During those periods in which the floating rate payable by the swap counterparty under the interest rate swap agreement is less than the fixed rate payable by the issuing entity under the interest rate swap agreement, the issuing entity will be obligated to make a net swap payment to the swap counterparty. The issuing entity’s obligation to pay a net swap payment to the swap counterparty is secured by the issuing entity property. | ||
An event of default under the indenture may result in payments on your notes being accelerated. The swap counterparty’s claim for a net swap payment will be higher in priority than all payments on the notes. If a net swap payment is due to the swap counterparty on a payment date and there are insufficient collections on the receivables and insufficient funds on deposit in the reserve account to make payments of interest and principal on the notes and if the note insurer fails to make any payment required under the note guaranty insurance policy, you may experience delays and/or reductions in the interest and principal payments on your notes. | ||
The interest rate swap agreement generally may not be terminated except upon failure of either party to the interest rate swap agreement to make payments when due, insolvency of either party to the interest rate swap agreement, illegality, amendment by the issuing entity of any transaction document without the prior consent of the swap counterparty to the extent that such consent is required under that transaction document; or failure of the swap counterparty to provide financial information as required by Regulation AB or to assign the interest rate swap agreement to an eligible counterparty if it determines in good faith that it is unable to provide that financial information; or failure of the swap counterparty to post collateral, assign the interest rate swap agreement to an eligible counterparty or take other remedial action if the swap counterparty’s credit ratings drop below the levels required by the interest rate swap agreement. Depending on the reason for the termination, a termination payment may be due to the issuing entity or to the swap counterparty. Any such termination payment could, if market interest rates and other conditions have changed materially, be substantial. |
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If the swap counterparty fails to make a termination payment owed to the issuing entity under the interest rate swap agreement, the issuing entity may not be able to enter into a replacement interest rate swap agreement. If this occurs, the amount available to pay principal of and interest on the notes will be reduced to the extent the interest rate on the [Class A-4] notes exceeds the fixed rate the issuing entity would have been required to pay the swap counterparty under the interest rate swap agreement. | ||
If the issuing entity is required to make a Senior Swap Termination Payment to the swap counterparty, that payment will be senior to all payments on the Class [B] notes and principal payments on the Class [A] notes but equal in priority to interest payments on the Class A notes. A Senior Swap Termination Payment to the swap counterparty could cause a shortfall in funds available on any payment date, in which case you may experience delays or reductions on the interest and principal payments of your notes. | ||
If the interest rate swap agreement is terminated and no replacement is entered into and collections on the receivables and funds on deposit in the reserve account are insufficient to make payments of interest and principal on your notes you may experience delays and/or reductions in the interest on and principal payments of your notes.] | ||
The concentration of leased vehicles to particular models could negatively affect the issuing entity’s assets. | The [ ], [ ] and [ ] models represent approximately [ ]%, [ ]% and [ ]% of the aggregate securitization value, respectively, of the leases allocated to the Transaction SUBI as of the cutoff date. Any adverse change in the value of a specific model type would reduce the proceeds received at disposition of a related leased vehicle. As a result, you may incur a loss on your investment. | |
The geographic concentration of the leases, economic factors and lease performance could negatively affect the issuing entity’s assets. | Economic conditions, such as unemployment, interest rates, inflation rates and consumer perceptions of the economy, in the states where obligors reside may affect delinquencies, losses and prepayments on the receivables. Further, the effect of natural disasters, such as hurricanes and floods, on the performance of the leases, is unclear, but there may be a significant adverse effect on general economic conditions, consumer confidence and general market liquidity. If there is a concentration of vehicle registrations in particular states, these or any other adverse economic conditions or natural disasters in those states may affect the rate of prepayment and defaults on the specified leases and the ability to sell or dispose of the related specified vehicles for an amount at least equal to their Automotive Lease Guide residual values. |
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As of the cutoff date, the servicer’s records indicate that the aggregate securitization value of the leases and leased vehicles were concentrated in the following states: |
Percentage of Aggregate | ||
Securitization | ||
State | Value as of the Cutoff Date | |
[ ] | [ ]% | |
[ ] | [ ]% | |
[ ] | [ ]% | |
[ ] | [ ]% |
No other state, based on the addresses of the state of origination of the leases, accounted for more than 5.00% of the aggregate securitization value of the leases and related leased vehicles as of the cutoff date. | ||
This prospectus supplement provides information regarding only the leases and leased vehicles as of the statistical cut-off date[, however the initial leases and leased vehicles and the subsequent leases and leased vehicles allocated to the Transaction SUBI Certificate could have different characteristics.] | This prospectus supplement describes only the characteristics of the leases and related leased vehicles as of the statistical cut-off date. The [initial] leases and related leased vehicles, [and any subsequent] leases and related leased vehicles transferred to the issuing entity during the Funding Period,] will have characteristics that differ somewhat from the characteristics of the leases and leased vehicles as of the statistical cut-off date described in this prospectus supplement. Although we do not expect the characteristics of the [initial] leases and related leased vehicles [and subsequent leases and related leased vehicles] to differ materially from the leases and related leased vehicles as of the statistical cut-off date, and each [initial] lease and related leased vehicle [and subsequent lease and related leased vehicle] must satisfy the eligibility criteria specified in the SUBI Transfer Agreement, you should be aware that the [initial] leases and related leased vehicles [and the subsequent leases and related leased vehicles] may have been originated using credit criteria different from the criteria applied to the leases and related leased vehicles disclosed in this prospectus supplement and may be of a different credit quality and seasoning. If you purchase a note, you must not assume that the characteristics of the [initial] leases and related leased vehicles [and the subsequent leases and related leased vehicles] will be identical to the characteristics of the leases and related leased vehicles as of the statistical cut-off date disclosed in this prospectus supplement. | |
The absence of a secondary market could limit your ability to resell your notes. | There will be no market for the notes prior to their issuance, and there can be no assurance that a secondary market will develop after such issuance. If a secondary market does develop, there can be no assurance that it will provide holders with liquidity of investment, that it will enable you to realize your desired yield, or that the market will continue for the life of the notes. The underwriters presently expect to |
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make a secondary market in the offered notes, but have no obligation to do so. Absent a secondary market for the notes, you may experience a delay if you choose to sell your note or the price you receive for your note may be less than you would receive for a comparable liquid note. The market values of the notes are likely to fluctuate. Fluctuations may be significant and could result in significant losses to you. [The secondary market for asset-backed securities is experiencing significantly reduced liquidity. Illiquidity can have a severely adverse effect on the prices of securities that are especially sensitive to prepayment, credit or interest rate risk, such as the notes. This period of illiquidity may continue and may adversely affect the market value of your notes.] See “Risk Factors—The absence of a secondary market for thesecurities could limit your ability to resell your securities” in the prospectus. | ||
[Loss of TALF Eligibility, the Requirements of the TALF Program or the Lack of Availability of a TALF Loan May Adversely Affect Your Financing Options and the Liquidity and Market Value of Your Notes] | On the closing date, the notes will be “eligible collateral” under and as defined in the Federal Reserve Bank of New York’s Term Asset-Backed Securities Loan Facility (“TALF”), as described under “TALF Considerations” in this prospectus supplement. Under TALF, subject to the program terms and conditions, the Federal Reserve Bank of New York (the “FRBNY”) may make loans secured by eligible asset-backed securities to eligible borrowers on a limited recourse basis. However, the FRBNY is under no obligation to extend credit to investors requesting TALF loans. | |
The FRBNY has expressly reserved the right to change the terms and conditions of the TALF program, including the size of the program, pricing of loans, loan maturity, collateral haircuts, requirements of the underlying assets and borrower eligibility requirements. | ||
• The Notes May Cease to be “Eligible Collateral” Under TALF, Which May Adversely AffectYourFinancing Options and the Liquidity and Market Value of Your Notes.Although the notes will be “eligible collateral” under and as defined in TALF on the closing date, as discussed under “TALF Considerations” in this prospectus supplement, there can be no assurance that the notes will remain “eligible collateral” for new TALF loans sought at any time after the closing date (or TALF loans sought to be assigned after the closing date), including due to changes in the terms and conditions of the TALF program or the characteristics of the notes or the underlying Units. In particular, the notes could become subject to a ratings downgrade or placed on negative credit watch by one of the rating agencies named in “Summary of Terms—Ratings” in this | ||
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prospectus supplement. To be considered “eligible collateral” under the TALF program, the notes must be rated in the highest long-term or short-term investment-grade rating category from two or more eligible nationally recognized statistical rating organizations (NRSROs) and must not have a credit rating below the highest investment-grade rating category from an eligible NRSRO. If a ratings downgrade or placement on negative credit watch were to occur, the notes would no longer constitute “eligible collateral” and an investor would not be able to obtain a new TALF loan secured by the notes unless and until the Class A notes were to comply with the eligibility criteria under TALF in the future. The automobile industry and financial services industry in the United States and elsewhere, like the broader world economy, are both in a state of hardship. Many automobile manufacturers, part suppliers, captive finance companies, auto dealers and related businesses have experienced declining revenues and higher financing and operating costs. Many financial institutions have experienced declining revenues, increased losses, reductions in market capitalization and higher costs. If, as a result of any financial and business difficulties impacting the automobile industry generally, or VW Credit specifically, the rating agencies rating the notes downgrade the notes, such downgrade could impair your ability to assign your TALF loan or to sell the notes securing your TALF loan. None of the sponsor, the issuing entity, the servicer, the indenture trustee nor the administrator is obligated to monitor the continuing accuracy of the characteristics of the underlying Units or to recalculate the weighted average life of each class of notes based on actual prepayment experience after the Closing Date or the weighted average FICO score of the lessees or to take actions to cause any ratings assigned to a class of notes to be reinstated or any negative credit watch to be removed. To the extent the notes cannot be pledged as collateral for a TALF loan, it could limit your ability to resell those notes and adversely affect the price of your notes. | ||
If you intend to obtain a TALF loan to finance your investment but are unable to obtain a TALF loan, you may have limited or no alternative financing options and your expected return on your investment in the notes may be significantly reduced. If the notes cease to be eligible collateral under TALF or if the terms of the TALF program change, those changes may cause the notes to become less attractive to potential purchasers of the notes. Further, the FRBNY has indicated that assignment of TALF loans to other eligible borrowers |
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may only occur with the consent of the FRBNY and prior to the expiration of the TALF program on March 31, 2010 (or such later date if extended by the FRBNY). An assignment of a TALF loan may also require the consent of the TALF agent that arranged the TALF loan. In addition, we can give no assurance that any TALF related request by a TALF agent for future documentation, fees or assurances occurring after issuance of the notes with respect to secondary market purchases of the notes will be acceptable to you, and it is expected that none of the sponsor, the depositor, the issuing entity, the underwriters nor any of their subsidiaries or affiliates will have any obligation to comply with any future request made by a TALF agent. As a result of the foregoing, you may not be able to sell your notes when you want to do so or you may not be able to obtain the price that you wish to receive. See also “—The absence of a secondary market for the securities could limit your ability to resell your securities” in the prospectus. | ||
• Investors Financing a Purchase of Notes with a TALF Loan must Access the TALF Program through a TALF Agent.An investor seeking a loan under the TALF program may only gain access to the TALF program as a borrower through a TALF Agent. A “TALF agent” is any financial institution that has agreed to be bound by the Master Loan and Security Agreement (the “MLSA”) between the FRBNY, the TALF agents and The Bank of New York Mellon, as custodian and administrator. TALF agents are primary dealers, as well as other dealers who have been specifically designated by the FRBNY to serve in this capacity, as agents on behalf of their customers, the TALF borrowers, in support of the TALF program. Although a TALF borrower will have various obligations and make various representations to the FRBNY, a borrower will not be in direct contractual privity with the FRBNY or any other government entity. The TALF borrower must enter into a customer agreement with a TALF agent that will act on behalf of the borrower in connection with a TALF loan and will receive from the borrower and deliver to the TALF custodian the eligible collateral, collateral haircut and other amounts due in connection with the closing of a TALF loan. Under the TALF program, the “collateral haircut”, which will be delivered by the borrower in connection with a TALF loan, is an amount of cash equal to the market value of the asset-backed securities to be pledged by a borrower to secure the TALF loan multiplied by a percentage set forth by the FRBNY as the applicable “haircut percentage”, which varies based |
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on the type of asset underlying the asset-backed securities pledged by the related borrower and the weighted average FICO score of the related obligors. Currently, requests for a TALF loan backed by auto lease asset-backed securities may be made once per month on the applicable TALF subscription date. On the subscription date, the TALF agent must provide the custodian with the CUSIP numbers and offering documents of all collateral expected to be pledged to secure the TALF loans for which that TALF agent acts on behalf of TALF borrowers, together with other information regarding the prospective borrower and the eligible collateral. On the TALF loan settlement date, the TALF borrower, through its TALF agent, will deliver the pledged collateral, the collateral haircut and the administrative fee due in connection with the TALF Loan to The Bank of New York Mellon, as the TALF custodian. If an investor in the notes failed to successfully subscribe for a TALF loan on the subscription date, or failed to close the TALF loan on the TALF loan settlement date, that investor would not be able to apply for another TALF loan until the next TALF subscription date, at which date the notes may no longer constitute eligible collateral. See “— Terms and Conditions to Obtaining TALF Loans May Change and You May Not Be Able to Pledge the Notes in the Future.” | ||
An investor in the notes who obtains a loan under the TALF program will not directly receive payments of interest and principal on any notes pledged to secure the TALF loan. Instead, payments with respect to pledged securities under the TALF program will be distributed directly to the custodian, which will then be applied first to pay interest and principal on the TALF loan, and then the remainder is distributed through the TALF agent to the TALF borrower in accordance with the terms of the MLSA and subject to the applicable customer agreement. While certain terms are required by the MLSA to be contained in each customer agreement, the terms of any particular customer agreement may vary depending on the TALF agent or agents selected by an investor. We can make no assurances of the creditworthiness or operations of any particular TALF agent, or that the terms offered under any particular TALF agent’s customer agreement will be acceptable to you. TALF agents may or may not be underwriters of the notes or affiliates of the underwriters. None of the sponsor, the depositor, the issuing entity, the underwriters or any of their subsidiaries or affiliates can give you any assurances that you will be an eligible borrower or that you will be able to borrow any funds under TALF. | ||
• The FRBNY May Enforce its Rights in the Collateral and Sell Your Notes. The FRBNY is permitted to assign asset-backed securities pledged as collateral to secure a TALF loan to TALF LLC, a special purpose entity, upon the occurrence of certain defaults (including the failure to repay the TALF loan by the applicable maturity date, which is currently three years for loans secured by auto lease-backed securities) and other events described in the MLSA, and TALF LLC may liquidate the collateral and pursue remedies against the TALF borrower. If TALF LLC were to liquidate collateral or pursue remedies with respect to securities of the same class as the notes you purchased (including as a result of defaults or other |
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actions of other TALF borrowers), or with respect to similar securities, the effect may be to depress the secondary market price of your notes. | ||
If you obtain a TALF loan and the outstanding amount of the loan is not repaid on or before the loan’s three-year maturity date, you must repay the outstanding amount on the maturity date or surrender your notes to the FRBNY. Because the rate of principal payments on each class of notes depends primarily on the rate of payment on the leases and the rate of realization of proceeds of the related leased vehicles, the final payment on your notes could occur later than the maturity date of the TALF loan. See “Maturity, Prepayment and Yield Considerations” in the accompanying prospectus and “Weighted Average Life of the Securities” in this prospectus supplement. If your notes remain outstanding on the maturity date of the TALF loan and you are unable to repay the outstanding amount of the TALF loan, the FRBNY may enforce its rights against the notes pledged as collateral, including by selling such notes to TALF LLC, as described above. If such an event were to occur, you would lose both your interest in the pledged notes and your equity investment in the notes represented by the collateral haircut. If an investor with a TALF loan defaults on the TALF loan, in most cases, the FRBNY and its designated agents (including TALF LLC) may only exercise remedies against the eligible collateral and the related collateral haircut securing the loan. However, there are certain exceptions to the limited recourse nature of the TALF facility outlined in the MLSA, which may result in a TALF borrower being subject to recourse for amounts in excess of the value of the collateral haircut and the pledged asset-backed securities collateral, as further described in “TALF Considerations—Defaults on TALF Loans” in this prospectus supplement. | ||
• Terms and Conditions to Obtaining TALF Loans May Change and You May Not Be Able to Pledge the Notes in the Future. The FRBNY, the Treasury Department and other agencies of the U.S. government have announced that TALF will be funded with $200 billion, with a possible increase up to $1 trillion. In addition, TALF is capitalized with $20 billion in funds from the U.S. Treasury Department’s Troubled Assets Relief Program (“TARP”). No assurance can be made that the entire amount of funds initially dedicated to TALF or TARP will be available through the maturity of securities pledged as collateral for TALF loans, if the U.S. Congress, Treasury Department or Board of Governors |
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of the Federal Reserve System determines that funding should be reduced or reallocated for other purposes. No assurance can be made that the terms and conditions of TALF loans existing on the closing date will remain the same if TALF borrowers wish to pledge the notes as collateral in the future. Additionally, no assurance can be made that the collateral haircuts initially announced will remain at their present levels, or that all collateral acceptable by the FRBNY at the inception of the TALF program will continue to be acceptable through the duration of the program. No assurance can be made that the FRBNY will refrain from changing (including retroactively) the terms of the MLSA and other terms and conditions of the TALF program. | ||
This prospectus supplement does not purport to describe all the requirements of participation in the TALF program or the associated risks or the availability or advisability of financing an investment in the notes with loans from the FRBNY under TALF. The terms of the TALF program are subject to change and more attractive terms could be included for different asset classes, which could cause asset-backed securities backed by prime automobile leases to be less attractive to investors. Further, it is unclear what effect TALF will have on the secondary market for the notes and asset-backed securities generally. Potential investors in the notes should consult with their own financial and legal advisors with respect to the program requirements of, eligibility for, and related legal and economic risk in connection with, TALF loans. For more information about the notes and TALF, see “TALF Considerations” in this prospectus supplement.] | ||
The residual value of leased vehicles may be adversely affected by discount pricing incentives, marketing incentive programs and recent economic developments. | Historical residual value loss experience on lease vehicles is partially attributable to new vehicles pricing policies of all manufacturers. Discount pricing incentives or other marketing incentive programs on new vehicles by VW Credit or by its competitors that effectively reduce the prices of new vehicles may have the effect of reducing demand by consumers for used vehicles. Although VW Credit currently does not have any marketing incentive program that reduces the prices of the new vehicles, it may introduce such programs in the future. | |
The residual value published inAutomotive Lease Guidefor a leased vehicle and the stated residual value for a leased vehicle are only estimates, and are not guarantees of the residual value of a leased vehicle. The reduced demand for used vehicles resulting from discount pricing incentives or other marketing incentive programs introduced by VW |
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Credit or any of its competitors may reduce the prices consumers will be willing to pay for used vehicles, including leased vehicles included in the pool assets at the end of the related leases and thus reduce the residual value of such leased vehicles. | ||
[In addition, the United States has experienced a period of economic slowdown. Rising unemployment and continued lack of availability of credit may lead to increased default rates. This period may be accompanied by decreased consumer demand for vehicles and declining values of off-lease vehicles, which increases the amount of a loss in the event of default by a lessee. Significant increases in the inventory of used vehicles during periods of economic slowdown or recession may also depress the prices at which off-lease vehicles may be sold or delay the timing of these sales. As a result, the proceeds received by the titling trust upon disposition of leased vehicles may be reduced and may not be sufficient to pay amounts owing on the notes.] | ||
Retention of the notes by the depositor or an affiliate of the depositor may reduce the liquidity of such notes. | Some or all of one or more classes of notes may be retained or purchased by the depositor or an affiliate of the depositor. Accordingly, the market for such a retained class of notes may be less liquid than would otherwise be the case. In addition, if any retained notes are subsequently sold in the secondary market, demand and market price for notes of that class already in the market could be adversely affected. | |
Credit scores and historical loss experience may not accurately predict the likelihood of losses on the leases. | Information regarding credit scores for the lessees obtained at the time of origination of the related lease is presented in “The Leases—Representations, Warranties and Covenants—Eligibility Criteria and Portfolio Characteristics” in this prospectus supplement. A credit score purports only to be a measurement of the relative degree of risk a borrower represents to a lender, i.e., that a borrower with a higher score is statistically expected to be less likely to default in payment than a borrower with a lower score. Neither the depositor, the sponsor nor any other party makes any representations or warranties as to any lessee’s current credit score or the actual performance of any lease or that a particular credit score should be relied upon as a basis for an expectation that a lease will be paid in accordance with its terms. | |
Additionally, historical loss and delinquency information set forth in this prospectus supplement under “The Leases—Representations, Warranties and Covenants—Eligibility Criteria and Portfolio Characteristics” was affected by several variables, including general economic conditions and market residual values, that are likely to differ in the future. Therefore, there can be no assurance that the net loss |
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experience calculated and presented in this prospectus supplement with respect to VW Credit’s managed portfolio of leases will reflect actual experience with respect to the leases allocated to the Transaction SUBI. There can be no assurance that the future delinquency or loss experience of the servicer with respect to the leases will be better or worse than that set forth in this prospectus supplement with respect to VW Credit’s managed portfolio. However, delinquencies and losses with respect to leases generally have trended higher during periods of economic uncertainty (including the current period of economic slowdown), and these negative trends may continue. |
