<PAGE>
As filed with the Securities and Exchange Commission on June 23, 2000
Registration No. 333-34266
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------
VOLKSWAGEN DEALER FINANCE, LLC
(Originator of the Trust described herein)
(Exact name of registrant as specified in its charter)
-------------------------
<TABLE>
<S> <C>
Delaware 38-3528063
(Registrant's State or other (Registrant's I.R.S. Employer
jurisdiction of incorporation or Identification No.)
organization)
3800 Hamlin Road Allen Strang
Auburn Hills, MI 48326 Assistant General Counsel
(248) 340-5000 VW Credit, Inc.
3800 Hamlin Road
Auburn Hills, Michigan 48326
(248) 340-5000
(Address, including zip code, (Name, address, including zip code,
and telephone number, and telephone number
zip code, and telephone number, including area code,
principal executive offices) of agent for service)
</TABLE>
-------------------------
Copies to:
<TABLE>
<CAPTION>
Marc L. Klyman Stuart M. Litwin
<S> <C>
Mayer, Brown & Platt Mayer, Brown & Platt
190 South La Salle Street 190 South La Salle Street
Chicago, Illinois 60603 Chicago, Illinois 60603
(312) 701-8053 (312) 701-7373
</TABLE>
-------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable on or after the effective date of this registration statement. If
the only securities being registered on this form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
-------------------------------
<TABLE>
<CAPTION>
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Title of Each Class of securities Amount to Proposed maximum Proposed Amount of
to be Registered be aggregate offering maximum aggregate registration fee(2)
registered price per unit (1) offering price(1)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
Dealer Loan Backed Notes............ $1,000,000 100% $1,000,000 $264
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED [___________] [__], 2000
$[_______________]
Volkswagen Credit Auto Master Owner Trust
Issuer
$[_____________] Floating Rate Dealer Loan Backed Notes, Series 2000-1
Volkswagen Dealer Finance, LLC
Transferor
VW Credit, Inc.
Servicer
The trust will issue the following notes:
<TABLE>
<S> <C>
Principal amount............................... $
Interest rate.................................. Lesser of (a) [One-Month
LIBOR] plus [__]% per year
and (b) assets receivables rate
Interest payment dates......................... Monthly on the 20th,
beginning __, 2000
Expected principal payment date................ 200_
Stated maturity date........................... 200_
</TABLE>
Credit enhancement for the notes:
. The residual interest in the trust is subordinate to the notes to the
extent of the available subordinated amount, which is initially $[ ],
assuming the incremental subordinated amount is zero.
. A reserve account, with an initial balance of $[ ].
The underwriter will purchase the notes. The underwriter will offer the notes
from time to time to the public at varying prices. The underwriter will pay to
the trust [_________]% of the principal amount of the notes, plus accrued
interest from [_________], 2000. The trust's expenses of the offering are
expected to be $[___________].
Investing in the notes involves risks. Before you purchase any of the
notes, you should carefully consider the "Risk Factors" beginning on page 9.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE NOTES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Morgan Stanley Dean Witter
[_______] [__], 2000
<PAGE>
Where to Find Information in this Prospectus
We include cross-references in this prospectus to captions in this
prospectus where you can find further related discussions.
You can find definitions of some terms used in this prospectus under the
caption "Glossary" beginning on page [113] in this prospectus.
Important Notice about Information
Presented in this Prospectus
You should rely only on the information provided in this prospectus. We
have not authorized anyone to provide you with other or different information.
We are not offering the notes in any state where the offer is not permitted. You
should not assume that the information in this prospectus is accurate on any
date other than the date stated on its cover.
Transactions That May Affect the Price of the Notes
The underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the notes, and transactions that may include
stabilizing and the purchase of the notes to cover syndicate short positions.
For a description of these activities see "Underwriting". The underwriters will
offer the notes, subject to prior sale, if and when the notes are issued to and
accepted by them. The underwriters reserve the right to reject an order in
whole or in part and to withdraw, cancel or modify the offer without
notice.