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• | to establish a special unit of beneficial interest in the origination trust (the“Transaction SUBI”); and | ||
• | to allocate a separate portfolio of leases and the related vehicles leased under the leases and some related assets of the origination trust to the Transaction SUBI. A lease, the related leased vehicle and the other origination trust assets directly related to the lease and leased vehicle are collectively called a“Unit”, and all of the Units allocated to the Transaction SUBI are called the“Included Units.” |
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• | purchase the Transaction SUBI Certificate from VW Credit; | ||
• | [deposit the pre-funded amount, if any, into the pre-funding account; and] | ||
• | make the initial deposit into the reserve account. |
• | issuing, selling, transferring and exchanging the notes and the certificates of beneficial interest in the issuing entity; | ||
• | acquiring the Transaction SUBI Certificate and the other property of the issuing entity; | ||
• | making deposits to and withdrawals from the collection account, the reserve account [, swap termination payment account] and the principal distribution account; | ||
• | assigning, granting, transferring, mortgaging, conveying and pledging the property of the issuing entity; |
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• | paying the organizational, start-up and transactional expenses of the issuing entity; | ||
• | making payments on the notes and distributions on the issuing entity’s certificate; | ||
• | holding, managing and distributing to the holders of the issuing entity’s certificate any portion of the issuing entity property released from the lien of indenture; | ||
• | entering into and performing its obligations under the transaction documents to which it is a party; | ||
• | engaging in other transactions, including entering into agreements, that are necessary, suitable or convenient to accomplish, or that are incidental to or connected with, any of the foregoing activities; and | ||
• | subject to compliance with the transaction documents, engaging in such other activities as may be required in connection with conservation of the issuing entity property and the making of distributions to the holders of the notes and the certificate. | ||
The issuing entity may not engage in any additional activities other than in connection with the foregoing purposes or other than as required or authorized by the terms of the issuing entity’s trust agreement or the other transaction documents [or the Delaware Statutory Trust Act]. |
Transaction SUBI Certificate | $ | [___________] | ||
[Pre-funding Account] | $ | [___________] | ||
Reserve Account | $ | [___________] |
Class A-1 Asset Backed Notes | $ | [___________] | ||
Class A-2 Asset Backed Notes | $ | [___________] | ||
Class A-3 Asset Backed Notes | $ | [___________] | ||
Class A-4 Asset Backed Notes | $ | [___________] | ||
[Class B Asset Backed Notes] | $ | [___________] | ||
Certificate | ||||
Total | $ | [___________] | ||
S-33
• | the Transaction SUBI Certificate, evidencing a 100% beneficial interest in the Transaction SUBI and the Included Units, including the collections thereunder after [ , ___] (the“cutoff date”); | ||
• | funds on deposit in the reserve account, the principal distribution account and the collection account (including investment earnings—net of losses and expenses—on amounts on deposit therein); | ||
• | the rights of the depositor, as buyer, under the SUBI Sale Agreement; | ||
• | the rights of the issuing entity, as buyer, under the SUBI Transfer Agreement; | ||
• | the rights of the issuing entity as a third-party beneficiary under the base servicing agreement, origination trust agreement and the supplements to those agreements, to the extent relating to the Included Units; and | ||
• | [the rights of the issuing entity under the interest rate swap agreement and the amounts payable to the issuing entity thereunder; and] | ||
• | all proceeds of the foregoing, provided that, with respect to sales proceeds, actual sales proceeds will not constitute part of the issuing entity property (as described under “The Transaction Documents— Like Kind Exchange Program” in the accompanying prospectus). |
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• | Was originated out of the lease of a new [or used] vehicle. | ||
• | Has a lessee which (a) is a resident of, or organized under the laws of and with its chief executive office in, the United States, (b) is not an affiliate of VW Credit, (c) is not a government or a governmental subdivision or agency, (d) is not shown on the servicer’s records as a debtor in a pending bankruptcy proceeding and (e) is not the lessee of any defaulted Unit. |
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• | Has a remaining term to maturity, as of the cutoff date less than [___] months and had an original lease term greater than or equal to [___] months and less than or equal to [___] months. | ||
• | Provides for substantially equal monthly payments. | ||
• | Is not more than [30] days past due as of the cutoff date and is not a defaulted lease. | ||
• | Was originated in compliance with, and complies in all material respect with, all material applicable legal requirements. | ||
• | Is the valid, legal, and binding payment obligation of the related lessee, enforceable against that lessee in accordance with its terms subject to no offset, counterclaim, defense or other lien, security interest, mortgage, pledge or encumbrance in, of or on that lease in favor of any other person, except for those liens permitted under the transaction documents. | ||
• | Is payable solely in U.S. dollars. | ||
• | The Securitization Value of the related Unit, as of the cutoff date, is no greater than $[___]. | ||
• | Does not require the lessee to consent to the transfer, sale or assignment of the rights of the origination trust under that lease. | ||
• | Does not, in whole or in part, materially contravene any law, rule or regulation applicable thereto (including, without limitation, those relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy). | ||
• | Was generated in the ordinary course of the origination trust’s business. | ||
• | Provides for level payments that fully amortize the adjusted capitalized cost of the lease to the related stated residual value over the lease term. | ||
• | Was originated in compliance with the servicer’s customary servicing practices. | ||
• | Is evidenced by only one original of the related lease, which is held by the servicer on behalf of the origination trust. | ||
• | Has no credit-related recourse to the related dealer. | ||
• | Was originated on or after [ , ___]. | ||
• | Is in full force and effect, and has not been satisfied, subordinated or rescinded. | ||
• | Requires the related lessee to obtain physical damage insurance covering the related leased vehicle in accordance with the servicer’s customary servicing practices. | ||
• | Is with respect to a Volkswagen brand or Audi brand vehicle [or other brand vehicle]. |
S-41
Lease Securitization | [_-_] | |||
Closing Date | [_______, ____] | |||
Cutoff Date | [_______, ____] | |||
Number of Leases | ||||
Original Book Value (1) | ||||
Original Securitization Value | ||||
Average | ||||
Minimum | ||||
Maximum | ||||
Percentage New Vehicles | ||||
Percentage Audi Vehicles | ||||
Percentage Volkswagen Vehicles | ||||
Base Residual | ||||
Average | ||||
Minimum | ||||
Maximum | ||||
Original Term (Months) | ||||
Weighted Average (2) | ||||
Minimum | ||||
Maximum | ||||
Remaining Term (Months) | ||||
Weighted Average (2) |
* FICO® is a federally registered trademark of Fair, Isaac & Company. |
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Minimum | ||||
Maximum | ||||
Seasoning (Months) (3) | ||||
Weighted Average (2) | ||||
Minimum | ||||
Maximum | ||||
Weighted Average FICO® Score (4) (5) | ||||
Minimum (5) (6) | ||||
Maximum (5) (6) | ||||
Base Residual as a % of Securitization Value | ||||
Base Residual as a % of MSRP |
(1) | Original Book Value is determined based on capitalized amounts of the leases less the accumulated depreciation of the related leased vehicles. | |
(2) | Weighted average by Securitization Value. | |
(3) | Seasoning refers to the number of months elapsed since origination of the leases. | |
(4) | FICO® is a federally registered trademark of Fair, Isaac & Company. | |
(5) | FICO® scores are calculated as of the origination of the related leases and excludes lessees for which no FICO® score was available. | |
(6) | Less than 5% of the obligor FICO® scores (based on the aggregate Securitization Value of the leases) exceeds [ ] and less than 5% of the obligor FICO® scores (based on the aggregate Securitization Value of the leases) falls below [ ]. Range of FICO® scores represents 90% of the aggregate Securitization Value as of the origination of the related lease. |
Calculation Date | Securitization Value Formula | |
as of any date other than its maturity date | the sum of the present values, calculated using a discount rate equal to the Securitization Rate, of (a) the aggregate monthly payments remaining on the lease (including monthly payments due but not yet paid) and (b) the Base Residual Value of the related leased vehicle and | |
as of its maturity date | the Base Residual Value of the related leased vehicle. |
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• | the related leased vehicle was sold or otherwise disposed of by the servicer following (i) the related lease becoming a defaulted lease or (ii) the scheduled or early termination (including any early termination by the related lessee) of the related lease; | ||
• | the related lease became a defaulted lease or the related lease terminated or expired more than 90 days prior to the end of that collection period and the related leased vehicle was not sold; or | ||
• | the servicer’s records, in accordance with its customary servicing practices, disclose that all insurance proceeds expected to be received have been received by the servicer following a casualty or other loss with respect to the related leased vehicle. |
• | on which any payment is past due [90 or more] days; | ||
• | for which the related vehicle has been repossessed but which has not been charged off; or | ||
• | which has been charged off in accordance with the servicer’s customary servicing practices. |
S-44
Percentage | Percentage of | |||||||||||||||
of Total | Aggregate | Aggregate | ||||||||||||||
Number of | Number of | Securitization | Securitization | |||||||||||||
Leases | Leases(1) | Value(1) | Value(1) | |||||||||||||
A6 | % | $ | % | |||||||||||||
S6 | % | $ | % | |||||||||||||
RS6 | % | $ | % | |||||||||||||
PASSAT | % | $ | % | |||||||||||||
A4 | % | $ | % | |||||||||||||
S4 | % | $ | % | |||||||||||||
JETTA | % | $ | % | |||||||||||||
ALL ROAD | % | $ | % | |||||||||||||
TOUAREG. | % | $ | % | |||||||||||||
BEETLE | % | $ | % | |||||||||||||
TT | % | $ | % | |||||||||||||
GOLF | % | $ | % | |||||||||||||
GTI | % | $ | % | |||||||||||||
VW Other | % | $ | % | |||||||||||||
Total | 100.00 | % | $ | (2) | 100.00 | % | ||||||||||
(1) | Balances and percentages may not add to total due to rounding. | |
(2) | Based on the [statistical] Securitization Rate. |
Percentage | Percentage of | |||||||||||||||
of Total | Aggregate | Aggregate | ||||||||||||||
Number of | Number of | Securitization | Securitization | |||||||||||||
Original Term | Leases | Leases(1) | Value(1) | Value(1) | ||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % |
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Percentage | Percentage of | |||||||||||||||
of Total | Aggregate | Aggregate | ||||||||||||||
Number of | Number of | Securitization | Securitization | |||||||||||||
Original Term | Leases | Leases(1) | Value(1) | Value(1) | ||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
Total | 100.00 | % | $ | (2) | 100.00 | % | ||||||||||
(1) | Balances and percentages may not add to total due to rounding. | |
(2) | Based on the [statistical] Securitization Rate. |
Percentage | Percentage of | |||||||||||||||
of Total | Aggregate | Aggregate | ||||||||||||||
Number of | Number of | Securitization | Securitization | |||||||||||||
Remaining Term | Leases | Leases(1) | Value(1) | Value(1) | ||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
% | $ | % | ||||||||||||||
Total | 100.00 | % | $ | (2) | 100.00 | % | ||||||||||
(1) | Balances and percentages may not add to total due to rounding. | |
(2) | Based on the [statistical] Securitization Rate. |
Percentage of | Percentage of | |||||||||||||||
Total | Aggregate | Aggregate | ||||||||||||||
Number | Number of | Securitization | Securitization | |||||||||||||
Quarter of Maturity | of Leases | Leases(1) | Value(1) | Value(1) | ||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % |
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Percentage of | Percentage of | |||||||||||||||
Total | Aggregate | Aggregate | ||||||||||||||
Number | Number of | Securitization | Securitization | |||||||||||||
Quarter of Maturity | of Leases | Leases(1) | Value(1) | Value(1) | ||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
[______] Quarter [______] | % | $ | % | |||||||||||||
Total | 100.00 | % | $ | (2) | 100.00 | % | ||||||||||
(1) | Balances and percentages may not add to total due to rounding. | |
(2) | Based on the [statistical] Securitization Rate. |
Percentage | Percentage of | |||||||||||||||
of Total | Aggregate | Aggregate | ||||||||||||||
Number of | Number of | Securitization | Securitization | |||||||||||||
State of Origination | Leases | Leases(1) | Value(1) | Value(1) | ||||||||||||
Alabama | % | $ | % | |||||||||||||
Alaska | ||||||||||||||||
Arizona | ||||||||||||||||
Arkansas | ||||||||||||||||
California | ||||||||||||||||
Colorado | ||||||||||||||||
Connecticut | ||||||||||||||||
Delaware | ||||||||||||||||
District of Columbia | ||||||||||||||||
Florida | ||||||||||||||||
Georgia | ||||||||||||||||
Hawaii | ||||||||||||||||
Idaho | ||||||||||||||||
Illinois | ||||||||||||||||
Indiana | ||||||||||||||||
Iowa | ||||||||||||||||
Kansas | ||||||||||||||||
Kentucky | ||||||||||||||||
Louisiana | ||||||||||||||||
Maine | ||||||||||||||||
Maryland | ||||||||||||||||
Massachusetts | ||||||||||||||||
Michigan | ||||||||||||||||
Minnesota | ||||||||||||||||
Mississippi | ||||||||||||||||
Missouri | ||||||||||||||||
Montana | ||||||||||||||||
Nebraska | ||||||||||||||||
Nevada | ||||||||||||||||
New Hampshire |
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Percentage | Percentage of | |||||||||||||||
of Total | Aggregate | Aggregate | ||||||||||||||
Number of | Number of | Securitization | Securitization | |||||||||||||
State of Origination | Leases | Leases(1) | Value(1) | Value(1) | ||||||||||||
New Jersey | ||||||||||||||||
New Mexico | ||||||||||||||||
New York | ||||||||||||||||
North Carolina | ||||||||||||||||
North Dakota | ||||||||||||||||
Ohio | ||||||||||||||||
Oklahoma | ||||||||||||||||
Oregon | ||||||||||||||||
Pennsylvania | ||||||||||||||||
Rhode Island | ||||||||||||||||
South Carolina | ||||||||||||||||
South Dakota | ||||||||||||||||
Tennessee | ||||||||||||||||
Texas | ||||||||||||||||
Utah | ||||||||||||||||
Vermont | ||||||||||||||||
Virginia | ||||||||||||||||
Washington | ||||||||||||||||
West Virginia | ||||||||||||||||
Wisconsin | ||||||||||||||||
Total | 100.00 | % | $ | (2) | 100.00 | % | ||||||||||
(1) | Balances and percentages may not add to total due to rounding. | |
(2) | Based on the [statistical] Securitization Rate. |
Percent of | ||||||||||||||||
Percent of | Aggregate | Aggregate | ||||||||||||||
Number of | Total Number | Securitization | Securitization | |||||||||||||
FICO Score Range | Leases | of Leases(1) | Value(1)(2) | Value(1)(2) | ||||||||||||
No FICO | % | $ | % | |||||||||||||
500 to 549 | ||||||||||||||||
550 to 599 | ||||||||||||||||
600 to 649 | ||||||||||||||||
650 to 699 | ||||||||||||||||
700 to 749 | ||||||||||||||||
750 to 799 | ||||||||||||||||
800 to 849 | ||||||||||||||||
850 to 899 | ||||||||||||||||
Total | $ | % | ||||||||||||||
(1) | Balances and percentages may not add to total due to rounding. |
S-48
(2) | Based on [statistical] Securitization Rate. |
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(Dollars in Thousands)
At [ ], | At [ ], | |||||||||||||||||||||||||||
[ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] | ||||||||||||||||||||||
Dollar Amount of Lease Contracts Outstanding(3) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Number of Lease Contracts Outstanding |
Units | % | Units | % | Units | % | Units | % | Units | % | Units | % | Units | % | |||||||||||||||||||||||||||||||||||||||||||
Number of Delinquent Lease Contracts(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31-60 Days | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
61-90 Days | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
91 Days or More | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total 31 days or more |
(1) | Data presented in the table is based upon lease balances for new and used vehicles financed by VW Credit, including those that have been sold but are serviced by VW Credit. | |
(2) | VW Credit considers a payment to be past due or delinquent when a lessee fails to make at least 75% of the scheduled monthly payment by the related due date. | |
(3) | Outstanding balance is the net book value. | |
(4) | Balances and percentages may not add to total due to rounding. |
(Dollars in Thousands)
At or For the [ ] Months | ||||||||||||||||||||||||||||
Ended [ ], | As or For the Twelve Months Ended [ ], | |||||||||||||||||||||||||||
[ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] | ||||||||||||||||||||||
Dollar Amount of Lease Contracts Outstanding(3) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Dollar Amount of Average Lease Contracts Outstanding(3) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Number of Lease Contracts Outstanding Average Number of Lease Contracts Outstanding | ||||||||||||||||||||||||||||
Repossessions: | ||||||||||||||||||||||||||||
Number of Repossessions | ||||||||||||||||||||||||||||
Number of Repossessions as a Percentage of the Average Number of Lease Contracts Outstanding | ||||||||||||||||||||||||||||
Charge-offs(4) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Recoveries(5) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Net Losses | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Net Losses as a Percentage of Average Dollar Amount of Lease Contracts Outstanding(3) |
(1) | Averages are computed by taking a simple average of the month end outstanding amounts for each period presented. | |
(2) | Data presented in the table is based upon lease balances for new and used vehicles financed by VW Credit, including those that have been sold but are serviced by VW Credit. | |
(3) | Outstanding balance is the net book value. | |
(4) | Charge-offs generally represent the total aggregate net outstanding balance of the lease contracts determined to be uncollectible in the period less proceeds from disposition of the related leased vehicles, other than recoveries described in Note (5). | |
(5) | Recoveries generally include the net amounts received with respect to lease contracts previously charged off. | |
(6) | Balances and percentages may not add to total due to rounding. |
S-50
For the [ ] Months | ||||||||||||||||||||||||||||
Ended [ ], | For the Twelve Months Ended [ ] | |||||||||||||||||||||||||||
[ ] | [ ] | [ ] | [ ] | [ ] | [ ] | [ ] | ||||||||||||||||||||||
Total Number of Vehicles Scheduled to Terminate | ||||||||||||||||||||||||||||
Total ALG Residual on Vehicles Scheduled to Terminate(3) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Number of Vehicles Returned to VW Credit(4) | % | % | % | % | % | % | % | |||||||||||||||||||||
Vehicles Returned to VW Credit Ratio | % | % | % | % | % | % | % | |||||||||||||||||||||
Total Gain/(Loss) on ALG Residuals on Vehicles Returned to VW Credit(5) | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Average Gain/(Loss) on ALG Residuals on Vehicles Returned to VW Credit | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Total ALG Residual on Vehicles Returned to VW Credit | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Total Gain/(Loss) on ALG Residuals on Vehicles Returned to VW Credit as a Percentage of ALG Residuals of Returned Vehicles Sold by VW Credit | % | % | % | % | % | % | % | |||||||||||||||||||||
Total Gain/(Loss) on ALG Residuals on Vehicles Returned to VW Credit as a Percentage of ALG Residuals of Vehicles Scheduled to Terminate | % | % | % | % | % | % | % | |||||||||||||||||||||
Average Stated Residual Value Percentage of MSRP | ||||||||||||||||||||||||||||
Average ALG Residual Percentage of MSRP | ||||||||||||||||||||||||||||
Percentage Difference |
(1) | Includes leases which VW Credit has sold to third parties but continues to service. The leases are grouped by scheduled maturity date. | |
(2) | Includes only new [and used] Audi and VW leases with obligors in the United States with a VW Credit residual value less than MSRP. | |
(3) | MSRP ALG Residual Value is calculated as the MSRP ALG Residual Percentage multiplied by the lesser of MSRP or the MRM ALG Residual. | |
(4) | Excludes repossessions and vehicles terminating [ ] days or more prior to scheduled maturity. | |
(5) | Gain/(Loss) calculated as (a) the sum of (i) gross sales proceeds plus (ii) excess wear and use and excess mileage charges paid by lessees minus (b) the sum of (i) auction expenses plus (ii) certification expenses plus (iii) MSRP ALG Residual. | |
(6) | All periods presented exclude the [ ] family of vehicles ([ ] and [ ]). | |
(7) | Balances and percentages may not add to total due to rounding. |
S-51
(1) | In month one, prepayments will occur at [___]% ABS and increase by [___]% ABS each month until reaching [___]% ABS in the [___] month of the life of the lease. | ||
(2) | In month [___] through [___], prepayments remain at [___]%. | ||
(3) | In month [___], prepayments decrease to [___]% ABS and remain at that level until the original outstanding principal balance of the contract has been paid in full. |
S-52
• | all monthly payments are timely received and no lease is ever delinquent; | ||
• | each fiscal month of VW Credit is equivalent to a calendar month; | ||
• | each lease payment is made on the last day of each calendar month beginning in [___]; | ||
• | no repurchase payment is required to be made by VW Credit in respect of any Included Unit; | ||
• | there are no losses in respect of the leases; | ||
• | payments on the notes are made on the [20th] day of each month, whether or not that day is a business day; | ||
• | [there are no termination payments due to the issuing entity or to the swap counterparty as a result of the termination of the interest rate swap agreement]; | ||
• | the interest on the Class A-1 notes is based on an actual/360 day count and the interest on the Class A-2 notes, the Class A-3 notes [and] the Class A-4 notes [and the Class B notes] is based on a 30/360 day count; | ||
• | the servicing fee is [1.00]% per annum (or, in the case of the initial collection period, is equal to one-sixth of one percent of the initial aggregate securitization value); | ||
• | all prepayments on the leases are prepayments in full (and the residual values of the related leased vehicles are paid in full); | ||
• | the reserve account is [initially] funded with an amount equal to $[___]; | ||
• | the aggregate Securitization Value of the Included Units as of the cutoff date is $[___], based on the [statistical] Securitization Rate; | ||
• | [Insert Pre-funding Assumptions]; and | ||
• | Interest accrues on the notes at the following coupon rates: Class A-1 notes, [___]%; Class A-2 notes, [___]%; Class A-3 notes, [___]%; [and] Class A-4 notes, [___]% [and Class B notes, [___]%;] | ||
• | the closing date (the“closing date”) is assumed to be [____________, ___]. |
S-53
Prepayment Assumption | ||||||||||||||||||||||||
Payment Date | 0% | 50% | 75% | 100% | 150% | 200% | ||||||||||||||||||
Closing Date | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
Weighted Average Life (years) (2) | ||||||||||||||||||||||||
Weighted Average Life to Optional Purchase (years)(2)(3) | ||||||||||||||||||||||||
(1) | Percentages assume no optional purchase occurs. | |
(2) | The weighted average life of the Class A-1 notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the closing date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a). | |
(3) | Assumes depositor exercises its optional purchase right on the first payment date on which it is permitted to do so. |
Prepayment Assumption | ||||||||||||||||||||||||
Payment Date | 0% | 50% | 75% | 100% | 150% | 200% | ||||||||||||||||||
Closing Date | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
Weighted Average Life (years)(2) | ||||||||||||||||||||||||
Weighted Average Life to Optional Purchase (years)(2)(3) | ||||||||||||||||||||||||
�� |
(1) | Percentages assume no optional purchase occurs. | |
(2) | The weighted average life of the Class A-2 notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the closing date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a). | |
(3) | Assumes depositor exercises its optional purchase right on the first payment date on which it is permitted to do so. |
Prepayment Assumption | ||||||||||||||||||||||||
Payment Date | 0% | 50% | 75% | 100% | 150% | 200% | ||||||||||||||||||
Closing Date | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
Weighted Average Life (years)(2) | ||||||||||||||||||||||||
Weighted Average Life to Optional Purchase (years)(2)(3) | ||||||||||||||||||||||||
(1) | Percentages assume no optional purchase occurs. | |
(2) | The weighted average life of the Class A-3 notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the closing date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a). |
S-54
(3) | Assumes depositor exercises its optional purchase right on the first payment date on which it is permitted to do so. |
Prepayment Assumption | ||||||||||||||||||||||||
Payment Date | 0% | 50% | 75% | 100% | 150% | 200% | ||||||||||||||||||
Closing Date | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
Weighted Average Life (years)(2) | ||||||||||||||||||||||||
Weighted Average Life to Optional Purchase (years)(2)(3) | ||||||||||||||||||||||||
(1) | Percentages assume no optional purchase occurs. | |
(2) | The weighted average life of the Class A-4 notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the closing date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a). | |
(3) | Assumes depositor exercises its optional purchase right on the first payment date on which it is permitted to do so. |
Prepayment Assumption | ||||||||||||||||||||||||
Payment Date | 0% | 50% | 75% | 100% | 150% | 200% | ||||||||||||||||||
Closing Date | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
_____________ | ||||||||||||||||||||||||
Weighted Average Life (years)(2) | ||||||||||||||||||||||||
Weighted Average Life to Optional Purchase (years)(2)(3) | ||||||||||||||||||||||||
(1) | Percentages assume no optional purchase occurs. | |
(2) | The weighted average life of the Class B notes is determined by (a) multiplying the amount of each distribution in reduction of principal amount by the number of years from the closing date to the date indicated, (b) adding the results and (c) dividing the sum by the aggregate distributions in reduction of principal amount referred to in clause (a). | |
(3) | Assumes depositor exercises its optional purchase right on the first payment date on which it is permitted to do so. |
S-55
• | failure of the TALF investor at any time to be an “eligible borrower” as determined by the criteria in effect at the time the TALF loan was made; and | ||
• | the failure of certain representations and warranties of the borrower made in the MLSA to be true, including; |
• | that the MLSA is a binding agreement enforceable against the borrower; | ||
• | that the TALF agent is authorized to enter into the MLSA and act on the borrower’s behalf; | ||
• | that the security interest of the FRBNY in the collateral for the TALF loan is valid, perfected and subject to no adverse claims; | ||
• | that the ABS collateral pledged at the time the TALF loan is made or assumed is “eligible collateral” under TALF, to the borrower’s knowledge based on its review of the related offering materials. |
As of the Cut-off Date, the assets underlying the notes had the following characteristics: |
• | All of the assets underlying the notes are leases of cars and light trucks and the related leased vehicles. | ||
• | All of the leases were U.S. dollar-denominated. | ||
• | At least 95% of the aggregate securitization value of the underlying Units relate to leases that are both (a) originated by U.S. organized entities or institutions or U.S. branches or agencies of foreign banks and (b) made to U.S. domiciled obligors. |
S-56
• | The securitization value of Units related to leases originated on or after October 1, 2007 is at least 85% of the aggregate securitization value of the Units. | ||
• | The weighted average FICO score of the lessees (weighted by the principal balance) is 680 or greater (assuming for purposes of calculating the weighted average that any lessee without an available credit score has a credit score of 300); which is “prime” for automobile leases under TALF. | ||
• | The Units are not exposures to “cash-backed ABS” or “synthetic ABS” within the meaning of the TALF program. |
• | The notes will be U.S. dollar-denominated cash (not synthetic) asset-backed securities. | ||
• | Each class of notes will have received the ratings specified in “Summary of Terms—Ratings” above. None of the notes will have received a credit rating below the highest investment-grade rating category from any of Standard & Poor’s, Moody’s or Fitch. Such ratings will be obtained without the benefit of any third-party guarantee, and no class has been placed on review or watch for downgrade. | ||
• | The notes will be issued in book-entry form and cleared through The Depository Trust Company or “DTC”, in the name of Cede & Co., as nominee of DTC. | ||
• | The notes will not bear interest payments that step up or step down to predetermined levels on specific dates. | ||
• | The notes will be obligations of the issuing entity only, and no payments of principal of or interest on the notes will be guaranteed by any third-party. | ||
• | The notes are not subject to an optional redemption other than a customary clean-up call, as described in “Description of the Transfer Agreements and the Administration Agreement—Redemption of the Notes”. | ||
• | The weighted average life to maturity (in years) of each class of notes (assuming 75% of the Prepayment Assumption, as described under “Weighted Average Life of the Securities”) will be five years or less. The weighted average life to maturity for the notes calculated in accordance with the TALF prepayment assumptions is as follows: |
Class | Weighted Average Life to Maturity | |||
Class A-1 Notes | ||||
Class A-2 Notes | ||||
Class A-3 Notes | ||||
Class A-4 Notes |
• | The CUSIP number for each class of notes will be as set forth in “Summary of Terms—CUSIP Numbers” in this prospectus supplement. |
• | A nationally recognized certified public accounting firm that is registered with the Public Company Accounting Oversight Board has delivered an accountants’ report to the FRBNY in a form prescribed by the FRBNY within the time frame required by the FRBNY. |
S-57
• | The sponsor will execute and deliver an undertaking to the FRBNY, in the form prescribed by the FRBNY, no later than four days before the closing date, under which the sponsor will agree to indemnify FRBNY and TALF LLC and their respective affiliates for certain losses. | ||
• | Each of the sponsor and the issuing entity will execute the “Certification as to TALF Eligibility” in the most recent form prescribed by the FRBNY as of the date of this prospectus supplement, a copy of which is attached to this prospectus supplement as [Appendix A]. | ||
• | The sponsor will submit to the FRBNY the final credit rating letters from each of [Standard & Poor’s][,] [and] [Moody’s] [and Fitch] no later than 10:00 a.m. on the closing date. |
S-58
• | Actual/360.Interest on the Class A-1 notes [and the Class A-4 notes] will be calculated on the basis of actual days elapsed during the applicable interest period, but assuming a 360-day year. This means that the interest due on each payment date for the Class A-1 notes [and the Class A-4 notes] will be the product of (i) the outstanding principal balance on the Class A-1 notes [and the Class A-4 notes], (ii) the related interest rate and (iii) the actual number of days since the previous payment date (or, in the case of the first payment date, since the closing date), divided by 360. | ||
• | 30/360.Interest on the Class A-2 notes, the Class A-3 notes, [the Class A-4 notes] [and the Class B notes] will be calculated on the basis of a 360-day year of twelve 30-day months. This means that the interest due on each payment date for the Class A-2 notes, the Class A-3 notes, [the Class A-4 notes] [and the Class B notes] will be the product of (i) the outstanding principal balance of the related class of notes, (ii) the applicable interest rate and (iii) 30 (or in the case of the first payment date, ______), divided by 360. |
S-59
• | Interest Accrual Periods. Interest will accrue on the outstanding principal amount of each class of notes as of the close of business on the prior payment date, or in the case of the first payment date, the closing date. Interest accrued as of any payment date but not paid on that payment date will be payable on the next payment date, together with interest on such amount at the applicable interest rate (to the extent lawful). |
• | the First Priority Principal Distribution Amount (as defined in this prospectus supplement); | ||
• | [the Second Priority Principal Distribution Amount (as defined in this prospectus supplement);] and | ||
• | the Regular Principal Distribution Amount (as defined in this prospectus supplement). |
S-60
• | for the Class A-1 notes, [ ] payment date; | ||
• | for the Class A-2 notes, [ ] payment date; | ||
• | for the Class A-3 notes, [ ] payment date; | ||
• | for the Class A-4 notes, [ ] payment date; and | ||
[• | for the Class B notes, [ ] payment date.] |
S-61
S-62
• | failure to make payments due under the interest rate swap agreement; or | ||
• | the occurrence of certain bankruptcy and insolvency events of the issuing entity or the swap counterparty. | ||
A termination event under the interest rate swap agreement includes, among other things: |
• | illegality of the transactions contemplated by the interest rate swap agreement; | ||
• | the issuing entity amends any transaction document without the prior consent of the swap counterparty if such consent is required under the transaction documents; | ||
• | any redemption, acceleration, auction, clean-up call or other prepayment in full, but not in part, of the notes under the indenture or any event of default under the indenture caused by the failure of the issuing entity to make a payment or maintain solvency that results in certain rights or remedies being exercised with respect to the collateral; | ||
• | failure of the swap counterparty to provide financial information as required by Regulation AB as specified in the interest rate swap agreement, which failure may not constitute a termination event if the swap counterparty; | ||
• | determines in good faith that it is unable to provide that financial information; and | ||
• | assigns its rights and obligations under the interest rate swap agreement to a substitute swap counterparty that is able to provide that information and that satisfies the Rating Agency Condition; | ||
• | failure of the swap counterparty to maintain its credit rating at certain levels required by the interest rate swap agreement, which failure may not constitute a termination event if the swap counterparty, among other things: | ||
• | posts collateral; | ||
• | assigns its rights and obligations under the interest rate swap agreement to a substitute swap counterparty that satisfies the Rating Agency Condition; or | ||
• | obtains an unconditional guarantee or other similar assurance in respect of the swap counterparty’s obligations under the interest rate swap agreement that satisfies the Rating Agency Condition. |
S-63
AGREEMENT
S-64
• | the collection account; | ||
• | the principal distribution account; | ||
• | the reserve account[; and | ||
• | the pre-funding account]. |
S-65
S-66
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S-68
• | Supplemental Servicing Fees; | ||
• | payments allocable to sales, use or other taxes (which will be collected by the servicer and remitted to the applicable governmental authority or used to reimburse the servicer for payment of those amounts in accordance with the servicer’s customary servicing practices); | ||
• | payments allocable to premiums for force-placed insurance policies purchased by the servicer on behalf of any lessee (which will be collected by the servicer and remitted to the applicable insurance company (or if those amounts were paid by the servicer, to the servicer) in accordance with the servicer’s customary servicing practices); | ||
• | payments allocable to fines for parking violations incurred by any lessee but assessed to the origination trust as the owner of the related leased vehicle (which will be collected by the servicer and remitted to the applicable governmental authority (or if those amounts were paid by the servicer, to the servicer) in accordance with the customary servicing practices); and | ||
• | rebates of premiums with respect to the cancellation of any insurance policy or service contract. |
S-69
S-70
S-71
S-72
S-73
S-74
Party | Priority in | |||||
Type of Fee | Amount of Fee | Receiving Fee | Distribution | |||
Servicing Fee(1) | Product of (a) one-twelfth (or, in the case of the initial collection period, one-sixth), (b) [1.00]% and (c) the aggregate Securitization Value of all Included Units as of the beginning of that collection period, or in the case of the first payment date, at the cutoff date2 | servicer | Payable pro rata with administration fees prior to payment of [net amounts due to the swap counterparty and] interest and principal on the notes | |||
Administration Fee | $[___] as compensation for its services during the preceding collection period | administrator | Payable pro rata with servicing fees prior to payment of [net amounts due to the swap counterparty and] interest and principal on the notes |
S-75
[Net amounts due to the Swap Counterparty] | [Net amount due on each payment date from the issuing entity to the swap counterparty under the Swap Agreement for the related Collection Period] | [swap counterparty] | [Payable prior to payment of interest and principal on the notes] | |||
[Swap termination payments] | [Market value of the Swap Agreement based on market quotations of the cost of entering into interest rate swap agreements with the same terms and conditions that would have the effect of preserving the full payment obligations of the parties in accordance with the procedures set forth in the Swap Agreement.] | [swap counterparty] | [Payable pari passu with payment of interest on the notes] | |||
Unpaid Indenture Trustee Compensation or Indemnification Payments(1) | $[___] as compensation for its services on a per annum basis and any indemnification amounts due under the transaction documents to the extent not paid under the transaction documents | indenture trustee | Payable following payment of interest and principal on the notes and funding of the reserve account | |||
Unpaid Owner Trustee Compensation or Indemnification Payments(1) | $[___] as compensation for its services on a per annum basis and any indemnification amounts due under the transaction documents to the extent not paid under the transaction documents | owner trustee | Payable following payment of interest and principal on the notes and funding of the reserve account | |||
Unpaid SUBI Trustee Compensation or Indemnification Payments(1) | $[___] as compensation for its services on a per annum basis and any indemnification amounts due under the transaction documents to the extent not paid under the transaction documents | SUBI trustee | Payable following payment of interest and principal on the notes and funding of the reserve account |
(1) | VW Credit, as the administrator pursuant to the administration agreement or as the servicer pursuant to the Servicing Agreement, as applicable, is required to pay fees, expenses and indemnity payments of the indenture trustee, the owner trustee and the SUBI trustee. However, to the extent that the administrator or the servicer fails to make these payments, fees, expenses and indemnity payments will be paid out of Available Funds to the extent they have not been previously paid when due. | |
(2) | [Reimbursable Expenses will be paid to the servicer on any day after the servicer supplies the origination trustee and indenture trustee with an officer’s certificate setting forth the calculations for such Reimbursable Expenses. See [“Description of the Transfer Agreements and the Administration Agreement—The Accounts—The Collection Account” in this prospectus supplement.] The formula for calculating Reimbursable Expenses may not be changed without the consent of all of the holders of the notes then outstanding and delivery of an opinion of counsel as to certain tax matters. See “Description of the Transfer Agreements and the Administration Agreement —Amendment Provisions” in this prospectus supplement.] |
S-76
S-77
S-78
• | a default for [five] days or more in the payment of interest on any note [of the controlling class after the same becomes due; | ||
• | a default in the payment of principal of a note on the related final scheduled payment date or the Redemption Date; | ||
• | a default in the observance or performance of any covenant or agreement of the issuing entity in the indenture, or any representation or warranty of the issuing entity made in the indenture or any related certificate or writing delivered pursuant to the indenture proves to have been incorrect in any material respect at the time made, which default or inaccuracy materially and adversely affects the interests of the noteholders, and the continuation of that default or inaccuracy for a period of [60] days after written notice thereof is given to the issuing entity by the indenture trustee or to the issuing entity and the indenture trustee by the holders of not less than a majority of the outstanding principal amount of the notes [of the controlling class] (excluding any notes owned by the issuing entity, the depositor, the servicer, the administrator or any of their respective affiliates); and |
S-79
• | the occurrence of certain events (which, if involuntary, remain unstayed for more than [90] days) of bankruptcy, insolvency, receivership or liquidation of the issuing entity; |
• | the issuing entity has deposited with the indenture trustee an amount sufficient to pay (1) all interest on and principal of the notes as if the indenture default giving rise to that declaration had not occurred, (2) all reasonable amounts previously advanced by the indenture trustee and its reasonable costs and expenses [(3) any amounts then due and payable by the issuing entity to the swap counterparty under the interest rate swap agreement]; and | ||
• | all indenture defaults—other than the nonpayment of principal of the notes that has become due solely due to that acceleration—have been cured or waived. |
• | the failure of the issuing entity to pay principal of or interest on the notes; and | ||
• | any default related to any covenant or provision of the indenture that cannot be modified or amended without the consent of 100% of the noteholders. |
S-80
• | the depositor elects to exercise the optional purchase and purchases the Transaction SUBI Certificate; | ||
• | 100% of the noteholders [and the swap counterparty] consent thereto; | ||
• | the proceeds of that sale are sufficient to pay in full all unpaid principal of and accrued interest on all outstanding notes [and all amounts due by the issuing entity to the swap counterparty]; or | ||
• | there has been an indenture default described in one of the first two bullet points under the caption “—Events of Default” above and the indenture trustee determines that the issuing entity property would not be sufficient on an ongoing basis to make all payments of principal of and interest on the notes as those payments would have become due if those obligations had not been declared due and payable, and the indenture trustee obtains the consent of [the swap counterparty and] holders of 662/3% of the outstanding principal amount of the notes, voting together as a single class. |
(a) | first,pro ratato the indenture trustee, the SUBI trustee and the owner trustee, for any accrued and unpaid fees, expenses and indemnity payments pursuant to the terms of the indenture, the origination trust agreement or the trust agreement, as applicable; provided, however, that aggregate expenses payable to the indenture trustee, the Transaction SUBI trustee and the owner trustee pursuant to thisclause (first)are limited to $100,000 per annum in the aggregate; |
S-81
(b) | second, to the servicer for reimbursement of all outstanding advances; | ||
(c) | third,pro rata, to the servicer, the servicing fee, together with amounts due in respect of unpaid servicing fees and to the administrator, the administration fee, together with any amounts due in respect of unpaid administration fees; | ||
(d) | fourth,pro rata, to the Class A noteholders to pay due and unpaid interest—including any overdue interest and, to the extent permitted under applicable law, interest on any overdue interest at the related interest rate [and, to the swap counterparty for any due and unpaid net swap payment]; | ||
(e) | [fifth, pro rata, (A) to the swap counterparty for any unpaid Senior Swap Termination Payments and (B) pro rata to the noteholders to pay due and unpaid interest — including any overdue interest and, to the extent permitted under applicable law, interest on any overdue interest at the related interest rate;] | ||
(f) | sixth, to the holders of the Class A-1 notes to pay outstanding principal on the Class A-1 notes; | ||
(g) | seventh, to the holders of the Class A-2 notes, the Class A-3 notes and the Class A-4 notes, on apro ratabasis, to pay outstanding principal on such notes; | ||
(h) | [eighth, to the Class B noteholders to pay due and unpaid interest—including any overdue interest and, to the extent permitted under applicable law, interest on any overdue interest at the related interest rate;] | ||
(i) | [ninth, to the holders of the Class B notes to pay outstanding principal on the Class B notes;] | ||
(j) | [(tenth, to the swap counterparty, any due and unpaid Subordinated Swap Termination Payment;] | ||
(k) | eleventh,pro ratato the indenture trustee, the SUBI trustee and the owner trustee, for any accrued and unpaid fees, expenses and indemnity payments; and | ||
(l) | twelfth, any remaining amounts to or at the direction of the holder of the certificate of the issuing entity (which initially will be the depositor). |
• | that noteholder previously has given the indenture trustee written notice of a continuing indenture default; | ||
• | noteholders holding not less than 25% of the outstanding principal amount of the notes have made written request to the indenture trustee to institute that proceeding in its own name as indenture trustee; | ||
• | that noteholder has offered the indenture trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in complying with the request to institute proceedings; |
S-82
• | the indenture trustee has for 60 days after its receipt of notice, request and offer of indemnity failed to institute that proceeding; and | ||
• | no direction inconsistent with the noteholders’ written request has been given to the indenture trustee during that 60-day period by noteholders holding at least a majority of the outstanding principal amount of the notes [of the controlling class]. |
• | ceases to satisfy the eligibility requirements of the indenture trustee; | ||
• | is subject to certain events of bankruptcy, insolvency, receivership or liquidation (which, if involuntary, remain unstayed for more than 30 days); or | ||
• | otherwise becomes incapable of acting. |
• | pay the indenture trustee from time to time compensation for its services in accordance with a fee letter between the administrator and the indenture trustee; |
S-83
• | reimburse the indenture trustee for all reasonable expenses, advances and disbursements reasonably incurred by it in connection with the performance of its duties as indenture trustee; and | ||
• | indemnify the indenture trustee for, and hold it harmless against, any loss, liability or expense, including reasonable attorneys’ fees, incurred by it in connection with the administration of the issuing entity or performance of its duties as indenture trustee. |
• | for any error of judgment made by it in good faith, unless it is proved that the indenture trustee was negligent in ascertaining the pertinent facts; | ||
• | with respect to any action it takes or omits to take in good faith in accordance with a direction received by it from the noteholders in accordance with the terms of the indenture; and | ||
• | for interest on any money received by it except as the indenture trustee and the issuing entity may agree in writing. |
• | as of each record date, within five days after that record date; | ||
• | within 30 days after receipt by the issuing entity of a written request for that list, as of not more than ten days before that list is furnished. |
S-84
S-85
• | the amendment of the indenture by a supplemental indenture where the consent of any noteholder is required; | ||
• | the amendment of the indenture by a supplemental indenture where the consent of any noteholder is not required and such amendment materially and adversely affects the interests of the certificateholder; | ||
• | the amendment, change or modification of the SUBI Transfer Agreement or the administration agreement, except to cure an ambiguity or defect or to amend or supplement a provision that would not materially adversely affect the certificateholder; or | ||
• | the appointment of a successor indenture trustee or the consent to the assignment by the note registrar or the indenture trustee of its obligations. |
• | reduce the interest rate or principal amount of any note, or delay the final scheduled payment date of any note; | ||
• | reduce the percentage of the aggregate outstanding principal amount of the outstanding notes, the holders of which are required to consent to any matter without the consent of the holders of at least the percentage of the aggregate outstanding principal amount of the outstanding notes which were required to consent to such matter before giving effect to such amendment; |
S-86
• | impair any right to institute suit for the enforcement of certain provisions of the indenture regarding payment; | ||
• | permit the creation of any lien ranking prior to or on parity with the lien of the indenture with respect to any portion of the issuing entity property or, except as otherwise permitted in the indenture, terminate the lien of the indenture on any property or deprive any noteholder of the security provided for by the lien of the indenture; or | ||
• | reduce the percentage of the outstanding note amount required to direct the indenture trustee to direct the issuing entity to sell the issuing entity property after an indenture default if the proceeds of such sale would be insufficient to pay the outstanding note amount plus accrued interest on the notes; or | ||
• | modify or alter the provisions of the proviso to the definition of the term “outstanding”. |
• | based on the terms of the notes and the transactions relating to the Transaction SUBI Certificate as set forth herein, the [Class A notes and the Class B] notes (other than any notes, if any, retained by the issuing entity or a person considered to be the same person as the issuing entity for United States federal income tax purposes) will be characterized as indebtedness for federal income tax purposes; and |
S-87
• | based on the applicable provisions of the trust agreement and related documents, for federal income tax purposes, the issuing entity will not be classified as an association taxable as a corporation and the issuing entity will not be treated as a publicly traded partnership taxable as a corporation. |
S-88
S-89
Class A-1 | Class A-2 | Class A-3 | Class A-4 | [Class B | ||||||||||||||||||||
Underwriter | Notes | Notes | Notes | Notes | Notes] | Total | ||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Selling | Reallowance | |||||||
Class | Concession | Discount | ||||||
Class A-1 Notes | % | % | ||||||
Class A-2 Notes | % | % | ||||||
Class A-3 Notes | % | % | ||||||
Class A-4 Notes | % | % | ||||||
[Class B Notes | % | %] |
S-90
S-91
• | it will not offer or sell any notes within the United States, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities, bank regulatory or other applicable law; and | ||
• | it will not offer or sell any notes in any other country, its territories or possessions or to persons who are citizens thereof or residents therein, except in transactions that are not prohibited by any applicable securities law. |
• | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 of the United Kingdom, as amended (“FSMA”)) received by it in connection with the issue or sale of any offered notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuing entity; and | ||
• | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any offered notes in, from or otherwise involving the United Kingdom.] |
S-92
(a) | to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; or | ||
(b) | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than€43,000,000 and (3) an annual net turnover of more than€50,000,000, as shown in its last annual or consolidated accounts; |
S-93
S-94
[75]% Prepayment Assumption | S-52 | |||
ABS | S-52 | |||
administration agreement | S-64 | |||
administrative trustee | S-7 | |||
administrator | S-7, S-32 | |||
advance | S-70 | |||
Available Funds | S-69 | |||
base residual value | S-10 | |||
Base Residual Value | S-44 | |||
benefit plan | S-88 | |||
business day | S-60 | |||
certificate | S-7 | |||
closing date | S-7, S-53 | |||
Code | S-88 | |||
collection account | S-65 | |||
collection period | S-65, S-68 | |||
Collections | S-69 | |||
cutoff date | S-11, S-34 | |||
defaulted lease | S-44 | |||
Delaware trustee | S-7 | |||
depositor | S-6, S-31, S-36 | |||
determination date | S-68 | |||
eligible account | S-67 | |||
eligible institution | S-68 | |||
ERISA | S-88 | |||
Exchange Act | S-91 | |||
final scheduled payment date | S-61 | |||
first priority principal distribution amount | S-12 | |||
First Priority Principal Distribution Amount | S-74 | |||
FSMA | S-92 | |||
Included Units | S-31 | |||
indenture | S-64 | |||
indenture default | S-79 | |||
indenture trustee | S-7, S-35, S-59 | |||
initial note balance | S-31 | |||
Investment Company Act | S-87 | |||
issuing entity | S-6, S-31 | |||
issuing entity property | S-10 | |||
Maximum Residualized MSRP | S-44 | |||
monthly remittance condition | S-66 | |||
MRM ALG Residual | S-44 | |||
MSRP | S-44 | |||
MSRP ALG Residual | S-44 |
note balance | S-61 | |||
noteholders | S-60 | |||
optional purchase | S-77 | |||
origination trust | S-6, S-31 | |||
origination trust agreement | S-36 | |||
origination trustee | S-7 | |||
origination trustees | S-7 | |||
Other SUBI | S-31 | |||
owner trustee | S-7, S-34 | |||
payment date | S-7 | |||
Payment Date Advance Reimbursement | S-74 | |||
Payment Waterfall | S-74 | |||
Permitted investments | S-68 | |||
Postmaturity Term Extension | S-40 | |||
pre-funding account | S-12 | |||
Principal Distribution Amount | S-60 | |||
PTCE | S-89 | |||
Pull-Ahead Amount | S-70 | |||
rating agency | S-32 | |||
Rating Agency Condition | S-85 | |||
record date | S-7, S-60 | |||
Recoveries | S-70 | |||
redemption price | S-77 | |||
regular principal distribution amount | S-13 | |||
Regular Principal Distribution Amount | S-74 | |||
regulation | S-88 | |||
related collection period | S-69 | |||
Relevant Implementation Date | S-93 | |||
Relevant Member State | S-93 | |||
repurchase payment | S-40 | |||
Retained Notes | S-92 | |||
Sales Proceeds | S-70 | |||
SEC | S-2, S-59 | |||
second priority principal distribution amount | S-12 | |||
Second Priority Principal Distribution Amount | S-74 | |||
Securities Act | S-90 | |||
Securitization Rate | S-43 | |||
securitization value | S-10 | |||
Securitization Value | S-43 | |||
seller | S-6, S-36 | |||
servicer | S-6, S-37 | |||
Servicer Certificate | S-70 |
A-95
servicer replacement events | S-77 | |||
Servicing Agreement | S-39 | |||
servicing fee | S-6, S-77 | |||
stated residual value | S-45 | |||
SUBI trustee | S-7 | |||
subsequent assets | S-12 | |||
Supplemental Servicing Fees | S-70 | |||
swap counterparty | S-7 | |||
TALF | S-16 | |||
TALF Rules | 1 | |||
Targeted Note Balance | S-75 | |||
Targeted Overcollateralization Amount | S-75 | |||
targeted reserve account balance | S-14 | |||
Terminated Unit | S-44 | |||
Transaction SUBI | S-11, S-31 |
Transaction SUBI Certificate | S-31 | |||
Transaction SUBI Servicing Supplement | S-39 | |||