<PAGE>
Table of Contents
-----------------
[To Be Conformed]
<TABLE>
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Page
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<S> <C>
Transaction Summary......................................................................... 1
Summary..................................................................................... 2
The Parties.............................................................................. 2
Closing Date............................................................................. 2
Initial Cut-Off Date..................................................................... 2
The Series 2000-1 Notes.................................................................. 2
Payment Dates............................................................................ 2
Interest................................................................................. 3
Yield Supplement Account................................................................. 3
Principal................................................................................ 3
Revolving Period......................................................................... 3
Accumulation Period...................................................................... 4
Early Amortization Period................................................................ 4
Credit Enhancement....................................................................... 4
Other Securities......................................................................... 5
Assets of the Trust...................................................................... 5
Collections.............................................................................. 6
Allocation of Cash Flows................................................................. 6
Servicing Fees........................................................................... 6
Optional Repurchase...................................................................... 6
Book-Entry Registration.................................................................. 6
Tax Status............................................................................... 6
ERISA Considerations..................................................................... 7
Risk Factors............................................................................. 7
Ratings.................................................................................. 7
Risk Factors................................................................................ 9
Early Amortization of Your Notes May Result in Early, Late and/or Reduced Payment of
Your Notes.............................................................................. 10
The Note Rate for the Your Notes is limited by the Assets Receivables Rate............... 11
The Trust may not be able to make up a Deficiency in Interest Payments due to Basis
Risk.................................................................................... 11
Credit Enhancement is Limited............................................................ 12
Commingling by the Servicer May Result in Delays and Reductions in Payments on
Your Notes.............................................................................. 12
You May Not Be Able to Influence Actions of the Trust.................................... 13
Dealer Concentration May Result in Larger Losses From a Single Dealer Default............ 14
Receivables May Be Uncollectible Due to Superior Interests............................... 14
Receivables May Be Unsecured Due to Sales Out of Trust................................... 15
A Bankruptcy of VW Credit, Inc. or the Transferor May Delay or Reduce Payments on
Your Notes.............................................................................. 15
Bankruptcy of One or More Manufacturers Could Result in Delays and Reductions in
Payments on Your Notes.................................................................. 16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Failure of VW Credit, Inc. to Create Sufficient New Receivables May Result in the Trust
Holding Assets with a Lower Yield....................................................... 17
Potential Delays and Reductions in Payments on Your Notes Due to Addition of
Accounts................................................................................ 18
Potential Delays and Reductions in Payments on Your Notes Due to Removal of
Accounts................................................................................ 19
Failure of [___________] Distributors to Repurchase Vehicles from Terminated Dealers
May Result in Increased Losses on the Receivables....................................... 20
The Failure of Dealers to Make Payments on the Receivables Could Delay or Reduce
Payments on Your Notes.................................................................. 20
Failure of VW Credit, Inc. or the Transferor to Fulfill its Repurchase Obligations May
Adversely Affect the Trust.............................................................. 20
Geographic Concentration May Increase Risk of Loss....................................... 21
Ability to Change Terms of the Accounts.................................................. 21
Limited Ability to Resell Your Notes..................................................... 21
The Ratings on Your Notes Are Limited in Scope........................................... 21
You Will Not Receive Physical Certificates Representing Your Notes....................... 21
Volkswagen AG, Volkswagen of America, Inc. And VW Credit, Inc............................... 23
Volkswagen AG............................................................................ 23
Volkswagen of America, Inc............................................................... 23
VW Credit, Inc........................................................................... 23
The Transferor.............................................................................. 24
The Trust................................................................................... 24
Capitalization of the Trust.............................................................. 26
The Owner Trustee........................................................................ 26
Use of Proceeds............................................................................. 26
The Dealer Floor Plan Financing Business.................................................... 26
General.................................................................................. 26
Creation of Receivables.................................................................. 27
Credit Underwriting Process.............................................................. 28
Payment Terms............................................................................ 30
Billing and Collection Procedures........................................................ 30
Revenue Experience....................................................................... 31
Relationship with VWOA................................................................... 31
Dealer Monitoring........................................................................ 32
"Dealer Default" Status and VCI's Write-Off Policy....................................... 33
Loss Experience.......................................................................... 34
Aging Experience......................................................................... 35