Transaction SUBI Supplement | S-39 | |||
Treasury | 2 | |||
U.S. Bank | S-35 | |||
Unit | S-31 | |||
UTI | S-31 | |||
UTI trustee | S-7 | |||
VALT 2002-A | S-38 | |||
Volkswagen AG | S-37 | |||
Volkswagen Group of America | S-37 | |||
VW Credit | S-1, S-6, S-31 | |||
Warranty Breach | 2 | |||
WTC | S-36 |
A-96
A-1
Lease Securitization | VALT-[ ] | VALT-[ ] | VALT-[ ] | |||||||||
Closing Date | [ , ] | [ , ] | [ , ] | |||||||||
Cutoff Date | [ , ] | [ , ] | [ , ] | |||||||||
Number of Leases | ||||||||||||
Original Book Value (1) | ||||||||||||
Original Securitization Value | ||||||||||||
Average | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Percentage New Vehicles | ||||||||||||
Percentage Audi Vehicles | ||||||||||||
Percentage Volkswagen Vehicles | ||||||||||||
Base Residual | ||||||||||||
Average | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Original Term (Months) | ||||||||||||
Weighted Average (2) | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Remaining Term (Months) | ||||||||||||
Weighted Average (2) | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Seasoning (Months) (3) | ||||||||||||
Weighted Average (2) | ||||||||||||
Minimum | ||||||||||||
Maximum | ||||||||||||
Weighted Average FICO® Score (4) (5) | ||||||||||||
Minimum (5) (6) | ||||||||||||
Maximum (5) (6) | ||||||||||||
Base Residual as a % of Securitization Value | ||||||||||||
Base Residual as a % of MSRP |
(1) | Original Book Value is determined based on capitalized amounts of the leases less the accumulated depreciation of the related leased vehicles. | |
(2) | Weighted average by Securitization Value. | |
(3) | Seasoning refers to the number of months elapsed since origination of the leases. | |
(4) | FICO® is a federally registered service mark of Fair, Isaac & Company. | |
(5) | FICO® scores are calculated excluding accounts for which no FICO score is available at the origination of the related lease. | |
(6) | Less than 5% of the obligor FICO® scores (based on the aggregate Securitization Value of the leases) exceeds [ ] and less than 5% of the obligor FICO® scores (based on the aggregate Securitization Value of the leases) falls below [ ]. Range of FICO® scores represents 90% of the aggregate Securitization Value as of origination. |
A-2
Lease Securitization | VALT-[ ] | VALT-[ ] | VALT-[ ] | |||||||||
Closing Date | [ , ] | [ , ] | [ , ] | |||||||||
Cutoff Date | [ , ] | [ , ] | [ , ] | |||||||||
By Original Term (1) | ||||||||||||
12 - 18 months | % | % | % | |||||||||
19 - 23 months | % | % | % | |||||||||
24 - 30 months | % | % | % | |||||||||
31 - 36 months | % | % | % | |||||||||
37 - 42 months | % | % | % | |||||||||
43 - 48 months | % | % | % | |||||||||
49 - 60 months | % | % | % | |||||||||
By Remaining Term (1) | ||||||||||||
12 - 18 months | % | % | % | |||||||||
19 - 23 months | % | % | % | |||||||||
24 - 30 months | % | % | % | |||||||||
31 - 36 months | % | % | % | |||||||||
37 - 42 months | % | % | % | |||||||||
43 - 48 months | % | % | % | |||||||||
49 - 60 months | % | % | % | |||||||||
By Model, Top Five (1) | ||||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
By State, States Representing More than 5% of Securitization Value (1) | ||||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % | ||||||||||
% | % | % |
(1) | As a percent of total Original Securitization Value. |
A-3
Period | VALT-[ ] | VALT-[ ] | VALT-[ ] | ||||||||||
1 | |||||||||||||
2 | |||||||||||||
3 | |||||||||||||
4 | |||||||||||||
5 | |||||||||||||
6 | |||||||||||||
7 | |||||||||||||
8 | |||||||||||||
9 | |||||||||||||
10 | |||||||||||||
11 | |||||||||||||
12 | |||||||||||||
13 | |||||||||||||
14 | |||||||||||||
15 | |||||||||||||
16 | |||||||||||||
17 | |||||||||||||
18 | |||||||||||||
19 | |||||||||||||
20 |
(1) | Actual prepayments on a lease are any Monthly Lease Payments related to a lease in excess of the Monthly Lease Payment for that lease for the applicable period. These include voluntary prepayments, voluntary early terminations, payments from third parties, repurchases, repossession proceeds, funds not recovered due to charge-offs and servicer advances. | |
The “Prepayment Amount” is defined as the change in the actual month-end Securitization Value of the pool that relates to early terminations of the related leases. | ||
This prepayment amount is converted into a monthly Single Month Mortality Rate “SMM” expressed as a percentage which is the Prepayment Amount divided by the previous month’s actual month-end Securitization Value less the scheduled payments made during the month. | ||
The “Prepayment Speeds” shown in the chart are derived by converting the SMM into the ABS Speed by dividing (a) the SMM by (b) the sum of (i) one and (ii) the SMM multiplied by the age of the pool, in months, minus one. The age of the pool is assumed to be the weighted average age of the pool at cut-off date plus the number of months since the cut-off date. | ||
(2) | Optional clean-up call exercised. |
A-4
Securitization | % of Ending Pool | 90+ Days | % of Ending Pool | |||||||||||||||
Value Outstanding | 31 - 60 Days Delinquent | Balance | Delinquent | Balance | ||||||||||||||
(1) | VW Credit considers an account delinquent when an obligor fails to make at least 75% of the scheduled monthly payment by the due date. The period of delinquency is based on the number of days payments are contractually past due. |
A-5
Original Securitization Value $[ ]
Aggregate Securitization | Cumulative Net Charge-off | |||||||||||||
Value on Charged-off (1) | as % Original | |||||||||||||
Units | Recoveries (2) | Net Charge-off | Securitization Value | |||||||||||
(1) | Charge-offs generally represent the total aggregate net securitization value of the lease contracts determined to be uncollectible in the period less proceeds from disposition of the related leased vehicles, other than recoveries described in Note (2). | |
(2) | Recoveries generally include the net amounts received with respect to a lease contract previously charged off. |
A-6
Original Securitization Value $[ ]
Aggregate Securitization | Cumulative Net Residual | ||||||||||||||||||||||||||||
Number of | Number of | Value | Losses as | ||||||||||||||||||||||||||
Scheduled | Scheduled | for Scheduled | Proceeds, including | % Original | |||||||||||||||||||||||||
(1) Terminated | (1) Terminated | (1) Terminated | Excess Wear, Tear & | Cumulative Net | Securitization | ||||||||||||||||||||||||
Units | Units Returned | Turn-in Ratio | Units | Mileage collected | Net Residual Losses | Residual Losses | Value | ||||||||||||||||||||||
(1) | Excludes repossessions and vehicles terminating prior to scheduled maturity. |
A-7
FOR NON-MORTGAGE-BACKED ABS]
The Issuing Entity and the Sponsor (collectively, “we”) hereby certify that: | ||
1. | We have reviewed the terms and conditions of the Term Asset-Backed Securities Loan Facility (“TALF”) provided by the Federal Reserve Bank of New York (“FRBNY”). Terms used below that are defined or explained in such terms and conditions, or in FAQs or other interpretative material issued by the FRBNY, shall have the meanings provided in such terms and conditions, FAQs or other interpretative material (such terms and conditions, FAQs or other interpretative material, the“TALF Rules”). | |
2. | After due inquiry by our appropriate officers, agents and representatives, we have determined that the securities offered hereby designated as the (a) Class A-1 Notes, CUSIP #: [•], (b) Class A-2 Notes, CUSIP #: [•], (c) Class A-3 Notes, CUSIP #: [•], [and] (d) Class A-4 Notes, CUSIP #: [•], [and (e) Class B Notes, CUSIP #: [•],] constitute eligible collateral under TALF. In particular: |
• | The securities are U.S. dollar-denominated cash (that is, not synthetic) asset-backed securities (“ABS”) that have (or have been provided on a preliminary basis, expected to be confirmed no later than the closing date) a credit rating in the highest long-term or short-term investment-grade rating category from two or more eligible nationally recognized statistical rating organizations (NRSROs) and do not have (including on a preliminary basis) a credit rating below the highest investment-grade rating category from an eligible NRSRO. Such ratings were obtained without the benefit of any third-party guarantee and are not on review or watch for downgrade. | ||
• | The securities are cleared through The Depository Trust Company. | ||
• | The securities do not bear interest payments that step up or step down to predetermined levels on specific dates. | ||
• | The securities are not subject to an optional redemption other than a customary clean-up call (as defined in the TALF Rules). | ||
• | All or substantially all (defined as at least 95% of the dollar amount) of the credit exposures underlying the securities are exposures that are both (a) originated by U.S.-organized entities or institutions or U.S. branches or agencies of foreign banks and (b) made to U.S.-domiciled obligors. The underlying credit exposures are auto leases and do not include exposures that are themselves cash ABS or synthetic ABS. The average life of the securities is less than or equal to five years. | ||
• | All or substantially all of the credit exposures underlying the securities were originated on or after October 1, 2007. “Substantially all” for purposes of this paragraph means 85% or more of the dollar amount. |
3. | Pursuant to the TALF Rules, the independent accounting firm that is performing certain procedures for the benefit of the FRBNY in connection with this offering is required, in certain circumstances where fraud or illegal acts are suspected to have occurred, to make reports to the TALF Compliance fraud hotline. We hereby provide our consent to such accounting firm to make such reports and waive any client confidentiality provisions we would otherwise be entitled to under applicable law, rules of accountant professional responsibility or contract. |
B-1
4. | We understand that purchasers of the securities offered hereby that are affiliates of either the originators of assets that are securitized in this offering or the issuing entity or sponsor of this offering will not be able to use these securities as TALF collateral. | |
5. | We hereby undertake that, until the maturity of the securities offered hereby, we will issue a press release and notify the FRBNY and all registered holders of the securities if we determine that the statements set forth in Item 2 above were not correct when made or have ceased to be correct. We will issue such press release and make such notification no later than 9:00 a.m. on the fourth Business Day after we make such determination; provided that we undertake to provide same business-day notice of any change in credit rating issued by any major NRSRO (including any change in the final rating compared to a preliminary rating) that occurs after pricing of this offering and on or prior to the closing date. | |
6. | We hereby undertake that, until the maturity of the securities offered hereby, we will provide, as promptly as practicable, upon the request of the FRBNY, copies of (i) the Governing Documents for the securities and (ii) the servicer and/or trustee reports or any other similar reports provided or made available to investors in connection with the securities issued. Governing Documents include the instruments and agreements (including any indenture, pooling and servicing agreement, trust agreement, servicing agreement, other similar agreement and other operative document), however denominated, pursuant to which the securities were issued, the assets backing such securities are serviced and collections on such assets are applied, remitted and distributed. | |
7. | We hereby represent and warrant to the FRBNY and TALF LLC that (i) this prospectus supplement and the accompanying prospectus and (ii) this prospectus supplement and the accompanying prospectus, when taken as whole together with all information provided by us or on our behalf to any nationally recognized statistical rating organization in connection with this offering, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. | |
8. | We acknowledge that the FRBNY and TALF LLC (in accepting the securities offered hereby as collateral), will rely upon this certification and will suffer damages if such certification is incorrect. The sponsor (and, if required by the terms of the form referred to below, the sponsor’s direct or indirect ultimate parent) has executed and delivered to the FRBNY an undertaking, in the form prescribed by the FRBNY, under which the sponsor (and, if applicable, its direct or indirect ultimate parent) has agreed to indemnify FRBNY and TALF LLC and their respective affiliates against losses incurred or suffered by them arising out of any misrepresentation or breach of warranty made or to be performed by us in this certification. | |
9. | We hereby jointly and severally agree that, should the securities be pledged to the FRBNY under the Master Loan and Security Agreement established under TALF or purchased by TALF LLC and at any time fail to constitute eligible collateral under TALF (provided that, solely for purposes of the foregoing, the only failure to satisfy the ratings eligibility criteria that shall be considered shall be a failure that arises as a result of the final rating on the securities, upon issuance, being lower than the required ratings for TALF eligibility, not any subsequent downgrades) under the TALF Rules as in effect at the time the securities are issued (a“Warranty Breach”), we shall permit (i) the United States Department of the Treasury (“Treasury”) and its agents, consultants, contractors and advisors, (ii) the Special Inspector General of the Troubled Asset Relief Program, and (iii) the Comptroller General of the United States access to personnel and any books, papers, records or other data in our possession, custody or control to the extent relevant to ascertaining the cause and nature of the Warranty Breach, during normal business hours and upon reasonable notice to the issuing entity or the sponsor, as the case may be; provided that prior to disclosing any information pursuant to clause (i), (ii) or (iii), the Treasury, the Special Inspector General of the Troubled Asset Relief Program and the Comptroller General of the United States shall have agreed, with respect to documents obtained under this agreement in furtherance of their respective functions, to follow applicable law and regulation (and the applicable customary policies and procedures, including those for inspectors general) regarding the dissemination of confidential materials, including redacting confidential information from the public version of its reports, as appropriate, and soliciting input from the sponsor or the issuing entity, as applicable, as to information that should be afforded confidentiality. In making this agreement, we understand that Treasury has represented that it has been informed by the Special Inspector General of the Troubled Asset Relief Program and the Comptroller General of the United | |
B-2
States that they, before making any request for access or information pursuant to their oversight and audit functions, will establish a protocol to avoid, to the extent reasonably possible, duplicative requests. Nothing in this paragraph shall be construed to limit the authority that the Special Inspector General of the Troubled Asset Relief Program or the Comptroller General of the United States have under law. |
VW Credit, Inc. | Volkswagen Auto Lease Trust [____] | |||||||||
By: | VW Credit, Inc., as Administrator on behalf of the Issuing Entity | |||||||||
By: | By: | |||||||||
Name: | Name: | |||||||||
Title: | Title: | ] |
B-3
Issuing Entity
Class A-1 Notes | $ | |
Class A-2 Notes | $ | |
Class A-3 Notes | $ | |
Class A-4 Notes | $ | |
[Class B Notes] | $ |
Depositor
Sponsor and Servicer
SUPPLEMENT
• | motor vehicle retail installment sales contracts and/or installment loans secured by a combination of new and used automobiles, light-duty trucks or other types of motor vehicles; | ||
• | 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 issuing entity; and | ||
• | any credit or cash flow enhancement issued in favor of the issuing entity. |
• | will represent indebtedness of the issuing entity that issued those securities, in the case of the notes, or beneficial interests in the issuing entity that issued those securities, in the case of the certificates; | ||
• | will be paid only from the assets of the issuing entity that issued those securities; | ||
• | will represent the right to payments in the amounts and at the times described in the accompanying applicable prospectus supplement; | ||
• | may benefit from one or more forms of credit or cash flow enhancement; and | ||
• | will be issued as part of a designated series, which may include one or more classes of notes and/or one or more classes of certificates. |
AND THE APPLICABLE PROSPECTUS SUPPLEMENT
• | the type of securities offered; | ||
• | certain risks relating to an investment in the securities; | ||
• | the timing and amount of interest payments on and principal payments of the securities; | ||
• | the receivables underlying your securities; | ||
• | the credit enhancement and cash flow enhancement for each class of securities; | ||
• | the credit ratings for each class of securities; and | ||
• | the method of selling the securities. |
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You must rely for repayment only upon the issuing entity’s assets, which may not be sufficient to make full payments on your securities. | Your securities are either secured by or represent beneficial ownership interests solely in the assets of the related issuing entity. Your securities will not represent an interest in or obligation of VW Credit, the depositor or any of their respective affiliates. 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 or cash flow enhancement for the securities. We cannot assure you that these amounts 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, unless specifically set forth in the applicable prospectus supplement, by any provider of credit enhancement or cash flow enhancement. | |
You may experience a loss if defaults on the receivables and related losses exceed the available credit enhancement or cash flow enhancement. | The issuing entity does not have, nor is it permitted or expected to have, any significant assets or sources of funds other than the receivables together with its right to payments under any interest rate or currency swap or cap agreement or credit enhancement and available funds in certain accounts. The securities of a series represent obligations solely of the issuer and will not be insured or guaranteed by any entity unless otherwise indicated in the applicable prospectus supplement. Accordingly, you will rely primarily upon collections on the receivables owned by the issuing entity for your series of securities and, to the extent available, any credit enhancement for the issuing entity, including payments under any interest rate or currency swap or cap agreement and amounts on deposit in any reserve account or similar account. Funds on deposit in any reserve account or similar account will cover shortfalls due to delinquencies and losses on the receivables up to some level. However, if delinquencies and losses create shortfalls which exceed the available credit enhancement for your series of securities, you may experience delays in payments due to you and you could suffer a loss. You will have no claim to any amounts properly distributed to the depositor or others from time to time. | |
Returns on your investments may be reduced by prepayments on the receivables, events of default, optional redemption of the securities or repurchases of receivables from the issuing entity. | You may receive payments on your securities earlier than you expected for the reasons set forth below. You may not be able to invest the amounts paid to you earlier than you expected at a rate of return that is equal to or |
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greater than the rate of return on your securities. | ||
• The rate of return of principal is uncertain. The amount of distributions of principal of your securities and the time when you receive those distributions depend on the amount in which and times at which obligors 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. Additionally, if an originator, the depositor or the servicer is required to repurchase receivables from the issuing entity because of a breach of representation or warranty, payment of principal on the securities will be accelerated. | ||
• You may be unable to reinvest distributions in comparable investments. The occurrence of an optional redemption event or events of default resulting in acceleration may require repayment of the securities prior to the expected principal payment date for one or more classes of securities of a series. Asset backed securities, like the securities, usually produce a faster return of principal to investors if market interest rates fall below the interest rates on the receivables and produce a slower return 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 your securities, and are likely to receive less money to reinvest when other investments generally are producing a higher yield than that on your 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 redemption of the securities from an optional redemption will shorten the life of your investment which may reduce your yield to maturity. If the receivables are sold upon exercise of a “clean-up call” by the servicer or any other entity specified in the applicable prospectus supplement, the issuing entity will redeem the securities and you will receive the remaining principal amount of your securities plus any other amounts due to securityholders, |
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such as accrued interest through the related payment date. Because your securities will no longer be outstanding, you will not receive the additional interest payments or other distributions 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 redemption had not been exercised. | ||
The failure to make interest and principal payments on any securities of a series will generally not result in an event of default under the related indenture until the applicable final scheduled payment date. | The amount of interest and principal required to be paid to investors prior to the applicable final scheduled payment date set forth in the applicable prospectus supplement generally will be limited to amounts available for those purposes. Therefore, the failure to pay interest on or principal of a security generally will not result in an event of default under the indenture until the applicable final scheduled payment date for that series of securities. | |
The issuing entity’s interest in the receivables could be defeated because the contracts will not be delivered to the issuing entity. | The servicer, as custodian of the receivables, will maintain possession of the original contracts for each of the receivables and the original contracts will not be segregated or marked as belonging to the issuing entity. If the servicer sells or pledges and delivers the original contracts for the receivables to another party, in violation of its contractual obligations, this party could acquire an interest in the receivable having a priority over the issuing entity’s interest. | |
In addition, another person could acquire an interest in a receivable that is superior to the issuing entity’s interest in the receivable if the receivable is evidenced by an electronic contract and the servicer loses control over the authoritative copy of the contract and another party purchases the receivable evidenced by the contract without knowledge of the issuing entity’s interest. If the servicer loses control over the contract through fraud, forgery, negligence or error, or as a result of a computer virus or a hacker’s actions or otherwise, a person other than the issuing entity may be able to modify or duplicate the authoritative copy of the contract. | ||
As a result of any of the above events, the issuing entity may not have a perfected security interest in certain receivables. The possibility that the issuing entity may not have a perfected security interest in the receivables may affect the issuing entity’s ability to repossess and sell the underlying financed vehicles. Therefore, you may be subject to delays in payment and may incur |
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losses on your investment in the securities. | ||
Furthermore, if the servicer, as custodian of the receivables, becomes the subject of a bankruptcy proceeding, 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, these claims could result in losses or delays in payments to you or an acceleration of the repayment of the securities. | ||
The issuing entity’s security interest in the financed vehicles will not be noted on the certificates of title, which may cause losses on your securities. | Upon the origination of a receivable, each Originator or its predecessor in interest or affiliate, as applicable, takes a security interest in the financed vehicle by placing a lien on the title to the financed vehicle. In connection with each sale of receivables to the depositor, each Originator, either directly or through one or more other Originators, will assign its security interests in the financed vehicles to the depositor, who will further assign them to the issuer. Finally, the issuing entity will pledge its interest in the financed vehicles as collateral for the securities. The lien certificates or certificates of title relating to the financed vehicles will not be amended or reissued to identify the issuing entity as the new secured party. In the absence of an amendment or reissuance, the issuing entity may not have a perfected security interest in the financed vehicles securing the receivables in some states. We, an Originator or another entity may be obligated to repurchase any receivable sold to the issuing entity which did not have a perfected security interest in the name of that Originator or an affiliate, as applicable, in the financed vehicle. | |
We, the servicer, an Originator or another entity may be required to purchase or repurchase, as applicable, any receivable sold to the issuing entity as to which it failed to obtain or maintain a perfected security interest in the financed vehicle securing the receivable. All of these purchases and repurchases are limited to breaches that materially and adversely affect the interests of the securityholders in the receivable and are subject to the expiration of a cure period. If the issuing entity 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 issuing entity 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 |
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a result, you may suffer a loss on your investment in the securities. | ||
Failure to comply with consumer protection laws could result in a loss. | Federal and state consumer protection laws impose requirements on retail loan contracts such as the receivables. The failure by the applicable originator to comply with these requirements may give rise to liabilities on the part of the issuing entity of a series of securities. Each applicable Originator will represent and warrant that each receivable complies with applicable law in all material respects. If that representation and warranty relating to any receivable for a series of securities proves incorrect, materially and adversely affects the interests of the issuing entity and is not timely cured, that originator will be required to repurchase the noncompliant receivable from the issuing entity. To the extent that the originator fails to make such a repurchase, or to the extent that a court holds the issuing entity liable for violating consumer protection laws regardless of such a repurchase, a failure to comply with consumer protection laws could result in required payments by the issuing entity. If sufficient funds are not available to make both payments to obligors and on your securities, you may suffer a loss on your investment in the securities. | |
For a discussion of federal and state consumer protection laws which may affect the receivables, you should refer to “Material Legal Aspects of the Receivables —Consumer Protection Law” in this prospectus. | ||
A depositor or sponsor bankruptcy could delay or limit payments to you. | Following a bankruptcy or insolvency of the sponsor or the depositor, a court could conclude that the receivables for your series of securities are owned by the sponsor or the depositor, instead of the issuing entity. This conclusion could be either because the transfer of the receivables from VW Credit to the depositor or from the depositor to the related issuing entity was not a true sale or because the court concluded that the depositor or the issuing entity should be treated as the same entity as the sponsor or the depositor for bankruptcy purposes. If this were to occur, you could experience delays in payments due to you or you may not ultimately receive all amounts due to you as a result of: |
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• the automatic stay, which prevents a secured creditor from exercising remedies against a debt or in bankruptcy without permission from the court, and provisions of the United States Bankruptcy Code that permit substitution of collateral in limited circumstances; | ||
• tax or government liens on the sponsor’s or depositor’s property (that arose prior to the transfer of the receivables to the issuing entity) having a prior claim on collections before the collections are used to make payments on the securities; or | ||
• the fact that the issuing entity and the indenture trustee for your series of securities may not have a perfected security interest in any cash collections of the receivables held by the servicer at the time that a bankruptcy proceeding begins. | ||
For a discussion of how a bankruptcy proceeding of the sponsor or the depositor may affect the issuing entity and the securities, you should refer to “Material Legal Aspects of the Receivables—Certain Matters Relating to Bankruptcy”in this prospectus. | ||
The Originators, the servicer and the depositor have limited obligations to the issuing entity and will not make payments on the securities | The Originators, the servicer, the depositor and their affiliates are not obligated to make any payments to you on your securities. The Originators, the servicer, the depositor and their affiliates do not guarantee payments on the receivables or your securities. However, the Originators will and the depositor may make representations and warranties about the characteristics of the receivables. | |
If a representation or warranty made by an Originator with respect to a receivable is untrue, or if that Originator breaches a covenant with respect to a receivable, then that Originator or another entity may be required to repurchase that receivable. If that Originator or another entity fails to repurchase that receivable, you might experience delays and/or reductions in payments on the securities. 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 “The Transaction Documents—Payments and Distributions on the Securities” in this prospectus. | ||
Interests of other persons in the receivables and financed vehicles could be superior to the issuing entity’s interest, which may result | The issuing entity could lose the priority of its security interest in a financed vehicle due to, among other things, liens for repairs or storage of a financed vehicle or for |
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in reduced payments on your securities. | unpaid taxes of an obligor. Neither the servicer nor any Originator will have any obligation to purchase or repurchase, respectively, a receivable if these liens result in the loss of the priority of the security interest in the financed vehicle after the issuance of securities by the issuing entity. Generally, no action will be taken to perfect the rights of the issuing entity 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 issuing entity prior to the time the proceeds are deposited by the servicer into an account controlled by the trustee for the securities. See “Material Legal Aspects of the Receivables—Security Interests in the Financed Vehicles” in this prospectus. | |
You may experience a loss or a delay in receiving payments on the securities if the assets of the issuing entity are liquidated. | If certain events of default under the indenture occur and the securities of a series are accelerated, the related indenture trustee may liquidate the assets of the related issuing entity. If a liquidation occurs close to the date when any class otherwise would have been paid in full, repayment of that class might be delayed while liquidation of the assets is occurring. The issuing entity cannot predict the length of time that will be required for liquidation of the assets of the issuing entity to be completed. In addition, liquidation proceeds may not be sufficient to repay the securities of that series in full. Even if liquidation proceeds are sufficient to repay the securities in full, any liquidation that causes the outstanding principal balance of a class of securities to be paid before the related final scheduled payment date will involve the prepayment risks described under“Risk Factors— Returns on your investments may be reduced by prepayments on the receivables, events of default, optional redemption of the securities or repurchases of receivables from the issuing entity”in this prospectus. | |
The servicer’s commingling of funds with its own funds could result in a loss. | Subject to the satisfaction of certain conditions set forth in the applicable prospectus supplement, VW Credit, as the servicer, may be able to commingle funds relating to a transaction such as collections from the loans and proceeds from the disposition of any repossessed financed vehicles with its own funds during each Collection Period and may make a single deposit to the collection account on each payment date. Commingled funds may be used or invested by the servicer at its own risk and for its own benefit. If the servicer were unable to remit those funds or the servicer were to become a debtor under any insolvency laws, delays or reductions in distributions to you may occur. |
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Extensions and deferrals of payments on receivables could increase the average life of the securities. | In some circumstances, the servicer may permit an extension on payments due on receivables on a case-by-case basis. In addition, the servicer may from time to time offer obligors an opportunity to defer payments. Any of these extensions or deferrals 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, if specified in the applicable prospectus supplement, the servicer will be required to purchase a receivable from the issuing entity if it extends the term of the receivable beyond the latest final scheduled payment date for any class of related securities. | |
The return on your securities may be reduced due to varying economic circumstances. | A deterioration in economic conditions could adversely affect the ability and willingness of obligors to meet their payment obligations under the receivables. As a result, you may experience payment delays and losses on your securities. An improvement in economic conditions could result in prepayments by the obligors of their payment obligations under the receivables. As a result, you may receive principal payments of your securities earlier than anticipated. No prediction or assurance can be made as to the effect of an economic downturn or economic growth on the rate of delinquencies, prepayments and/or losses on the receivables. | |
The return on your securities could be reduced by shortfalls due to application of the Servicemembers Civil Relief Act. | The Servicemembers Civil Relief Act and similar state legislation may limit the interest payable on a receivable during an obligor’s period of active military duty. This legislation could adversely affect the ability of the servicer to collect full amounts of interest on a receivable as well as to foreclose on an affected receivable during and, in certain circumstances, after the obligor’s period of active military duty. This legislation may thus result in delays and losses in payments to holders of the securities. See “Material Legal Aspects of the Receivables—Servicemembers Civil Relief Act” in this prospectus. | |
Changes to federal or state bankruptcy or debtor relief laws may impede collection efforts or alter timing and amount of collections, which may result in acceleration of or reduction in payment on your securities. | If an obligor sought protection under federal or state bankruptcy or debtor relief laws, a court could reduce or discharge completely the obligor’s obligations to repay amounts due on its receivable. As a result, that receivable would be written off as uncollectible. You could suffer a loss if no funds are available from credit enhancement or other sources and finance charge amounts allocated to the securities are insufficient to |
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cover the applicable default amount. | ||
The absence of a secondary market for the securities could limit your ability to resell your securities. | If you want 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. | |
Because the securities are in book-entry form, your rights can only be exercised indirectly. | Because the securities will initially be issued in book-entry form, you will be required to hold your interest in your securities through The Depository Trust Company in the United States, or Clearstream Banking, société anonyme or Euroclear Bank S.A./NV as operator of the Euroclear System in Europe or Asia. Transfers of interests in the securities within The Depository Trust Company, Clearstream Banking, société anonyme or Euroclear Bank/S.A./NV as operator of the Euroclear System must be made in accordance with the usual rules and operating procedures of those systems. So long as the securities are in book-entry form, you will not be entitled to receive a definitive note representing your interest. The securities of a series will remain in book-entry form except in the limited circumstances described under the caption “The Securities—Definitive Securities” in this prospectus. Unless and until the securities cease to be held in book-entry form, the related transaction parties will not recognize you as a holder of the related security. | |
As a result, you will only be able to exercise the rights as a securityholder indirectly through The Depository Trust Company (if in the United States) and its participating organizations, or Clearstream Banking, société anonyme and Euroclear Bank S.A./NV as operator of the Euroclear System (in Europe or Asia) and their participating organizations. Holding the securities in book-entry form could also limit your ability to pledge or transfer your securities to persons or entities that do not participate in The Depository Trust Company, Clearstream Banking, société anonyme or |
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Euroclear Bank S.A./NV as operator of the Euroclear System. In addition, having the securities in book-entry form may reduce their liquidity in the secondary market since certain potential investors may be unwilling to purchase securities for which they cannot obtain physical notes. | ||
Interest and principal on the securities of any series will be paid by the related issuing entity to The Depository Trust Company as the record holder of those securities while they are held in book-entry form. The Depository Trust Company will credit payments received from the issuing entity to the accounts of its participants which, in turn, will credit those amounts to securityholders either directly or indirectly through indirect participants. This process may delay your receipt of payments from the issuing entity. | ||
The ratings for the securities are limited in scope, may not continue to be issued and do not consider the suitability of an investment in the securities for you. | We will offer a class of securities only if that class receives the rating specified in the applicable prospectus supplement. The rating considers only the likelihood that the issuing entity will pay interest on time and will ultimately pay principal in full or make full distributions of the outstanding balance of the securities. A security rating is not a recommendation to buy, sell or hold the securities. Ratings on the securities may be lowered, qualified or withdrawn at any time after the securities are issued without notice from the issuing entity or the depositor. A rating downgrade may reduce the price that a subsequent purchaser will be willing to pay for the securities. Ratings on the securities do not address the timing of distributions of principal on the securities prior to the applicable final scheduled payment 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. | |
Adverse events with respect to VW Credit or its affiliates or third party providers to whom VW Credit outsources its activities could affect the timing of payments on your securities or have other adverse effects on your securities. | Adverse events with respect to VW Credit or any of its affiliates or a third party provider to whom VW Credit outsources its activities could result in servicing disruptions or reduce the market value of your securities. In the event of a termination and replacement of VW Credit as the servicer, there may be some disruption of the collection activity with respect to delinquent loans and therefore delinquencies and credit losses could increase. Similarly, if VW Credit becomes unable to repurchase the beneficial interest in any receivables which do not comply with representations and warranties about the receivables made by VW Credit in |
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the related transfer agreement (for example, representations relating to the compliance of the lease receivables with applicable laws), then investors could suffer losses. In addition, adverse corporate developments with respect to servicers of asset-backed securities or their affiliates have in some cases also resulted in a reduction in the market value of the related asset-backed securities. For example, VW Credit is an indirect wholly-owned subsidiary of Volkswagen AG. Although Volkswagen AG is not guaranteeing the obligations of the issuing entity for any series of securities, if Volkswagen AG ceased to manufacture vehicles or support the sale of vehicles or if Volkswagen AG faced financial or operational difficulties, such events may reduce the market value of Volkswagen and Audi vehicles, and ultimately the amount realized on any Volkswagen or Audi vehicle repossessed following an obligor’s default under the related receivable. | ||
The securities may not be a suitable investment for you. | The securities are not a suitable investment for you if you require a regular or predictable schedule of 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 risks, the tax consequences of an investment in the securities and the interaction of these factors. |
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• | the receivables identified on the schedule of receivables acquired on the Closing Date and on each subsequent funding date, if any, which are a pool of motor vehicle retail installment sales contracts and/or installment loans made by an Originator, a third party or through a dealer that sold a financed vehicle, all of which are secured by new or used automobiles, light-duty trucks and/or other types of motor vehicles; | ||
• | collections and all other amounts due under the receivables after the cut-off dates specified in the applicable prospectus supplement; | ||
• | the depositor’s right to all documents and information contained in the receivable files; | ||
• | the security interests in the financed vehicles; | ||
• | rights under any interest rate swap or cap agreement and payments made by the counterparty under that interest rate swap or cap agreement; | ||
• | an Originator’s rights to receive any proceeds from claims on any physical damage, credit life, risk default, disability or other insurance policies covering the financed vehicles or |
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obligors or refunds in connection with extended service agreements relating to defaulted receivables from the applicable cut-off date; |
• | any other property securing the receivables; | ||
• | to the extent specified in the applicable prospectus supplement, some of the Originator’s rights relating to the receivables purchased from dealers under agreements between the Originators that purchase receivables from dealers and the dealers that sold the financed vehicles; | ||
• | the issuing entity accounts and all amounts on deposit in the applicable issuing entity 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 other entity identified in the applicable prospectus supplement); | ||
• | rights of the issuing entity under the applicable transaction documents; | ||
• | the rights under any credit enhancement; and | ||
• | all proceeds of the foregoing. |
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• | the owner trustee ceases to be eligible to continue as owner trustee under the related trust agreement; | ||
• | the owner trustee becomes legally unable to act; or | ||
• | the owner trustee becomes insolvent. |
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• | was originated out of the sale of or is secured by a new vehicle or a used vehicle; | ||
• | requires substantially equal monthly payments to be made by the related obligor; | ||
• | has an obligor which is not a government or governmental subdivision or agency and is not shown on the servicer’s records as a debtor in a pending bankruptcy proceeding; and | ||
• | is not more than 30 days delinquent on the related cut-off date. |
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• | residential information; | ||
• | source and amount of monthly income; | ||
• | monthly mortgage or rent payment; | ||
• | social security number; and | ||
• | other personal and financial information. |
* | FICO® is a registered trademark of Fair, Isaac & Co. |
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• | principal payments with disproportionate, nominal or no interest payments; or | ||
• | interest payments with disproportionate, nominal or no principal payments. |
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• | distributions of principal with disproportionate, nominal or no interest distributions; or | ||
• | interest distributions with disproportionate, nominal or no distributions of principal. |
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• | used by the issuing entity during the revolving period to acquire additional receivables which satisfy the criteria described under “The Receivables—The Receivables Pools” in this prospectus and the criteria set forth in the applicable prospectus supplement; | ||
• | held in an account and invested in Permitted Investments for later distribution to securityholders; or | ||
• | applied to those securities of the related series as then are in amortization, if any. |
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• | the depositor, indenture trustee or the administrator, as applicable, advises the indenture trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to the securities, and the indenture trustee, the depositor or the administrator, as applicable, are unable to locate a qualified successor; | ||
• | the administrator, at its option, elects to terminate the book-entry system through DTC; or | ||
• | after an event of default, beneficial owners representing in the aggregate a majority of the outstanding principal amount of the controlling class or of all the securities (as specified in the applicable prospectus supplement), advise the indenture trustee through DTC in writing that the continuation of a book-entry system through DTC (or its successor) is no longer in the best interest of those owners. |
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• | as of each Record Date, within five days of that Record Date; and | ||
• | within 30 days after receipt by the issuing entity of a written request from the owner trustee or indenture trustee for that list, as of not more than ten days before that list is furnished. |
• | the amount of the distribution on or with respect to each class of the securities allocable to principal; | ||
• | the amount of the distribution on or with respect to each class of the securities allocable to interest; | ||
• | the aggregate distribution amount for that payment date; | ||
• | the payments to any enhancement provider with respect to any credit or liquidity enhancement on that payment date; | ||
• | 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; | ||
• | the aggregate servicing fee paid to the servicer with respect to that collection period; |
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• | the amount of collections on the receivables for that collection period; | ||
• | the amount of funds available for payment of the aggregate amount payable or distributable on the securities, the amount of any principal or interest shortfall with respect to each class of securities and the amount required from any applicable enhancement provider to pay any shortfall; | ||
• | the aggregate amount of proceeds received by the servicer, net of reimbursable 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 vehicle has been repossessed; | ||
• | the Pool Factor and/or the Note Factor; | ||
• | the Net Pool Balance; and | ||
• | the amount remaining of any credit or liquidity enhancement, if applicable. |
• | each “purchase agreement” or “transfer agreement” pursuant to which the depositor will purchase receivables from the applicable Originator (collectively, the “transfer agreements”); |
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• | each “contribution agreement” and “servicing agreement” or each “sale and servicing agreement,” pursuant to which an issuing entity will purchase receivables from the depositor and which the servicer will agree to service those receivables (collectively, the “sale and servicing agreements”); and | ||
• | each “administration agreement,” if any, pursuant to which an Originator or another party specified in the applicable prospectus supplement will undertake specified administrative duties with respect to an issuing entity. |
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• | A reserve account or cash deposit available to cover trustee fees and expenses, servicing fees, reimbursement of servicer advances, payments to interest rate or currency hedge providers, interest payments on the securities, priority principal payments and final principal payments if collections on the receivables were insufficient. Any amounts remaining on deposit after payment of all fees and expenses owing by the issuing entity and amounts owing on the securities would be returned to the depositor or other provider of the cash or deposit. | ||
• | Excess interest available to cover trustee fees and expenses, servicing fees, reimbursement of servicer advances, payments to interest rate or currency hedge providers, interest payments on the securities, and principal payments on the securities. The amount of excess spread will depend on factors such as APRs, interest rates on the securities, prepayments, yield supplement overcollateralization amounts and losses. | ||
• | Overcollateralization, which is the amount by which the net pool balance of the receivables exceeds the principal balance of the securities. | ||
• | Yield supplement discount arrangements for low APR receivables where the payments due under certain low APR receivables are discounted at both the contractual APR and at a higher rate and the aggregate difference of the discounted payments in each month is subtracted from the pool balance in order to increase the amount of principal required to be paid on each payment date. |
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• | One or both of the following structural features: subordination that will cause more junior classes of securities to absorb losses before more senior classes and “turbo” payments where interest as well as principal collections from the receivables will be used to repay a class or classes of securities and no amounts are released to the residual until such class or classes are paid. |
• | Interest rate swaps where the issuing entity makes fixed payments on a monthly or quarterly basis to a swap counterparty and receives a payment based on LIBOR and interest rate caps where the issuing entity makes an upfront payment to a swap counterparty and receives a payment on a monthly or quarterly basis to the extent LIBOR exceeds a stated, or capped, amount. | ||
• | Currency swaps where the issuing entity makes fixed payments in one currency on a monthly or quarterly basis to a swap counterparty and receives a payment in a second currency based on the exchange rate between the two currencies. | ||
• | Guaranteed investment contracts or guaranteed rate agreements under which in exchange for either a fixed one-time payment or a series of periodic payments the issuing entity will receive specified payments from a counterparty either in fixed amounts or in amounts sufficient to achieve the returns specified in the agreement and described in the applicable prospectus supplement. | ||
• | Third party payments or guarantees, under which a third party would pay amounts specified in the applicable prospectus supplement if other assets of the issuing entity were insufficient to make required payments or would pay if assets of the issuing entity were unavailable, such as collections held by the servicer at the time of a bankruptcy proceeding. | ||
• | Surety bonds or insurance policies, which would be purchased for the benefit of the holders of any specified class of securities to assure distributions of interest or principal with respect to that class in the manner and amount specified in the applicable prospectus supplement. | ||
• | Letters of credit, under which the issuer of a letter of credit will be obligated to honor demands with respect to that letter of credit, to the extent of the amount available thereunder, and under the circumstances and subject to any conditions specified in the applicable prospectus supplement. |
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• | except as expressly permitted by the applicable indenture, the applicable sale and servicing agreement, the applicable trust agreement, the applicable administration agreement or the other transaction documents, sell, transfer, exchange or otherwise dispose of any of the assets of the issuing entity; | ||
• | 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 (the “Internal Revenue Code”), 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 any part of the issuing entity property; | ||
• | dissolve or liquidate in whole or in part; | ||
• | merge or consolidate with, or transfer substantially all of its assets to, any other person; | ||
• | 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 that indenture except as may be expressly permitted thereby; | ||
• | permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (except certain permitted encumbrances) to be created on or extend to or otherwise arise upon or burden the assets of the issuing entity or any part thereof, or any interest therein or the proceeds thereof; or | ||
• | incur, assume or guarantee any indebtedness other than indebtedness incurred in accordance with the transaction documents. |
37
• | its eligibility and qualification to continue as indenture trustee under the related indenture; | ||
• | information regarding a conflicting interest of the indenture trustee; | ||
• | if the related indenture requires the indenture trustee to make advances, the character and amount of any advances made by it under the indenture; | ||
• | the amount, interest rate and maturity date of any indebtedness owing by the issuing entity to the applicable indenture trustee in its individual capacity; | ||
• | any change to the property and funds physically held by the indenture trustee in its capacity as indenture trustee; | ||
• | any release, or release and substitution, of property subject to the lien of the related indenture that has not been previously reported; | ||
• | any additional issue of notes that has not been previously reported; and | ||
• | any action taken by it that materially affects the related notes or the trust property and that has not been previously reported. |
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• | all the terms of the contracts related to or evidencing the receivable; and any defense or claim in recoupment arising from the transaction that gave rise to the contracts; and |
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• | any other defense or claim of the obligor against the assignor of such receivable which accrues before the obligor receives notification of the assignment. |