The Accounts................................................................................ 35
General.................................................................................. 35
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Geographic Distribution 38
Maturity and Principal Payment Considerations............................................... 38
The Series 2000-1 Notes..................................................................... 39
General.................................................................................. 39
Interest................................................................................. 40
Principal................................................................................ 41
Collection Account....................................................................... 45
Allocation of Collections; Deposits in Collection Account................................ 45
Excess Funding Account................................................................... 46
Allocation Percentages................................................................... 47
Excess Principal Collections............................................................. 48
Allocation of Collections; Limited Subordination of Residual Interest.................... 49
Trust Distributions...................................................................... 50
Distributions from the Collection Account for Series 2000-1 Notes; Reserve Account;
Yield Supplement Account................................................................ 51
Available Subordinated Amount............................................................ 54
Principal Collections.................................................................... 54
Series 2000-1 Principal Funding Account.................................................. 55
Distributions to Series 2000-1 Noteholders............................................... 56
Series 2000-1 Noteholder Charge-Offs..................................................... 57
Early Amortization Events................................................................ 57
Stated Maturity Date..................................................................... 60
Payment Event of Default................................................................. 60
Optional Repurchase...................................................................... 61
Reports.................................................................................. 62
The Indenture and the Series 2000-1 Supplement........................................... 63
New Issuances............................................................................ 70
The Indenture Trustee.................................................................... 70
Book-entry Registration.................................................................. 71
Definitive Notes......................................................................... 74
The Transfer and Servicing Agreements....................................................... 75
Receivables Purchase Agreement........................................................... 76
Conveyance of Receivables and Collateral Security........................................ 79
Representations and Warranties by the Transferor......................................... 80
Ineligible Receivables................................................................... 82
Addition of Accounts..................................................................... 82
Removal of Accounts...................................................................... 84
The Residual Interest.................................................................... 87
Adjustment Payments and Rebate Payments.................................................. 88
Termination; Fully Funded Date........................................................... 88
Indemnification.......................................................................... 89
Collection and Other Servicing Procedures................................................ 91
Servicer Covenants....................................................................... 92
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Servicing Compensation and Payment of Expenses........................................... 93
Material Matters Regarding the Servicer.................................................. 94
Servicing Default........................................................................ 94
Rights upon Servicing Default............................................................ 95
Waiver of Past Defaults.................................................................. 96
Evidence as to Compliance................................................................ 96
Amendments............................................................................... 96
Intercreditor Arrangements............................................................... 98
Administration Agreement................................................................. 98
Material Legal Aspects of the Receivables................................................... 99
Transfer of Receivables.................................................................. 99
Material Matters Relating to Bankruptcy..................................................... 100
Material Federal Income Tax Consequences.................................................... 102
General.................................................................................. 102
Tax Characterization of the Trust and the Series 2000-1 Notes............................ 103
Consequences to Holders of the Series 2000-1 Notes....................................... 104
State and Local Tax Consequences............................................................ 107
ERISA Considerations........................................................................ 107
Underwriting................................................................................ 109
Legal Opinions.............................................................................. 110
Where You Can Find More Information......................................................... 110
Incorporation by Reference.................................................................. 111
</TABLE>
iv
<PAGE>
Transaction Summary
<TABLE>
<S> <C>
Trust: Volkswagen Credit Auto Master Owner Trust
Transferor: Volkswagen Dealer Finance, LLC
Originator: VW Credit, Inc.
Servicer: VW Credit, Inc.
Indenture Trustee: [_____________]
Owner Trustee: [_____________]
Closing Date: [___________], 2000
Clearance and Settlement: DTC/Clearstream/Euroclear
Primary Trust Assets: Receivables arising from automobile dealer floor plan
financing agreements
</TABLE>
Series 2000-1 Notes
<TABLE>
<S> <C>
Principal Amount: [ ]$
Anticipated Ratings:* ([Moody's/Standard & Poor's] [Aaa/AAA]
Credit Enhancement: available subordinate amount,
reserve account
Interest Rate: Lesser of (a) [One-Month
LIBOR] plus
[ ]% per year and
(b) assets receivables rate
Interest Accrual Method: [actual/360]
Interest Payment Dates: monthly (20th)
Interest Rate Index Reset Date: [2 London business days before
each interest payment date]
First Interest Payment Date: [ ], 2000
Expected Principal Payment Date: [ ], 200_
Commencement of Accumulation Period (subject to [ ], 200_
adjustment):
Stated Final Maturity Date: [ ], 200_
Annual Servicing Fee Rate: [ ]%
</TABLE>
* It is a condition to issuance that one of these ratings be obtained.