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• | subject to certain assumptions (including the assumption that the books and records relating to the assets and liabilities of any Originator will at all times be maintained separately from those relating to the assets and liabilities of the depositor, the depositor will prepare its own balance sheets and financial statements and there will be no commingling of the assets of that Originator with those of the depositor) the assets and liabilities of the depositor should not be substantively consolidated with the assets and liabilities of that Originator in the event of a petition for relief under the Bankruptcy Code with respect to that Originator; and the transfer of receivables by any Originator should constitute an absolute transfer, and, therefore, such receivables would not be property of that Originator in the event of the filing of an application for relief by or against any Originator under the Bankruptcy Code or, in the case of an Originator that is subject to regulation by the Federal Deposit Insurance Corporation (“FDIC”), the receivables will either be subject to a valid, perfected security interest that will not be subject to avoidance by the FDIC or will satisfy the requirements of the FDIC pursuant to which the FDIC, as conservator or receiver, would not seek to treat the receivables and collections thereon as that Originator’s property or property of the conservatorship or receivership. See “Material Legal Aspects of the Receivables—Certain Matters Relating to Bankruptcy—Certain Matters Relating to the Federal Deposit Insurance Corporation” in this prospectus. |
• | subject to certain assumptions, the assets and liabilities of the depositor would not be substantively consolidated with the assets and liabilities of any Originator in the event of a petition for relief under the Bankruptcy Code with respect to any Originator; and | ||
• | the transfer of receivables by that Originator constitutes an absolute transfer and would not be included in the applicable Originator’s bankruptcy estate or subject to the automatic stay provisions of the Bankruptcy Code. |
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• | 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. |
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• | Certificates representing interests in a trust which the depositor, the servicer and the applicable certificateholders will agree to treat as equity interests in a grantor trust (a “Tax Trust”). Upon the issuance of each series of notes or certificates, if the applicable prospectus supplement specifies that the trust is a Tax Trust, Special Tax Counsel is of the opinion that the trust will not be taxable as an association or publicly traded partnership taxable as a corporation, but should be classified as a grantor trust under Sections 671 through 679 of the Internal Revenue Code. Special Tax Counsel is of the opinion that the trust will not be subject to United States federal income tax, and Special Tax Counsel is of the opinion that the certificates will represent a pro rata undivided interest in the income and assets of the Tax Trust. | ||
• | Certificates or membership interests—including Strip Certificates—and Strip Notes (“Partnership Certificates”), representing interests in a trust or limited liability company which the depositor, the servicer and the applicable holders will agree to treat as equity interests in a partnership (a “Tax Partnership”). Upon the issuance of the notes or Partnership Certificates, if the applicable prospectus supplement specifies that the trust or limited liability company is a Tax Partnership, Special Tax Counsel is of the opinion that the trust or limited liability company will be treated as a partnership and not as an association or publicly traded partnership taxable as a corporation and that the trust or limited liability company will not be subject to United States federal income tax. Special Tax Counsel is also of the opinion that the Partnership Certificates will be treated as partnership interests in the Tax Partnership. | ||
• | Certificates or membership interests (“Tax Non-Entity Certificates"), all of which are owned by the depositor or an affiliate (the “Initial Certificateholder”) representing interests in a trust or limited liability company, as the case may be, which the depositor and the servicer will agree to treat as a division of the Initial Certificateholder for purposes of federal, state and local income, franchise, and value-added taxes (a “Tax Non-Entity"). In the case of an issuing entity treated as a Tax Non-Entity, Special Tax Counsel is of the opinion that the issuing entity will not be treated as an association or publicly traded partnership taxable as a corporation for United States federal income tax purposes. |
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• | is not actually or constructively a “10 percent shareholder” of a Tax Trust, Tax Partnership or the depositor, 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 depositor is a “related person” within the meaning of the Internal Revenue Code, and | ||
• | provides an appropriate statement on IRS Form W-8BEN 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. |
• | 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. |
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• | 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. |
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(x) | three months or ninety days after the Closing Date for that transaction; | ||
(y) | the date on which an event of default occurs; or | ||
(z) | the date the amount in the pre-funding account is less than the minimum dollar amount specified in the indenture, if any, or other agreement(s) among the depositor, a servicer and trustee. |
(a) | is an “eligible swap”. An “eligible swap” is one which: |
(1) | is denominated in U.S. dollars; | ||
(2) | pursuant to which the issuing entity pays or receives, on or immediately prior to the respective payment or distribution date for the class of certificates to which the swap relates, a fixed rate of interest or a floating rate of interest based on a publicly available index (e.g., LIBOR or the U.S. Federal Reserve’s Cost of Funds Index (COFI)), with the issuing |
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entity receiving such payments on at least a quarterly basis and obligated to make separate payments no more frequently than the counterparty, with all simultaneous payments being netted; | |||
(3) | has a notional amount that does not exceed either: (i) the principal balance of the class of certificates to which the swap relates, or (ii) the portion of the principal balance of such class represented by obligations; | ||
(4) | is not leveraged (i.e., payments are based on the applicable notional amount, the day count fractions, the fixed or floating rates permitted above, and the difference between the products thereof, calculated on a one-to-one ratio and not on a multiplier of such difference); | ||
(5) | has a final termination date that is either the earlier of the date on which the issuing entity terminates or the related class of certificates are fully repaid; and | ||
(6) | does not incorporate any provision which could cause a unilateral alteration in the interest rate requirements described above or the prohibition against leveraging; |
(b) | is with an “eligible counterparty”. An “eligible counterparty” means a bank or other financial institution which has a rating at the date of issuance of the certificates, which is in one of the three highest long-term credit rating categories or one of the two highest short-term credit rating categories, utilized by at least one of the rating agencies rating the certificates; provided that, if a counterparty is relying on its short-term rating to establish eligibility hereunder, such counterparty must either have a long-term rating in one of the three highest long-term rating categories or not have a long-term rating from the applicable rating agency; | ||
(c) | is purchased by a “qualified plan investor”. A “qualified plan investor” is an employee benefit plan or plans where the decision to buy such class of certificates is made on behalf of the employee benefit plan by an independent fiduciary qualified to understand the swap transaction and the effect the swap would have on the rating of the certificates and such fiduciary is either |
(1) | a “qualified professional asset manager” (“QPAM”) under Prohibited Transaction Class Exemption (“PTCE”) 84-14 (a QPAM generally would include for these purposes insurance companies, savings and loan associations, banks and registered investment advisers registered under the Investment Advisers Act of 1940, each meeting certain minimum capitalization requirements); or | ||
(2) | an “in-house asset manager” under PTCE 96-23 (see below); or | ||
(3) | has total assets (both employee benefit plan and non-employee benefit plan) under management of at least $100 million at the time the certificates are acquired by the employee benefit plan; |
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(d) | if a “rating dependent swap” (where the rating of a class of certificates is dependent on the terms and conditions of the swap), the swap agreement must provide that if the credit rating of the counterparty is withdrawn or reduced by any rating agency below a level specified by the rating agency, the servicer must, within the period specified under the pooling and servicing agreement: |
(1) | obtain a replacement swap agreement with an eligible counterparty which is acceptable to the rating agency and the terms of which are substantially the same as the current swap agreement (at which time the earlier swap agreement must terminate); or | ||
(2) | cause the swap counterparty to establish any collateralization or other arrangement satisfactory to the rating agency such that the then current rating by the rating agency of the particular class of certificates will not be withdrawn or reduced (and the terms of the swap agreement must specifically obligate the counterparty to perform these duties for any class of certificates with a term of more than one year). |
(e) | if a “non-ratings dependent swap” (those where the rating of the certificates does not depend on the terms and conditions of the swap) the swap agreement must provide that if the credit rating of the counterparty is withdrawn or reduced below the lowest level permitted above, the servicer will, within a specified period after such rating withdrawal or reduction: |
(1) | obtain a replacement swap agreement with an eligible counterparty, the terms of which are substantially the same as the current swap agreement (at which time the earlier swap agreement must terminate); | ||
(2) | cause the counterparty to post collateral with the issuing entity in an amount equal to all payments owed by the counterparty if the swap transaction were terminated; or | ||
(3) | terminate the swap agreement in accordance with its terms; and |
(f) | permits the issuing entity to make termination payments to the swap counterparty (other than currently scheduled payments) solely from excess spread or amounts otherwise payable to the servicer or depositor. |
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• | a benefit plan’s investment in the notes or certificates does not exceed 25% of all of the notes or certificates outstanding at the time of the acquisition; | ||
• | immediately after the acquisition, no more than 25% of the assets of a benefit plan with respect to which the person who has discretionary authority to render investment advice are invested in securities representing an interest in an issuing entity containing assets sold or serviced by the same entity; and | ||
• | in the case of the acquisition of notes or certificates in connection with their initial issuance, at least 50% of such securities are acquired by persons independent of the restricted group and at least 50% of the aggregate interest in the issuing entity is acquired by persons independent of the restricted group. |
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• | 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. |
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• | rated by at least one nationally recognized statistical rating agency or organization that initially rates the series at the request of the depositor; and | ||
• | identified in the applicable prospectus supplement as being in one of the four highest generic rating categories, which are referred to as “investment grade,” of the rating agencies identified in the applicable prospectus supplement as rating the offered securities. |
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administration agreement | 27 | |||
amortization period | 23 | |||
Bankruptcy Code | 43 | |||
benefit plan | 60 | |||
Clearstream | 24 | |||
Closing Date | 71 | |||
Code | 47 | |||
collection period | 71 | |||
contribution agreement | 27 | |||
Controlling Class | 71 | |||
defaulted receivable | 71 | |||
depositor | 11 | |||
disqualified persons | 60 | |||
DTC | 20 | |||
ERISA | 60 | |||
Euroclear | 24 | |||
event of default | 36 | |||
Exchange Act | 18 | |||
FDIA | 45 | |||
FDIC | 44 | |||
Financial Institution | 71 | |||
FIRREA | 45 | |||
Fitch | 71 | |||
Foreign Person | 71 | |||
FTC Rule | 43 | |||
HDC Rule | 43 | |||
Initial Certificateholder | 48 | |||
Internal Revenue Code | 36 | |||
IRS | 47 | |||
Issuing Entity Accounts | 71 | |||
issuing entity property | 11 | |||
Moody’s | 71 | |||
Net Pool Balance | 71 | |||
Note Factor | 71 | |||
OID | 49 | |||
Originators | 71 | |||
parties in interest | 60 | |||
Partnership Certificates | 48, 72 |
Payment Date | 72 | |||
Permitted Investments | 72 | |||
plan assets regulation | 60 | |||
Pool Factor | 72 | |||
Prepayment Assumption | 72 | |||
prohibited transaction | 60 | |||
PTCE | 61 | |||
purchase agreement | 26 | |||
receivables pool | 14 | |||
Record Date | 72 | |||
Regulation | 72 | |||
Relief Act | 42 | |||
restricted group | 62 | |||
revolving period | 23 | |||
sale and servicing agreement | 27 | |||
sale and servicing agreements | 27 | |||
Scheduled Interest Method | 72 | |||
SEC | 72 | |||
Securities Act | 30 | |||
servicing agreement | 27 | |||
Short-Term Note | 72 | |||
Simple Interest Method | 72 | |||
Simple Interest Receivables | 72 | |||
Special Tax Counsel | 73 | |||
Standard & Poor’s | 73 | |||
Strip Certificates | 73 | |||
Strip Notes | 73 | |||
stripped bonds | 53 | |||
Tax Non-Entity | 48, 73 | |||
Tax Non-Entity Certificates | 48, 73 | |||
Tax Partnership | 48, 73 | |||
Tax Trust | 48, 73 | |||
transfer agreement | 26 | |||
transfer agreements | 26 | |||
Trust Certificates | 74 | |||
Volkswagen AG | 15 | |||
Volkswagen Group of America | 14 | |||
VW Credit | 11 |
I-1
Issuing Entities
Depositor
Sponsor and Servicer
• | a certificate evidencing a 100% beneficial interest in a pool of closed-end vehicle leases and the related leased vehicles, including the lease payments and the right to payment received from the sale or other disposition of the leased vehicles; | ||
• | funds in the accounts of the issuing entity (including investment earnings, net of losses and investment expenses, on amounts on deposit therein); and | ||
• | any credit enhancement issued in favor of the issuing entity. |
• | will represent indebtedness of the issuing entity that issued those securities, in the case of the notes, or beneficial interests in the issuing entity that issued those securities, in the case of the certificates; | ||
• | will be paid only from the assets of the issuing entity that issued those securities; | ||
• | will represent the right to payments in the amounts and at the times described in the accompanying applicable 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/or one or more classes of certificates. |
PROSPECTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT
• | the type of securities offered; | ||
• | certain risks relating to an investment in the securities; | ||
• | the timing and amount of interest payments on and principal payments of the securities; | ||
• | the leases and related leased vehicles underlying your securities; | ||
• | the credit enhancement for each class of securities; | ||
• | the credit ratings for each class of securities; and | ||
• | the method of selling the securities. |
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You must rely for repayment only upon the issuing entity’s assets which may not be sufficient to make full payments on your securities. | Your securities are either secured by, or represent beneficial interests solely in the assets of, the related issuing entity. Your securities will not represent an interest in or an obligation of VW Credit, the origination trust, the depositor or any of their respective affiliates. Distributions on any class of securities will depend solely on the amount and timing of payments and other collections in respect of the related leases and any credit enhancement or cash flow enhancement for the securities. We cannot assure you that these amounts, together with sales proceeds of the related leased vehicles, will be sufficient to make full and timely distributions on your securities. The securities and the leases will not be insured or guaranteed, in whole or in part, by the United States or any governmental entity or, unless specifically set forth in the applicable prospectus supplement, by any provider of credit enhancement or cash flow enhancement. | |
You may experience a loss or a delay in receiving payments on the securities if the assets of the issuing entity are liquidated. | If certain events of default under the indenture occur and the securities of a series are accelerated, the related indenture trustee may liquidate the assets of the related issuing entity. If a liquidation occurs close to the date when any class otherwise would have been paid in full, repayment of that class might be delayed while liquidation of the assets is occurring. The issuing entity cannot predict the length of time that will be required for liquidation of the assets of the issuing entity to be completed. In addition, liquidation proceeds may not be sufficient to repay the securities of that series in full. Even if liquidation proceeds are sufficient to repay the securities in full, any liquidation that causes the outstanding principal balance of a class of securities to be paid before the related final scheduled payment date will involve the prepayment risks described under “Risk Factors—Returns on your investments may be reduced by prepayments on the leases, events of default, optional redemption of the securities or reallocations of the leases and leased vehicles from the Transaction SUBI” in this prospectus. | |
Vicarious tort liability may result in a loss | Some states allow a party that incurs an injury involving a vehicle to sue the owner of the vehicle merely because of that ownership. As owner of the vehicles, the origination trust may be subject to these lawsuits. Most, but not all, states, however, either prohibit these vicarious liability suits against leasing companies or limit the lessor’s liability to the amount of liability insurance that the lessee was required to carry under applicable law but failed to maintain. | |
On August 10, 2005, President George W. Bush signed into law the Safe Accountable, Flexible, and Efficient Transportation Equity Act of 2005 (the “Transportation Act”), Pub. L. No. 109-59. The Transportation Act provides that an owner of a motor vehicle that rents or leases the vehicle to a person will not be liable under the law of a state or political subdivision by reason of being the owner of the vehicle, for harm to persons or property that results or arises out of the use, operation, or possession of the vehicle during the period of the rental or lease, if (i) the owner (or an affiliate of the owner) is |
1
engaged in the trade or business of renting or leasing motor vehicles; and (ii) there is no negligence or criminal wrongdoing on the part of the owner (or an affiliate of the owner). This provision of the Transportation Act was effective upon enactment and applies to any action commenced on or after August 10, 2005. The Transportation Act is intended to preempt state and local laws that impose possible vicarious tort liability on entities owning motor vehicles that are rented or leased and it is expected that the Transportation Act should reduce the likelihood of vicarious liability being imposed on the origination trust. State and federal courts considering whether the Transportation Act preempts state laws permitting vicarious liability have generally concluded that such laws are preempted with respect to cases commenced on or after August 10, 2005. While the vast majority of courts have concluded that the Transportation Act preempts state laws permitting vicarious liability, one New York lower court has reached a contrary conclusion in a case involving a leasing trust. This New York court concluded that the preemption provision in the Transportation Act was an unconstitutional exercise of congressional authority under the Commerce Clause of the United States Constitution and, therefore, did not preempt New York law regarding vicarious liability. This decision, however, was reversed on appeal by the appellate division of the Supreme Court of New York. | ||
The servicer will be required to maintain liability insurance coverage on behalf of the origination trust. However, this coverage is subject to deductibles and claims could be imposed against the assets of the origination trust which could exceed that coverage. In the event the servicer fails to maintain this liability insurance coverage, the deductible is not satisfied or the insurance coverage protecting the origination trust is insufficient to cover, or does not cover, a material claim, that claim could be satisfied out of the proceeds of the vehicles and leases allocated to the Transaction SUBI for your series of securities and you could incur a loss on your investment. | ||
For a discussion of the possible liability of the origination trust in connection with the use or operation of the leased vehicles, you should refer to “Additional Legal Aspects of the Leases and the Leased Vehicles—Vicarious Tort Liability” in this prospectus. | ||
You may experience a loss if defaults on the leases or residual value losses exceed the available credit enhancement | The issuing entity does not have, nor is it permitted or expected to have, any significant assets or sources of funds other than the related Transaction SUBI certificate, together with its right to payments under any interest rate or currency swap or cap agreement or credit enhancement and available funds in certain accounts. The securities of a series represent obligations solely of the issuing entity and will not be insured or guaranteed by any entity unless otherwise indicated in the applicable prospectus supplement. Accordingly, you will rely primarily upon collections on the leases and the related leased vehicles allocated to the Transaction SUBI owned by the issuing entity for your series of securities and, to the extent available, any credit enhancement for the issuing entity, including payments under any interest rate or currency swap or cap agreement and amounts on deposit in any reserve account or similar account. Funds on deposit in any reserve account or similar account will cover delinquencies on the leases and losses on the leases and leased vehicles up to some |
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level. However, if delinquencies and losses create shortfalls which exceed the available credit enhancement for your series of securities, you may experience delays in payments due to you and you could suffer a loss. You will have no claim to any amounts properly distributed to the depositor or to others from time to time. | ||
In establishing the stated residual value of leased vehicles, VW Credit uses an internally developed proprietary model. There is no guarantee that the assumptions regarding future events that are used to determine residual values will prove to be correct. If the stated residual values of the leased vehicles as originally determined by VW Credit are substantially higher than the sales proceeds actually realized upon the sale of the leased vehicles, you may suffer losses if the available credit enhancement for your series of securities is exceeded. | ||
For a discussion of factors that may contribute to residual value losses, you should refer to “Risk Factors—Used car market factors may increase the risk of loss on your investment,” “Risk Factors—Increased turn-in rates may increase losses” and “Origination and Servicing Procedures—Determination of Residual Values” in this prospectus, “Risk Factors—The concentration of leased vehicles to particular models could negatively affect the issuing entity’s assets” and “—The geographic concentration of the leases, economic factors and lease performance could negatively affect the issuing entity’s assets” in the accompanying prospectus supplement. | ||
The failure to make interest and principal payments on any securities of a series will generally not result in an event of default under the related indenture until the applicable final scheduled payment date | The amount of interest and principal required to be paid to investors prior to the applicable final scheduled payment date set forth in the applicable prospectus supplement generally will be limited to amounts available for those purposes. Therefore, the failure to pay interest on or principal of a note generally will not result in an event of default under the indenture until the applicable final scheduled payment date for that series of securities. | |
Interests of other persons in the leases and the leased vehicles could be superior to the issuing entity’s interest, which may result in delayed or reduced payment on your securities | Because the Transaction SUBI will represent a beneficial interest in the related Transaction SUBI assets, you will be dependent on payments made on the leases allocated to the Transaction SUBI for your series of securities and proceeds received in connection with the sale or other disposition of the related leased vehicles for payments on your securities. The issuing entity of a series of securities will not have a direct ownership interest in the leases or a direct ownership interest or perfected security interest in the related leased vehicles — which will be titled in the name of the origination trust. It is therefore possible that a claim against or lien on the leased vehicles or the other assets of the origination trust could limit the amounts payable in respect of the Transaction SUBI certificate to less than the amounts received from the lessees of the leased vehicles or received from the sale or other disposition of the leased vehicles. | |
In addition, as described under “The Transaction Documents—Like Kind Exchange Program”, the indenture trustee will not have a security interest in leased vehicle sale proceeds held by the qualified intermediary, which could result in losses on your securities in the event of a bankruptcy of the servicer. |
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Further, liens in favor of and/or enforceable by the Pension Benefit Guaranty Corporation could attach to the leases and leased vehicles owned by the origination trust (including the leases and the leased vehicles allocated to the related Transaction SUBI) and could be used to satisfy unfunded ERISA obligations of any member of a controlled group that includes VW Credit, Inc. and its affiliates. Because these liens could attach directly to the leases and leased vehicles allocated to the related Transaction SUBI and because the issuing entity does not have a prior perfected security interest in the assets of the related Transaction SUBI, these liens could have priority over the interest of the issuing entity in the assets of the related Transaction SUBI. | ||
To the extent a third-party makes a claim against, or files a lien on, the assets of the origination trust, including the leased vehicles allocated to the related Transaction SUBI for your series of securities, it may delay the disposition of those leased vehicles or reduce the amount paid to the holder of the related Transaction SUBI certificate. If that occurs, you may experience delays in payment or losses on your investment. | ||
For more information on the effect of third-party claims or liens on payment of the securities, you should refer to “Additional Legal Aspects of the Origination Trust and the Transaction SUBI—Allocation of Origination Trust Liabilities” in this prospectus. | ||
If ERISA liens are placed on the origination trust assets, you could suffer a loss | Liens in favor of the Pension Benefit Guaranty Corporation could attach to the leases and leased vehicles owned by the origination trust (including the leases and the leased vehicles allocated to a Transaction SUBI) and could be used to satisfy unfunded pension obligations of any member of a controlled group that includes VW Credit and its affiliates which has unfunded pension liabilities under its defined benefit pension plans. Because these liens could attach directly to the leases and leased vehicles and because the issuing entity does not have a prior perfected security interest in the assets included in a Transaction SUBI, these liens could have priority over the interest of the issuing entity in the assets included in the related Transaction SUBI. | |
From time to time, the rating agencies rating your securities may request information with respect to any defined benefit pension plans maintained or sponsored by VW Credit or any of its affiliates. Although VW Credit will use reasonable efforts to comply with such request, there is no assurance that VW Credit will be able to provide the requested information. Any rating downgrade could result in a decline in the market value of your securities. | ||
As of the date of this prospectus, neither VW Credit nor any of its affiliates had any material unfunded liabilities with respect to their respective defined benefit pension plans. | ||
The securities are not suitable investments for all investors, and may not be a suitable investment for you | The securities are not a suitable investment for you if you require a regular or predictable schedule of payments. 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, residual value, default and market risk, the tax consequences of an investment in the |
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securities or payment on any specific date and the interaction of these factors. | ||
The ratings for the securities are limited in scope, may not continue to be issued and do not consider the suitability of an investment in the securities for you | We will offer a class of securities only if that class receives the rating specified in the applicable prospectus supplement. The rating considers only the likelihood that the issuing entity will pay interest on time and will ultimately pay principal in full or make full distributions of the outstanding balance of the securities. A security rating is not a recommendation to buy, sell or hold the securities. Ratings on the securities may be lowered, qualified or withdrawn at any time after the notes are issued without notice from the issuing entity or the depositor. A rating downgrade may reduce the price that a subsequent purchaser will be willing to pay for the securities. Ratings on the securities do not address the timing of distributions of principal on the securities prior to the applicable final scheduled payment 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. | |
The absence of a secondary market for the securities could limit your ability to resell your securities | If you want 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. | |
A depositor or sponsor bankruptcy could delay or limit payments to you | Following a bankruptcy or insolvency of the sponsor or the depositor, a court could conclude that the Transaction SUBI certificate for your series of securities is owned by the sponsor or the depositor, instead of the issuing entity. This conclusion could be either because the transfer of that Transaction SUBI certificate from VW Credit to the depositor or from the depositor to the related issuing entity was not a true sale or because the court concluded that the depositor or the issuing entity should be treated as the same entity as the sponsor or the depositor, respectively, for bankruptcy purposes. If this were to occur, you could experience delays in payments due to you or you may not ultimately receive all amounts due to you as a result of: | |
• the automatic stay, which prevents a secured creditor from exercising remedies against a debtor in bankruptcy without permission from the court, and provisions of the United States Bankruptcy Code that permit substitution of collateral in limited circumstances; | ||
• tax or government liens on the sponsor’s or the depositor’s property (that arose prior to the transfer of the Transaction SUBI certificate to the issuing entity) having a prior claim on collections before the collections are used to make |
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payments on the securities; or | ||
• the fact that neither the issuing entity nor the indenture trustee for your series of securities has a perfected security interest in the leases and leased vehicles allocated to the Transaction SUBI and may not have a perfected security interest in any cash collections of the leases and leased vehicles allocated to the Transaction SUBI held by the servicer at the time that a bankruptcy proceeding begins. | ||
For a discussion of how a bankruptcy proceeding of the sponsor or the depositor may affect the issuing entity and the securities, you should refer to “Additional Legal Aspects of the Origination Trust and the Transaction SUBI—Insolvency Related Matters” in this prospectus. | ||
Adverse events with respect to VW Credit or its affiliates or third party providers to whom VW Credit outsources its activities could affect the timing of payments on your securities or have other adverse effects on your securities | Adverse events with respect to VW Credit or any of its affiliates or a third party provider to whom VW Credit outsources its activities could result in servicing disruptions or reduce the market value of your securities. In the event of a termination and replacement of VW Credit as the servicer, there may be some disruption of the collection activity with respect to delinquent leases and therefore delinquencies and credit losses could increase. Similarly, if VW Credit becomes unable to repurchase the beneficial interest in any Units which do not comply with representations and warranties about the Units made by VW Credit in the related SUBI Transfer Agreement (for example, representations relating to the compliance of the lease contracts with applicable laws or representations relating to amounts required to be received upon the exercise of purchase options by the lessees thereunder), then investors could suffer losses. In addition, adverse corporate developments with respect to servicers of asset-backed securities or their affiliates have in some cases also resulted in a reduction in the market value of the related asset-backed securities. For example, VW Credit is an indirect wholly-owned subsidiary of Volkswagen AG. Although Volkswagen AG is not guaranteeing the obligations of the issuing entity for any series of securities, if Volkswagen AG ceased to manufacture vehicles or support the sale of vehicles or if Volkswagen AG faced financial or operational difficulties, such events may reduce the market value of Volkswagen and Audi vehicles, and ultimately the amount realized on any Volkswagen or Audi leased vehicle, including the leased vehicles allocated to the Transaction SUBI for your series of securities. | |
The servicer’s commingling of funds with its own funds could result in a loss | Subject to the satisfaction of certain conditions set forth in the applicable prospectus supplement, VW Credit, as the servicer, may be able to commingle funds relating to this transaction such as security deposits, collections from the leases and proceeds from the disposition of the related leased vehicles with its own funds during each collection period and may be able to make a single deposit to the collection account on each payment date. See “The Transaction Documents—The Servicing Agreement” in this prospectus. Commingled funds may be used or invested by the servicer at its own risk and for its own benefit. If the servicer were unable to remit such funds or the servicer were to become a debtor under any insolvency laws, delays or reductions in distributions to you may occur. In addition, if the servicer failed to remit to the lessees the required |
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portions of their security deposits at the expiration of their leases, the origination trust could be held liable for those portions of the security deposits, and investors in the securities could incur a loss on their investment as a result. | ||
The return on your securities may be reduced due to varying economic circumstances | A deterioration in economic conditions could adversely affect the ability and willingness of lessees to meet their payment obligations under the leases. As a result, you may experience payment delays and losses on your securities. Further, the market values of the related leased vehicles could increase or decrease based on economic conditions. No prediction or assurance can be made as to the effect of an economic downturn or economic growth on the rate of delinquencies, prepayments, residual values and/or losses on the leases. | |
Used car market factors may increase the risk of loss on your investment | The used car market is affected by supply and demand, consumer tastes, economic factors and manufacturer decisions on pricing of new car models. For instance, introduction of a new model by Volkswagen AG or its affiliates may impact the resale value of the existing portfolio of similar model types. Discount pricing incentives or other marketing incentive programs on new cars by Volkswagen AG or by its competitors that effectively reduce the prices of new cars may have the effect of reducing demand by consumers for used cars. Other factors that are beyond the control of the issuing entity, the depositor and the servicer could also have a negative impact on the resale value of a vehicle. If the proceeds actually realized upon the sale of the leased vehicles are substantially lower than the residual values originally established by VW Credit, you may suffer a loss on your investment. | |
Increased turn-in rates may increase losses | Under each lease, the lessee may elect to purchase the related vehicle at the expiration of the lease for an amount generally equal to the stated residual value established at the inception of the lease. Lessees who decide not to purchase their related vehicles at lease expiration will expose the issuing entity to possible losses if the sale prices of those vehicles in the used car market are less than their respective stated residual values. The level of turn-ins at termination of the leases could be adversely affected by lessee views on vehicle quality, the relative attractiveness of new models available to the lessees, sales and lease incentives offered with respect to other vehicles (including those offered by VW Credit), the level of the purchase option prices for the related vehicles compared to new and used vehicle prices and economic conditions generally. The grant of extensions and the early termination of leases by lessees may affect the number of turn-ins in a particular month. If losses resulting from increased turn-ins exceed the credit enhancement for your series of securities, you may suffer a loss on your investment. | |
The return on your securities could be reduced by shortfalls due to application of the Servicemembers Civil Relief Act | The Servicemembers Civil Relief Act and similar laws of many states may provide relief to members of the military on active duty, including reservists, who have entered into an obligation, such as a lease contract for a lease of a vehicle, before entering into military service and provide that under some circumstances the lessor may not terminate the lease contract for breach of the terms of the contract including nonpayment. Furthermore, under the Servicemembers Civil Relief Act, a lessee may terminate a lease of a vehicle at |
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anytime after the lessee’s entry into military service or the date of the lessee’s military orders (as described below) if (i) the lease is executed by or on behalf of a person who subsequently enters military service under a call or order specifying a period of not less than 180 days (or who enters military service under a call or order specifying a period of 180 days or less and who, without a break in service, receives orders extending the period of military service to a period of not less than 180 days); or (ii) the lessee, while in the military, executes a lease of a vehicle and thereafter receives military orders for a permanent change of station outside of the continental United States or to deploy with a military unit for a period of not less than 180 days. No early termination charge may be imposed on the lessee for such termination. No information can be provided as to the number of leases that may be affected by these laws. In addition, current military operations of the United States, including military operations in Iraq and the Middle East, have increased and may continue to increase the number of citizens who are in active military service, including persons in reserve status who have been called or will be called to active duty. In addition, these laws may impose limitations that would impair the ability of the servicer to repossess a defaulted vehicle during the lessee’s period of active duty status. If a lessee’s obligation to make lease payments is reduced, adjusted or extended, or if the lease is terminated early and no early termination charge is imposed, the servicer will not be required to advance those amounts. Any resulting shortfalls in interest or principal will reduce the amount available for distribution on the securities of any series. | ||
For more information regarding the effect of the Servicemembers Civil Relief Act, you should refer to “Additional Legal Aspects of the Leases and the Leased Vehicles—Servicemembers Civil Relief Act” in this prospectus. | ||
Failure to comply with consumer protection laws could result in a loss | Federal and state consumer protection laws, including the federal Consumer Leasing Act of 1976 and Regulation M promulgated by the Board of Governors of the Federal Reserve System, impose requirements on retail lease contracts such as the leases. The failure by the origination trust to comply with these requirements may give rise to liabilities on the part of the origination trust or the issuing entity of a series of securities (as owner of the related Transaction SUBI). Further, many states have adopted “lemon laws” that provide vehicle users certain rights in respect of substandard vehicles. A successful claim under a lemon law could result in, among other things, the termination of the related lease and/or the requirement that a portion of payment previously paid by the lessee be refunded. VW Credit will represent and warrant that each lease complies with applicable law in all material respects. If that representation and warranty relating to any lease allocated to the Transaction SUBI for a series of securities proves incorrect, materially and adversely affects the interests of the issuing entity and is not timely cured, VW Credit will be required to repurchase the beneficial interest in the noncompliant lease and related vehicle from the issuing entity. To the extent that VW Credit fails to make such a repurchase, or to the extent that a court holds the origination trust or the issuing entity liable for violating consumer protection laws regardless of such a repurchase, a failure to comply with consumer protection laws could result in required payments by the origination |
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trust or the issuing entity. If sufficient funds are not available to make both payments to lessees and on your securities, you may suffer a loss on your investment in the securities. | ||
For a discussion of federal and state consumer protection laws which may affect the leases, you should refer to “Additional Legal Aspects of the Leases and the Leased Vehicles—Consumer Protection Laws” in this prospectus. | ||
Changes to federal or state bankruptcy or debtor relief laws may impede collection efforts or alter timing and amount of collections, which may result in acceleration of or reduction in payment on your securities | If a lessee sought protection under federal or state bankruptcy or debtor relief laws, a court could reduce or discharge completely the lessee’s obligations to repay amounts due on its lease. As a result, that lease would be written off as uncollectible. You could suffer a loss if no funds are available from credit enhancement or other sources and finance charge amounts allocated to the securities are insufficient to cover the applicable default amount. | |
VW Credit, the servicer and the depositor have limited obligations to the issuing entity with respect to repurchases | VW Credit, the servicer, the depositor and their affiliates are not obligated to make any payments to you on your securities. However, VW Credit will, and the depositor may, make representations and warranties about the characteristics of the leases and leased vehicles allocated to the related Transaction SUBI. If a representation or warranty made by VW Credit or the depositor is untrue, or if VW Credit or the depositor breaches a covenant with respect to a lease or a leased vehicle, then VW Credit, the depositor or another entity may be required to repurchase the beneficial interest in that lease and the related leased vehicle. In addition, in some circumstances, the servicer may be required to purchase the beneficial interest in leases and leased vehicles if a covenant made by the servicer with respect to the leases or leased vehicles is breached. While the depositor, VW Credit and the servicer may be obligated to reallocate or repurchase any beneficial interest in a lease and related leased vehicle if there is a breach of any of their respective representations and warranties relating thereto which materially and adversely affects the interests of the issuing entity, as set forth in the applicable prospectus supplement, there can be no assurance given that the depositor, VW Credit or the servicer, as applicable, will financially be in a position to fund its repurchase obligation and you might experience delays or reductions in payments on your securities. | |
Returns on your investments may be reduced by prepayments on the leases, events of default, optional redemption of the securities or reallocations of the leases and leased vehicles from the Transaction SUBI | You may receive payments on your securities earlier than you expected for the reasons set forth below. You may not be able to invest the amounts 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. | |
• The rate of return of principal is uncertain. The amount of distributions of principal of your securities and the time when you receive those distributions depend on the rate of payments and losses on the leases and the leased vehicles. Prepayments, liquidations of defaulted leases or reallocations from the Transaction SUBI of leases and the related vehicles that do not meet certain eligibility criteria will shorten the life of the securities to an extent that cannot be fully predicted. Further, the leases allocated to a |
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Transaction SUBI may be prepaid, in full or in part, voluntarily or as a result of defaults, theft of or damage to the related leased vehicles or for other reasons. For example, a lessee under certain circumstances may elect to terminate the lease prior to its maturity. Each of these payments will have the effect of accelerating the payment of principal and shortening the average lives of the outstanding securities of a series. | ||
• You may be unable to reinvest distributions in comparable investments. The occurrence of an optional redemption event or events of default resulting in acceleration may require repayment of the securities prior to the expected principal payment date for one or more classes of securities of a series. Asset-backed securities, like the securities, usually produce a faster return of principal to investors if market interest rates fall below the interest rates on the receivables and produce a slower return 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 your securities, and are likely to receive less money to reinvest when other investments generally are producing a higher yield than that on your 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 redemption of the securities from an optional redemption will shorten the life of your investment which may reduce your yield to maturity. If the Transaction SUBI is sold upon exercise of a “clean-up call” by the servicer or the depositor, as specified in the applicable prospectus supplement, the issuing entity will redeem the securities and you will receive the remaining principal amount of your securities plus any other amounts due to securityholders, such as accrued interest through the related payment date. Because your securities will no longer be outstanding, you will not receive the additional interest payments or other distributions 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 redemption had not been exercised. | ||
Because the securities are in book-entry form, your rights can only be exercised indirectly | Clearstream Banking, société anonyme or Euroclear Bank S.A./NV as operator of the Euroclear System in Europe or Asia. Transfers of interests in the securities within The Depository Trust Company, Clearstream Banking, société anonyme or Euroclear Bank S.A./NV as operator of the Euroclear System must be made in accordance with the usual rules and operating procedures of those systems. So long as the securities are in book-entry form, you will not be entitled to receive a definitive note representing your interest. The securities of a series will remain in book-entry form except in the limited circumstances described under the caption “The Securities—Definitive Securities” in this prospectus. Unless and until the |
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securities cease to be held in book-entry form, the related transaction parties will not recognize you as a holder of the related security. As a result, you will only be able to exercise the rights as a securityholder indirectly through The Depository Trust Company (if in the United States) and its participating organizations, or Clearstream Banking, société anonyme and Euroclear Bank S.A./NV as operator of the Euroclear System (in Europe or Asia) and their participating organizations. Holding the securities in book-entry form could also limit your ability to pledge or transfer your securities to persons or entities that do not participate in The Depository Trust Company, Clearstream Banking, société anonyme or Euroclear Bank S.A./NV as operator of the Euroclear System. In addition, having the securities in book-entry form may reduce their liquidity in the secondary market since certain potential investors may be unwilling to purchase securities for which they cannot obtain physical notes. | ||
Interest and principal on the securities of any series will be paid by the related issuing entity to The Depository Trust Company as the record holder of those securities while they are held in book-entry form. The Depository Trust Company will credit payments received from the issuing entity to the accounts of its participants which, in turn, will credit those amounts to securityholders either directly or indirectly through indirect participants. This process may delay your receipt of payments from the issuing entity. | ||
The servicer’s discretion over the servicing of the leases may impact the amount and timing of funds available to make payments on the securities | The servicer is obligated to service the leases and related leased vehicles in accordance with its customary practices. The servicer has discretion in servicing the leases and the related leased vehicles, including the ability to grant payment extensions and to determine the timing and method of collection and liquidation procedures. In addition, the servicer’s customary practices may change from time to time and those changes could reduce collections on the leases and related leased vehicles. Although the servicer’s customary practices at any time will apply to all vehicles and leases held by the origination trust, without regard to whether a vehicle and related lease has been allocated to a securitization transaction, the servicer is not obligated to maximize collections from the leases and related leased vehicles. Consequently, the manner in which the servicer exercises its servicing discretion or changes its customary practices could have an impact on the amount and timing of collections on the leases and the related leased vehicles, which may impact the amount and timing of funds available to make payments on the securities. |
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• | to establish a special unit of beneficial interest in the origination trust (each, a“Transaction SUBI”); and | ||
• | to allocate a separate portfolio of leases and the related vehicles leased under the leases and some related assets of the origination trust to such Transaction SUBI. A lease, the related leased vehicle and the other origination trust assets directly related to the lease and leased vehicle are collectively called a“Unit”, and all of the Units allocated to a Transaction SUBI related to any series of securities are called the“Included Units.” |
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• | a Transaction SUBI Certificate, evidencing a 100% beneficial interest in the related Transaction SUBI and the related Included Units, including the lease payments and the right to payments received after the related cutoff date and the right to payment received after the cutoff date from the sale or other disposition of the related leased vehicles; | ||
• | amounts deposited in a reserve account, a principal distribution account, collection account and similar accounts (including investment earnings — net of losses and expenses — on amounts on deposit therein); | ||
• | the rights of the depositor, as buyer, under the related SUBI Sale Agreement; | ||
• | the rights of the issuing entity under each applicable transaction document; | ||
• | the rights of the issuing entity as a third-party beneficiary under the Servicing Agreement, origination trust agreement and the supplements to those agreements, to the extent relating to the Included Units; | ||
• | the rights of the issuing entity under an interest rate cap agreement or interest swap agreement and the amounts payable to the issuing entity thereunder; | ||
• | the rights under any credit enhancement; and | ||
• | all proceeds of the foregoing, provided that actual sales proceeds will not constitute part of the issuing entity property (as described under “Transaction Documents—The Servicing Agreement” and “—Like Kind Exchange Program” in this prospectus). |
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• | issue beneficial or other interests in the origination trust assets or securities other than (i) with respect to each issuance of notes, the related Transaction SUBI and the Transaction SUBI Certificate, (ii) one or more special units of beneficial interest, each consisting of a portfolio of leases and related leased vehicles separate from the portfolio allocated to the Transaction SUBI (each, an“Other SUBI”) and one or more certificates representing each Other SUBI (the“Other SUBI Certificates”) and (iii) the UTI and one or more certificates representing the UTI (the“UTI Certificates”); | ||
• | borrow money on behalf of the origination trust; | ||
• | make loans or extend credit on behalf of the origination trust; | ||
• | underwrite securities; | ||
• | offer securities in exchange for origination trust assets, with the exception of the Transaction SUBI Certificate issued with respect to any series of notes, Other SUBI Certificates and the UTI Certificates; | ||
• | repurchase or otherwise reacquire any UTI Certificate or, except as permitted by or in connection with permitted financing transactions, the Transaction SUBI Certificate or any Other SUBI Certificate; | ||
• | have any employees; | ||
• | own any real property; or | ||
• | except for the acquisition of origination trust assets and agreements relating to permitted financing transactions, enter into any agreements or contracts. |
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• | cash; | ||
• | leases originated by VW Credit, a dealer or directly by the origination trust; | ||
• | leased vehicles and all proceeds of those leased vehicles; | ||
• | the right to proceeds from all dealer repurchase obligations, if any, relating to any lease or leased vehicle; | ||
• | all warranty and indemnity claims against the manufacturer or distributor of a vehicle; | ||
• | all guarantees given in connection with any lease; | ||
• | the rights under and proceeds from insurance policies, if any, covering the leases, the related lessees or the leased vehicles, including but not limited to residual value, liability and credit life insurance; | ||