Subject to the discussion under "ERISA Considerations," the Series 2000-1 Notes
may be acquired by pension, profit-sharing or other employee benefit plans, as
well as individual retirement accounts, Keogh plans and other plans covered by
Section 4975 of the U.S. Internal Revenue Code.
<PAGE>
Summary
This summary highlights selected information from this prospectus and provides
an overview to aid in your understanding of the series 2000-1 notes. It does
not contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of the series 2000-1 notes,
carefully read this entire prospectus, including the information under the
caption "Risk Factors" in this prospectus.
The Parties
Issuer/Trust
Volkswagen Credit Auto Master Owner Trust, a New York common law trust to be
formed by the transferor and the owner trustee on the date of the issuance of
the series 2000-1 notes. The transferor will be the sole holder of the residual
interest in the trust, which will be represent the sole ownership and beneficial
interest in the trust.
Transferor
Volkswagen Dealer Finance, LLC, a Delaware limited liability company and a
wholly-owned subsidiary of VW Credit, Inc.
Servicer
VW Credit, Inc., a Delaware corporation and a wholly-owned subsidiary of
Volkswagen of America, Inc. and an indirect subsidiary of Volkswagen AG.
Owner Trustee
[_______________________________].
Indenture Trustee
[_______________________________].
Closing Date
The closing date of the transaction will be [___________________].
Initial Cut-Off Date
[______________].
The Series 2000-1 Notes
The trust will issue $[__________] aggregate principal amount of series 2000-1
notes. Only the series 2000-1 notes are being offered by this prospectus. The
trust may issue additional series of notes after the issuance of the series
2000-1 notes. The trust will pay interest and principal on the series 2000-1
notes as follows:
Payment Dates
The trust will make payments on the series 2000-1 notes on the 20th day of each
month or, if the 20th day of any month is not a business day, on the next
succeeding business day.
Interest
The series 2000-1 notes will bear interest at [one-month LIBOR as determined
each
2
<PAGE>
month] plus [___]% per annum or, if lower, the assets receivables rate.
The "assets receivables rate" is based on the interest rates on the receivables
and investment earnings on amounts on deposit in accounts of the trust to which
the holders of the series 2000-1 notes are entitled. If the interest rate on
the series 2000-1 notes, which is based on LIBOR, exceeds the assets receivables
rate, then the interest rate on the series 2000-1 notes will be adjusted to
equal the assets receivables rate.
Interest will be calculated for the series 2000-1 notes as follows:
Principal Number of days
balance at end in interest period
of prior monthly X ------------------ X interest rate
interest period 360
Each interest period begins on and includes a payment date and ends on but
excludes the next payment date. However, the first interest period will begin
on and include the closing date.
Yield Supplement Account
The servicer will establish and maintain a yield supplement account in the name
of the indenture trustee for the benefit of the holders of the notes. The
transferor will deposit $_______ into the yield supplement account on the
closing date. The "yield supplement account required amount" for any payment
date will equal ___% of the outstanding principal balance of series 2000-1 notes
for the payment date aftergiving effect to the change in principal balance on
the payment date.
If on any payment date the interest rate on the series 2000-1 notes has been
adjusted to the assets receivables rate, then amounts on deposit in the yield
supplement account will be available to pay any interest that would have been
payable to the holders of the series 2000-1 notes had the interest rate on the
series 2000-1 notes for the payment date been calculated based on LIBOR.
Principal
The trust is expected to pay principal in full on the series 2000-1 notes on the
_________ 200_ payment date. However, special circumstances could cause
principal to be paid earlier or later or in reduced amounts. See "Maturity and
Principal Prepayment Considerations."
If the trust has not previously paid the outstanding principal amount of the
series 2000-1 notes, the outstanding principal amount of the series 2000-1 notes
will be payable in full on the stated final maturity date for the series 2000-1
notes, which is [______________].
Revolving Period
The series 2000-1 notes will have a revolving period during which no principal
will be paid on the series 2000-1 notes. The revolving period will begin at the
close of business on the closing date and end when the accumulation period for
the series 2000-1 notes begins. However, the revolving period will end before
the accumulation period for the series 2000-1 notes begins if an early
amortization period that is not terminated begins.
3
<PAGE>
Accumulation Period
The series 2000-1 notes will have an accumulation period, unless an early
amortization period that is not terminated begins before the start of the
accumulation period. The accumulation period will be a period of [one to three]
months long. The trust will make no principal payments on the series 2000-1
notes during the accumulation period. However, the trust is expected to pay the
entire principal balance of the series 2000-1 notes on the ________ 200_ payment
date, which is the first payment date following the end of the accumulation
period.
Early Amortization Period
The series 2000-1 notes may have an early amortization period if an early
amortization event occurs and is not cured. See "The Series 2000-1 Notes--Early
Amortization Events" in this prospectus for a description of the events that
might cause an early amortization period to start and, in some cases, terminate.
During an early amortization period, the trust will make principal payments on
the series 2000-1 notes to the extent of funds available for that purpose.
Credit Enhancement
Subordination of the Residual Interest
The residual interest in the trust is subordinated to the rights of the holders
of notes to the extent described in this prospectus. Collections on the
receivables otherwise allocable to the residual interest may be used to pay
interest and principal on the series 2000-1 notes, but only to theextent of the
series 2000-1 available subordinated amount.
The series 2000-1 available subordinated amount will initially be $___________
but is subject to reduction from time to time. See "The Series 2000-1 Notes--
Allocation of Collections; Limited Subordination of the Residual Interest" for
more information about the series 2000-1 available subordinated amount.
Collections on the receivables will be allocated to the series 2000-1 notes
based on the sum of the series 2000-1 available subordinated amount and the
series 2000-1 invested amount. The series 2000-1 invested amount will initially
be $______ but is subject to reduction from time to time as described in this
prospectus under the caption "The Series 2000-1 Notes--Allocation Percentages."
Reserve Account
The servicer will establish and maintain a reserve account in the name of the
indenture trustee for the benefit of the holders of the series 2000-1 notes.
The transferor will deposit $_________ into the reserve account on the closing
date. The reserve account required amount for any payment date will equal
[___]% of the outstanding principal balance of the series 2000-1 notes for that
payment date, after giving effect to any change in the principal balance on that
payment date.
Amounts on deposit in the reserve account will be available to pay monthly
interest, the monthly servicing fee and amounts covering receivables that become
defaulted and that have been allocated to the holders of the series 2000-1
notes. In addition, on the
4
<PAGE>
stated maturity date for the series 2000-1 notes or on the date on which the
principal amount of the series 2000-1 notes has been reduced to zero, amounts on
deposit in the reserve account will be available to pay the total amount of
interest on the series 2000-1 notes that (a) was not paid on any payment dates
because the interest rate on the payment dates had been adjusted to equal to the
assets receivables rate, and (b) was not made-up on any subsequent payment date.
Excess Principal Collections
Principal collections allocable to other series of notes, to the extent not
needed to make payments on the other series of notes, will be applied to make
principal payments on the series 2000-1 notes and to make principal payments on
other series of notes entitled to principal payments.
Other Securities
The trust may issue additional series of notes from time to time.
Assets of the Trust
The primary assets of the trust will be a revolving pool of receivables arising
under revolving floor plan financing agreements entered into with VW Credit,
Inc. by retail automotive dealers to finance their inventory of new and used
automobiles and light duty trucks.