• | any security deposits to the extent due to the lessor under the related lease; and | ||
• | all proceeds of the foregoing. |
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• | Units not allocated to a Transaction SUBI or any Other SUBI, by the UTI; | ||
• | Units included in this transaction, by a Transaction SUBI; and | ||
• | Units financed in another transaction, by one or more Other SUBIs. |
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• | residential information; | ||
• | source and amount of monthly income; | ||
• | monthly mortgage or rent payment; | ||
• | social security number; and | ||
• | other personal information. |
* | FICO® is a registered trademark of Fair, Isaac & Co. |
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(1) | the lessee can purchase the leased vehicle for an amount (the“maturity date purchase option amount”) equal to the sum of (a) the purchase option amount specified in the lease, (b) the purchase option fee specified in the lease, if any, (c) any other fees and taxes related to the purchase of the leased vehicle and (d) any due and unpaid payments and other charges under the lease; or | ||
(2) | the lessee can return the leased vehicle to, or upon the order of, the lessor and pay an amount equal to (a) the turn-in fee, if any, specified in the lease, (b) any amounts assessed by the servicer as a result of excessive wear and use, excess mileage, taxes, parking tickets or fines and (c) any due and unpaid payments under the lease. |
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• | net proceeds resulting from early lease terminations; | ||
• | sales proceeds following a default under the lease; or | ||
• | repurchase payments made by VW Credit. |
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• | principal payments with disproportionate, nominal or no interest payments; or | ||
• | interest payments with disproportionate, nominal or no principal payments. |
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• | distributions of principal with disproportionate, nominal or no interest distributions; or | ||
• | interest distributions with disproportionate, nominal or no distributions of principal. |
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• | used by the issuing entity during the revolving period to acquire the beneficial interest in additional leases and the related leased vehicles which satisfy the criteria set forth in the applicable prospectus supplement; | ||
• | held in an account and invested in Permitted Investments for later distribution to securityholders; or | ||
• | applied to those securities of the related series as then are in amortization, if any. |
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• | the administrator advises the indenture trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to the securities, and the indenture trustee or the administrator, as applicable, is unable to locate a qualified successor; | ||
• | the administrator, at its option, elects to terminate the book-entry system through DTC; or | ||
• | after an event of default, beneficial owners representing in the aggregate a majority of the outstanding principal amount of the controlling class or of all the securities (as specified in the applicable prospectus supplement), advise the indenture trustee through DTC in writing that the continuation of a book-entry system through DTC (or its successor) is no longer in the best interest of those owners. |
• | as of each Record Date, within five days of that Record Date; and | ||
• | within 30 days after receipt by the issuing entity of a written request from the owner trustee or indenture trustee for that list, as of not more than ten days before that list is furnished. |
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• | each “SUBI sale agreement” pursuant to which the depositor will purchase the Transaction SUBI Certificate from VW Credit; | ||
• | each “SUBI transfer agreement” pursuant to which the issuing entity will purchase the Transaction SUBI Certificate from the depositor; | ||
• | each “administration agreement”, if any, pursuant to which VW Credit or another party specified in the applicable prospectus supplement will undertake specified administrative duties with respect to an issuing entity; and | ||
• | the Servicing Agreement and each “Transaction SUBI Servicing Supplement” pursuant to which the servicer will agree to service the Included Units. |
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• | A reserve account or cash deposit available to cover trustee fees and expenses, servicing fees, reimbursement of servicer advances, payments to interest rate or currency hedge providers, interest payments on the securities, priority principal payments and final principal payments if collections on the leases and related leased vehicles were insufficient. Any amounts remaining on deposit after payment of all fees and expenses owing by the issuing entity and amounts owing on the securities would be returned to the depositor or other provider of the cash or deposit. | ||
• | Excess interest available to cover trustee fees and expenses, servicing fees, reimbursement of servicer advances, payments to interest rate or currency hedge providers, interest payments on the securities, and principal payments on the securities. The amount of excess spread will depend on factors such as APRs, interest rates on the securities, prepayments, yield supplement overcollateralization amounts and losses. | ||
• | Overcollateralization, which is the amount by which the aggregate securitization value of the Included Units exceeds the incentive rate leases (also known as “subvented leases”). | ||
• | Yield supplement discount arrangements for subvented leases where the payments due under certain subvented leases are discounted at both the implicit lease rate and at a higher rate and the aggregate difference of the discounted payments in each month is subtracted from the aggregate securitization value in order to increase the amount of principal required to be paid on each payment date. | ||
• | One or both of the following structural features: subordination that will cause more junior classes of securities to absorb losses before more senior classes and “turbo” payments where interest as well as principal collections from the leases and related leased vehicles will be used to repay a class or classes of securities and no amounts are released to the residual until such class or classes are paid. |
• | Interest rate swaps where the issuing entity makes fixed payments on a monthly or quarterly basis to a swap counterparty and receives a payment based on LIBOR and interest rate caps where the issuing entity makes an upfront payment to a swap counterparty and receives a payment on a monthly or quarterly basis to the extent LIBOR exceeds a stated, or capped, amount. | ||
• | Currency swaps where the issuing entity makes fixed payments in one currency on a monthly or quarterly basis to a swap counterparty and receives a payment in a second currency based on the exchange rate between the two currencies. |
36
• | Guaranteed investment contracts or guaranteed rate agreements under which in exchange for either a fixed one-time payment or a series of periodic payments the issuing entity will receive specified payments from a counterparty either in fixed amounts or in amounts sufficient to achieve the returns specified in the agreement and described in the applicable prospectus supplement. | ||
• | Third party payments or guarantees, under which a third party would pay amounts specified in the applicable prospectus supplement if other assets of the issuing entity were insufficient to make required payments or would pay if assets of the issuing entity were unavailable, such as collections held by the servicer at the time of a bankruptcy proceeding, or worth less than expected, such as the residual values of the leased vehicles. | ||
• | Surety bonds or insurance policies, which would be purchased for the benefit of the holders of any specified class of securities to assure distributions of interest or principal with respect to that class in the manner and amount specified in the applicable prospectus supplement. | ||
• | Letters of credit, under which the issuer of a letter of credit will be obligated to honor demands with respect to that letter of credit, to the extent of the amount available thereunder, and under the circumstances and subject to any conditions specified in the applicable prospectus supplement. |
• | The LKE Program requires the proceeds from the sale of relinquished vehicles, including the leased vehicles, to be assigned to, and deposited directly with, a qualified intermediary rather than being paid directly to VW Credit as servicer. | ||
• | The qualified intermediary uses the proceeds of the sale, together with additional funds, if necessary, to purchase replacement lease vehicles. | ||
• | Because the servicer will use the sales proceeds of the leased vehicles to acquire replacement vehicles, the servicer will deposit an amount equal to those sales proceeds at the required time into the collection account, however, in no event will the actual sales proceeds be deposited into the collection account except after the exercise of remedies upon an event of default under the indenture. |
37
• | The LKE Program also requires that there be no security interest in the amounts held by the qualified intermediary. Consequently, the indenture trustee will waive any security interest in any amounts held by the qualified intermediary. |
38
39
40
• | engage in any activities other than financing, acquiring, owning, pledging and managing the related Transaction SUBI Certificate and the other collateral as contemplated by the related indenture and the other related transaction documents; | ||
• | sell, transfer, exchange or otherwise dispose of any of its assets, except as expressly permitted by the related indenture and the other transaction documents; |
41
• | 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 from such payments under the Internal Revenue Code of 1986, as amended (the “Code”) or applicable state law — or assert any claim against any present or former noteholder because of the payment of taxes levied or assessed upon any part of the issuing entity property; | ||
• | permit (1) the validity or effectiveness of the related indenture to be impaired, (2) the lien of the related indenture to be amended, hypothecated, subordinated, terminated or discharged, (3) any person to be released from any covenants or obligations under that indenture except as may be expressly permitted thereby, (4) any adverse claim (other than liens permitted under the transaction documents) to be created on or extend to or otherwise arise upon or burden any part of the related issuing entity property, or any interest therein or the proceeds therefrom or (5) (except as provided in the transaction documents) the lien of the indenture to not constitute a first priority security interest in related issuing entity property; | ||
• | incur, assume or guarantee any indebtedness other than indebtedness incurred in accordance with the related transaction documents; | ||
• | dissolve or liquidate in whole or in part, except as permitted by the transaction documents; or | ||
• | merge or consolidate with any other person. |
• | any change to its eligibility and qualification to continue as indenture trustee under the related indenture; | ||
• | information regarding a conflicting interest of the indenture trustee; | ||
• | if the related indenture requires the indenture trustee to make advances, the character and amount of any advances made by it under the indenture which remain unpaid on the date of the report; | ||
• | the amount, interest rate and maturity date of any indebtedness owing by the issuing entity to the applicable indenture trustee in its individual capacity; | ||
• | any change to the property and funds physically held by the indenture trustee in its capacity as indenture trustee; | ||
• | any release, or release and substitution, of property subject to the lien of the related indenture that has not been previously reported; | ||
• | any additional issue of notes that has not been previously reported; and |
42
• | any action taken by it that materially affects the related notes or the issuing entity property and that has not been previously reported. |
43
THE TRANSACTION SUBI SUPPLEMENT
44
45
TRUST AND THE TRANSACTION SUBI
46
(1) | tax liens arising against the depositor, VW Credit, the origination trust, the UTI beneficiary or the related issuing entity; | ||
(2) | liens arising under various federal and state criminal statutes; | ||
(3) | certain liens in favor of the Pension Benefit Guaranty Corporation; and | ||
(4) | judgment liens arising from successful claims against the origination trust arising from the operation of leased vehicles titled in the name of the origination trust. |
47
• | a court were to conclude that the assets and liabilities of the origination trust, the depositor or the related issuing entity should be consolidated with those of VW Credit in the event of the application of applicable insolvency laws to VW Credit; | ||
• | a filing were to be made under any insolvency law by or against the origination trust, the depositor or the related issuing entity; or | ||
• | an attempt were to be made to litigate any of the foregoing issues. |
• | the automatic stay, which prevents secured creditors from exercising remedies against a debtor in bankruptcy without permission from the court and provisions of the United States Bankruptcy Code that permit substitution of collateral in certain circumstances; | ||
• | certain tax or government liens on VW Credit’s property having a prior claim on collections before the collections are used to make payments on the notes; or | ||
• | the related issuing entity not having a perfected security interest in the Included Units, on sales proceeds held by the qualified intermediary (as described under “The Transaction Documents—The Servicing Agreement—Like Kind Exchange Program”) or any cash collections held by VW Credit at the time that VW Credit becomes the subject of a bankruptcy proceeding. |
48
49
50
51
(1) | the amount and type of all payments due at the time of origination of the lease; | ||
(2) | a description of the lessee’s liability at the end of the lease term; | ||
(3) | the amount of any periodic payments and manner of their calculation; | ||
(4) | the circumstances under which the lessee may terminate the lease prior to the end of the lease term; | ||
(5) | the capitalized cost of the vehicle; and | ||
(6) | a warning regarding possible charges for early termination. |
52
53
54
• | an accrual method taxpayer; |
55
• | 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 specified pass-through entities specified in the Code. |
56
57
58
59
(1) | is denominated in U.S. dollars; |
60
(2) | pursuant to which the issuing entity pays or receives, on or immediately prior to the respective payment or distribution date for the class of certificates to which the swap relates, a fixed rate of interest or a floating rate of interest based on a publicly available index (e.g., LIBOR or the U.S. Federal Reserve’s Cost of Funds Index (COFI)), with the issuing entity receiving such payments on at least a quarterly basis and obligated to make separate payments no more frequently than the counterparty, with all simultaneous payments being netted; | ||
(3) | has a notional amount that does not exceed either: (i) the principal balance of the class of certificates to which the swap relates, or (ii) the portion of the principal balance of such class represented by obligations; | ||
(4) | is not leveraged (i.e., payments are based on the applicable notional amount, the day count fractions, the fixed or floating rates permitted above, and the difference between the products thereof, calculated on a one-to-one ratio and not on a multiplier of such difference); | ||
(5) | has a final termination date that is either the earlier of the date on which the issuing entity terminates or the related class of certificates are fully repaid; and | ||
(6) | does not incorporate any provision which could cause a unilateral alteration in the interest rate requirements described above or the prohibition against leveraging; |
(b) | is with an “eligible counterparty”. An “eligible counterparty” means a bank or other financial institution which has a rating at the date of issuance of the certificates, which is in one of the three highest long-term credit rating categories or one of the two highest short-term credit rating categories, utilized by at least one of the Rating Agencies rating the certificates; provided that, if a counterparty is relying on its short-term rating to establish eligibility hereunder, such counterparty must either have a long-term rating in one of the three highest long-term rating categories or not have a long-term rating from the applicable rating agency; | ||
(c) | is purchased by a “qualified plan investor”. A “qualified plan investor” is an employee benefit plan or plans where the decision to buy such class of certificates is made on behalf of the employee benefit plan by an independent fiduciary qualified to understand the swap transaction and the effect the swap would have on the rating of the certificates and such fiduciary is either |
(1) | a “qualified professional asset manager” (“QPAM”) under Prohibited Transaction Class Exemption (“PTCE”) 84-14 (a QPAM generally would include for these purposes insurance companies, savings and loan associations, banks and registered investment advisers registered under the Investment Advisers Act of 1940, each meeting certain minimum capitalization requirements); or | ||
(2) | an “in-house asset manager” under PTCE 96-23 (see below); or | ||
(3) | has total assets (both employee benefit plan and non-employee benefit plan) under management of at least $100 million at the time the certificates are acquired by the employee benefit plan; |
(d) | if a “rating dependent swap” (where the rating of a class of certificates is dependent on the terms and conditions of the swap), the swap agreement must provide that if the credit rating of the counterparty is withdrawn or reduced by any rating agency below a level specified by the rating agency, the servicer must, within the period specified under the pooling and servicing agreement: |
61
(1) | obtain a replacement swap agreement with an eligible counterparty which is acceptable to the rating agency and the terms of which are substantially the same as the current swap agreement (at which time the earlier swap agreement must terminate); or | ||
(2) | cause the swap counterparty to establish any collateralization or other arrangement satisfactory to the rating agency such that the then current rating by the rating agency of the particular class of certificates will not be withdrawn or reduced (and the terms of the swap agreement must specifically obligate the counterparty to perform these duties for any class of certificates with a term of more than one year). |
(e) | if a “non-ratings dependent swap” (those where the rating of the certificates does not depend on the terms and conditions of the swap) the swap agreement must provide that if the credit rating of the counterparty is withdrawn or reduced below the lowest level permitted above, the servicer will, within a specified period after such rating withdrawal or reduction: |
(1) | obtain a replacement swap agreement with an eligible counterparty, the terms of which are substantially the same as the current swap agreement (at which time the earlier swap agreement must terminate); | ||
(2) | cause the counterparty to post collateral with the issuing entity in an amount equal to all payments owed by the counterparty if the swap transaction were terminated; or | ||
(3) | terminate the swap agreement in accordance with its terms; and |
(f) | permits the issuing entity to make termination payments to the swap counterparty (other than currently scheduled payments) solely from excess spread or amounts otherwise payable to the servicer or seller. |
• | a benefit plan’s investment in the notes or certificates does not exceed 25% of all of the notes or certificates outstanding at the time of the acquisition; | ||
• | immediately after the acquisition, no more than 25% of the assets of a benefit plan with respect to which the person who has discretionary authority to render investment advice are invested in securities representing an interest in an issuing entity containing assets sold or serviced by the same entity; and |
62
• | in the case of the acquisition of notes or certificates in connection with their initial issuance, at least 50% of such securities are acquired by persons independent of the restricted group and at least 50% of the aggregate interest in the issuing entity is acquired by persons independent of the restricted group. |
63
• | 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. |
64
• | 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 applicable prospectus supplement as being in one of the four highest generic rating categories, which are referred to as “investment grade,” of the rating agencies identified in the applicable prospectus supplement as rating the offered securities. |
65
66
67
administration agreement | 34 | |||
administrative lien | 16 | |||
amortizable bond premium | 56 | |||
amortization period | 31 | |||
Base Servicing Agreement | 15 | |||
benefit plan | 58 | |||
Black Book | 19 | |||
capital assets | 54 | |||
certificate factor | 27 | |||
Charged-off Lease | 53 | |||
Clearstream | 31 | |||
Code | 42 | |||
Collections | 36 | |||
customary servicing practices | 35 | |||
DTC | 31 | |||
early termination | 23 | |||
early termination amount | 23 | |||
eligible counterparty | 61 | |||
eligible swap | 61 | |||
equity interest | 59 | |||
ERISA | 58 | |||
Euroclear | 31 | |||
event of default | 42 | |||
Exchange Act | 25 | |||
foreign person | 57 | |||
Included Units | 13 | |||
incorporate by reference | 67 | |||
in-house asset managers | 59 | |||
insolvency laws | 47 | |||
IRS | 54 | |||
issuing entity property | 14 | |||
leased vehicle sale price | 23 | |||
lemon laws | 9, 53 | |||
LKE Program | 38 | |||
market discount rules | 55 | |||
maturity date purchase option amount | 23 | |||
note factor | 27 | |||
OID | 54 | |||
origination trust | 13, 15 | |||
origination trust agreement | 15 | |||
Origination Trust Documents | 17 |
Other SUBI | 13, 15 | |||
Other SUBI Certificates | 15 | |||
owner | 51 | |||
plan assets regulation | 59 | |||
portfolio interest | 57 | |||
prohibited transaction | 58 | |||
PTCE | 59, 62 | |||
Pull-Ahead Amount | 22 | |||
QPAM | 62 | |||
qualified plan investor | 62 | |||
qualified professional asset managers | 59 | |||
qualified stated interest | 55 | |||
qualified stated interest payments | 55 | |||
replacement vehicles | 38 | |||
restricted group | 60 | |||
revolving period | 30 | |||
Securities Act | 38 | |||
seller | 13 | |||
Servicing Agreement | 17 | |||
stated redemption price at maturity | 54 | |||
stated residual value | 19 | |||
SUBI sale agreement | 34 | |||
SUBI transfer agreement | 34 | |||
subvented leases | 37 | |||
swap | 61 | |||
swap agreement | 61 | |||
Transaction SUBI | 13 | |||
Transaction SUBI Certificate | 13 | |||
Transaction SUBI Servicing Supplement | 17, 34 | |||
Transaction SUBI Supplement | 17 | |||
Transaction SUBI Trust Agreement | 17 | |||
Transportation Act | 1 | |||
U.S. Bank | 16 | |||
Unit | 13 | |||
UTI | 13, 15 | |||
UTI Certificates | 15 | |||
Volkswagen AG | 18 | |||
Volkswagen Group of America | 18 | |||
VW Credit | 13 | |||
WTC | 16 |
68
Registration Fee | $ | 502,200.00 | ||
Accountant Fees and Expenses | 250,000.00 | |||
Legal Fees and Expenses | 1,250,000.00 | |||
Printing and Engraving Costs | 200,000.00 | |||
Blue Sky Fees and Expenses | 0.00 | |||
Trustee Fees and Expenses | 125,000.00 | |||
Rating Agency Fees | 1,750,000.00 | |||
Miscellaneous Expenses | 50,000.00 | |||
Total | $ | 4,127,200.00 | ||
VOLKSWAGEN AUTO LEASE/LOAN UNDERWRITTEN FUNDING, LLC | ||||||
By: | /s/ Martin Luedtke | |||||
Name: | ||||||
Title: | President | |||||
By: | /s/ Lawrence S. Tolep | |||||
Name: | ||||||
Title: | Assistant Treasurer | |||||
By: | /s/ Martin Luedtke | |||||
Name: | ||||||
Title: | Director, President (Principal Executive Officer) | |||||
By: Name: | * /s/ Andrew Stuart | |||||
Title: | Director, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |||||
By: Name: | * /s/ Allen Strang | |||||
Title: | Director | |||||
By: Name: | * /s/ Kevin P. Burns | |||||
Title: | Director | |||||
* | The undersigned by signing his name hereto, does hereby sign this Amendment No. 1 to Registration Statement on behalf of the above-indicated officer or director of the Registrant pursuant to the Power of Attorney signed by such officer or director. | |
By: | /s/ Martin Luedtke | |||
Name: | ||||
Title: | President | |||
VW CREDIT LEASING, LTD. | ||||||
By: VW Credit, Inc., solely as servicer of VW Credit Leasing, Ltd. | ||||||
By: | /s/ Kevin Kelly | |||||
Name: | ||||||
Title: | President and CFO | |||||
By: | /s/ Martin Luedtke | |||||
Name: | ||||||
Title: | Treasurer | |||||
Signature | Title | Date | ||
/s/ Martin Luedtke | Performing the function of Principal Executive Officer of VW Credit Leasing, Ltd. | September 16, 2009 | ||
/s/ Andrew Stuart | Performing the function of Principal Financial Officer of VW Credit Leasing, Ltd. | September 16, 2009 | ||
/s/ Dennis Tack | Performing the function of Principal Accounting Officer of VW Credit Leasing, Ltd. | September 16, 2009 |
Exhibit | ||
No. | Description of Exhibit | |
1.1 | Form of Underwriting Agreement * | |
3.1.1 | Certificate of Formation of Volkswagen Auto Lease Underwritten Funding, LLC (“VALU Funding”) * | |
3.1.2 | Certificate of Amendment to Certificate of Formation of VALU Funding* | |
3.2 | Limited Liability Company Agreement of VALU Funding* | |
4.1 | Form of Indenture between the Issuing Entity and the Indenture Trustee (including forms of Notes) (Loan Receivables) * | |
4.2 | Form of Indenture between the Issuing Entity and the Indenture Trustee (including forms of Notes) (Lease Assets) * | |
4.3 | Form of Pooling and Servicing Agreement among VALU Funding, the Servicer and the Trustee (Loan Receivables) * | |
5.1 | Opinion of Mayer Brown LLP with respect to legality | |
8.1 | Opinion of Mayer Brown LLP with respect to federal income tax matters | |
10.1 | Form of Sale and Servicing Agreement among VALU Funding, the Servicer and the Issuing Entity (Loan Receivables) * | |
10.2 | Form of Receivables Purchase Agreement between VALU Funding and VW Credit, Inc. (Loan Receivables) * | |
10.3 | Form of SUBI Sale Agreement between VW Credit, Inc. and VALU Funding (Lease Assets) * | |
10.4 | Form of SUBI Transfer Agreement between VALU Funding and the Issuing Entity (Lease Assets) * | |
10.5 | Trust Agreement among VW Credit, Inc., U.S. Bank Trust National Association and Wilmington Trust Company (Lease Assets) * | |
10.6 | Form of Transaction SUBI Supplement to Trust Agreement between VW Credit, Inc. and U.S. Bank National Association (including form of the SUBI Certificate) (Lease Assets) * | |
10.7 | Amended and Restated Servicing Agreement between VW Credit Leasing, Ltd. and VW Credit, Inc. (Lease Assets) * | |
10.8 | Form of Transaction SUBI Supplement to Amended and Restated Servicing Agreement among VW Credit Leasing, Ltd., VW Credit, Inc. and U.S. Bank National Association (Lease Assets) * | |
10.9 | Form of Interest Rate Swap Agreement between the Issuing Entity and the Swap Counterparty* | |
10.10 | Form of Administration Agreement among the Issuing Entity, VW Credit, Inc. and Indenture Trustee (Loan Receivables) * | |
10.11 | Form of Administration Agreement among the Issuing Entity, VW Credit, Inc. and Indenture Trustee (Lease Assets) * | |
23.1 | Consent of Mayer Brown LLP (included in Exhibits 5.1 and 8.1) | |
24.1 | Power of Attorney with respect to signatories for Volkswagen Auto Lease/Loan Underwritten Funding, LLC* | |
24.2 | Power of Attorney with respect to signatories for VW Credit Leasing, Ltd. (included in the signature pages to this Amendment No. 1 to Registration Statement) | |
25.1 | Statement of Eligibility and Qualification of the Indenture Trustee on Form T-1** | |
99.1 | Form of Limited Liability Company Agreement of the Issuing Entity* | |
99.2 | Form of Amended and Restated Trust Agreement of the Issuing Entity (Loan Receivables) * | |
99.3 | Form of Amended and Restated Trust Agreement of the Issuing Entity (Lease Assets) * |
Exhibit | ||
No. | Description of Exhibit | |
99.4 | Form of Limited Partnership Agreement* |
* | Previously filed on July 10, 2009. | |
** | To be filed pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939. |