The receivables will be sold by VW Credit, Inc. to the transferor, and then
transferred by the transferor to the trust. Pursuant to the indenture for the
notes, the trust will grant a security interest to the indenture trustee for the
benefit of the holders of the notes in thereceivables and the other property of
the trust. The trust property will also include:
. security interests in the collateral securing the dealers' obligations to
pay the receivables, which will include unsold vehicles and which may
include parts inventory, equipment, fixtures and service accounts, real
estate and/or personal guarantees securing the receivables;
. amounts held on deposit in trust accounts maintained for the trust or for
the notes;
. recourse VW Credit, Inc. may have against the dealers under the financing
agreements;
. a portion of the transferor's rights under its purchase agreement with VW
Credit, Inc.; and
. all rights of the trust under the trust sale and servicing agreement.
New receivables arising under the revolving floor plan financing agreements
generally will be transferred to the trust on a daily basis. The trust
generally will transfer the principal collections on the receivables to the
transferor, if there are sufficient assets in the trust, prior to the date on
which funds are required to be set aside for payment on a series of notes. If
there are insufficient assets in the trust, the trust will retain the principal
collections and invest them in eligible investments.
However, if an early amortization event or investment event described in this
prospectus or relating to another outstanding series of notes occurs, the trust
will retain all
5
<PAGE>
or a portion of the principal collections and invest them in eligible
investments in a principal funding account dedicated to the noteholders of that
series for future payment on the notes of that series.
Collections
Collections consist of all collections of principal under the receivables, as
well as all collections of interest.
Allocation of Cash Flows
Collections of interest and other nonprincipal charges generally will be used
monthly on each payment date to make payments of interest on the series 2000-1
notes and to make deposits as required into the reserve account and yield
supplement account.
During the revolving period, no principal payments are to be made on the series
2000-1 notes, and collections of principal will be paid to the holder of the
residual interest in the trust, deposited to the excess funding account, or
allocated to the noteholders of other series of notes. If, however, an early
amortization event for the series 2000-1 notes occurs, principal allocated to
the series 2000-1 notes will be paid to the holders of the series 2000-1 notes
on each payment date until the principal amount of the series 2000-1 notes is
reduced to zero.
Servicing Fees
The trust will pay the servicer a fee as compensation for servicing the
receivables. This servicing compensation will be paid in monthly installments,
and each month the servicer receive one-twelfth of 1.0% per annum of the
principal balance of thereceivables in the receivables pool on the last day of
the prior month.
Optional Repurchase
The servicer may repurchase the series 2000-1 notes on any payment date after
the series 2000-1 invested amount is reduced to an amount less than or equal to
$_______ (10% of the initial outstanding principal amount of the series 2000-1
notes).
Book-Entry Registration
Persons acquiring beneficial ownership interests in the series 2000-1 notes will
hold their series 2000-1 notes through The Depository Trust Company in the
United States or Clearstream Banking, societe anonyme or Euroclear. Transfers
within The Depository Trust Company, Clearstream Banking, societe anonyme, or
Euroclear will be in accordance with the usual rules and operating procedures of
the relevant system. Crossmarket transfers between persons holding directly or
indirectly through The Depository Trust Company, on the one hand, and persons
holding directly or indirectly through Clearstream Banking, societe anonyme, or
Euroclear, on the other hand, will take place in The Depository Trust Company,
through the relevant depositories of Clearstream Banking, societe anonyme, or
Euroclear.
Tax Status
Subject to important considerations described under "Material Federal Income Tax
Consequences", Mayer, Brown & Platt, as special tax counsel to the trust, is of
the opinion that, under existing law your series 2000-1 notes will be
characterized as debt for federal income tax purposes and the trust
6
<PAGE>
will not be characterized as an association (or publicly traded partnership)
taxable as a corporation.
By accepting a series 2000-1 note, you agree to treat the series 2000-1 notes as
indebtedness for federal, state and local income and franchise tax purposes.
See "Material Federal Income Tax Consequences" and "State and Local Tax
Consequences" in this prospectus concerning the application of federal, state
and local tax laws.
ERISA Considerations
Subject to the considerations discussed under "ERISA Considerations", an
employee benefit plan regulated by the Employee Retirement Income Security Act
of 1974 may purchase the series 2000-1 notes. See "ERISA Considerations" for a
description of the limitations on the purchase of series 2000-1 notes by
employee benefit plans. Employee benefit plans should consult with their
counsel before purchasing any series 2000-1 notes.
Risk Factors
There are material risks associated with an investment in the series 2000-1
notes and you should consider the matters set forth under Risk Factors on pages
[9 through 22] of this prospectus.
Ratings
The series 2000-1 notes will be rated in the highest rating category for long-
term debt obligations by at least one nationally recognized rating agency.
7
<PAGE>
Risk Factors
In addition to the other information contained in this prospectus, you
should consider carefully the following risk factors in deciding whether to
purchase the series 2000-1 notes. The disclosures below summarize the principal
material risks of investing in the series 2000-1 notes. The summary does not
purport to be complete; to fully understand and evaluate it, you should also
read the rest of this prospectus.
<TABLE>
<CAPTION>
<S> <C>
The Issuance of Additional The trust, as a master trust, may issue
Series May Result in Delays additional series of notes. These
and Reductions on additional series may be issued without
Payments on Your Notes your consent and could result in delays
or reductions in payments on your
series. The terms of any series may be
different from your series. Some series
may be in accumulation or amortization
periods while your series may be in a
revolving period; principal collections
will be paid to those series while your
series is not receiving principal
collections. Some series may also be in
their revolving periods while your
series is in an accumulation or early
amortization period; principal
collections that otherwise would have
been paid to those series will be paid
to your series to make principal
payments on the series 2000-1 notes.
If your series were to enter an
accumulation period or an early
amortization period while another series
was either in an accumulation,
investment or amortization period or
were to enter an accumulation,
investment or amortization period before
the principal amount of the notes of
your series were reduced to zero,
principal collections from that series
would not be available to make principal
payments on your notes. As a result, the
payments on your notes may be reduced
and final payment of the principal of
the notes of your series may be delayed.
Also, the shorter the accumulation
period for the notes of your series, the
greater the chance that payment in full
of the notes of your series on the
expected principal payment date will
depend on principal collections being
available from other series to make
principal payments on your notes. If a
series from which principal collections
were expected to be available to make
payments on the notes of your series
were to enter an amortization,
investment or accumulation period,
principal collections allocable to that
series would not be available to make
principal payments on your notes. As a
result, the payments on your notes may
be reduced and the final
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payment of principal of your notes may
be later than the expected principal
payment date.
It is a condition to the issuance of
each new series that each rating agency
that has rated your notes confirm in
writing that the issuance of the new
series will not result in a reduction or
withdrawal of its rating of your notes.
However, a rating confirmation does not
guarantee that the timing or amount of
payments on your notes will remain the
same.
The transferor will include in any
report it files under the Securities and
Exchange Act of 1934 all material
information about any other series of
notes issued after your series that may
have a material effect on your series.
Early Amortization of Your If an early amortization event for your
Notes May Result in Early, series should occur, an early
Late and/or Reduced amortization period for your series will
Payment of Your Notes begin and this could result in reduced
payment on your notes and/or payment on
your notes before or after the expected
principal payment date. You may not be
able to reinvest the principal on your
notes repaid to you earlier than
expected at a rate of return that is
equal to or greater than the rate of
return on your notes. An early
amortization event may result from,
among other things:
. the bankruptcy, insolvency or
receivership of the trust, the
transferor or Volkswagen of America,
Inc.;
. the failure of the transferor, the
servicer or the trust to make required
payments on the series 2000-1 notes or
as otherwise required under the
indenture, the trust sale and
servicing agreement or the receivables
purchase agreement;
. a breach of a representation,
warranties or covenant by the trust,
the transferor and VW Credit, Inc.;
. the occurrence of a servicer default
or event of default with respect to
the series 2000-1 notes;
. a decline in the monthly payment rate
of the receivables below the amount
required, and
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. any carry-over amount being
outstanding for six months.
A significant decline in the amount of
receivables generated also could cause
an early amortization event if VW Credit
fails as required to designate
additional accounts the receivables of
which would be transferred to the trust.
The Note Rate for the Your The assets receivables rate is based on
Notes is limited by the the interest rates on the receivables,
Assets Receivables Rate investment earnings on amounts on
deposit in the reserve account, the
yield supplement account and the
principal funding account for the series
2000-1 notes, and the share of the
holders of the series 2000-1 notes in
investment earnings on amounts on
deposit in the collection account. If
the interest rate on the series 2000-1
notes, which is based on LIBOR, exceeds
the assets receivables rate, then the
interest rate on the series 2000-1 notes
will be adjusted to equal the assets
receivables rate.
The Trust may not be able The interest rate on the series 2000-1
to make up a Deficiency in notes is based on LIBOR and may exceed
Interest Payments due to the assets receivables rate if LIBOR
Basis Risk exceeds the interest rate on the
receivables (which may be reduced by the
Servicer) and/or if LIBOR exceeds the
investment earnings on amounts on
deposit in the reserve account, the
yield supplement account and the
principal funding account for the series
2000-1 notes and the share of the
holders of the series 2000-1 notes in
investment earnings on amounts on
deposit in the collection account. Any
deficiency in interest payments
resulting from the assets receivables
rate being lower than the interest rate
based on LIBOR and investment earnings
on accounts, and interest on that
deficiency, will be paid to the extent
of:
. any funds on deposit in the yield
supplement account;
. any funds remaining after all required
distributions and deposits for the
series 2000-1 notes have been made;
and
. on the last payment date for series
2000-1, amounts remaining in the
reserve account after the withdrawal
of all other amounts required to be
withdrawn from the reserve account on
that last payment date, and
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additional noteholder collections
available to cover the deficiency.
The transferor cannot assure that those
amounts, if any, will be sufficient to
pay the deficiency. If any deficiency is
outstanding for [six] consecutive
payment dates, an early amortization
event will occur.
Credit Enhancement is The series 2000-1 notes represent
Limited obligations of the trust only. The
series 2000-1 notes are not obligations
of and are not insured or guaranteed by
Volkswagen AG, Volkswagen of America,
Inc., VW Credit, Inc. or the transferor
or any other entity or person (including
any affiliate of VW Credit, Inc. or the
transferor). The sole source of payments
on the series 2000-1 notes are the
assets of the trust. The trust will not
have any significant assets or sources
of funds other than the receivables and
the reserve account. Credit enhancement
will be provided by the subordination of
the residual interest in the trust as
described in this prospectus and by
amounts in the reserve account. The
amount of the credit enhancement is
limited and will be reduced from time to
time.
You must rely primarily on payments on
the trust's receivables and amounts on
deposit in the reserve account. In
addition, you may have to look to the
proceeds from the repossession and sale
of the collateral that secures defaulted
receivables and the proceeds from any
recourse against dealers under the
financing agreements. If these sources
are insufficient, you might experience
delays or reductions in payments on your
notes.
Commingling by the The trust sale and servicing agreement
Servicer May Result in allows the servicer to retain
Delays and Reductions in collections on the receivables. So long
Payments on Your Notes as VW Credit, Inc. remains servicer, no
servicing default has occurred, and VW
Credit, Inc. meets a minimum net worth
requirement, arranges for a form of
enhancement for its obligations to make
deposits into the collection account
acceptable to the rating agencies that
have rated outstanding series, or those
rating agencies have otherwise approved
of the retention of collections by the
servicer, the servicer does not have to
deposit collections into the collection
account until the related payment date.
The servicer is currently retaining
collections on the receivables and will
not deposit
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collections into the collection account
for any calendar month until the
related payment date.
Until the servicer deposits payments on
the receivables into the collection
account, the servicer may use those
funds for its own benefit and will not
segregate those funds from its own
assets, and the proceeds of any
investment of those funds will accrue to
the servicer. The servicer will pay no
fee to the trust or any noteholder for
any use by the servicer of collections
on the receivables. If the servicer were
to become insolvent, the servicer's
failure to deposit collections in the
collection account may result in delays
and reductions in payments on your
notes.
You May Not Be Able to You may be unable to influence or
Influence Actions of the otherwise control the actions of the
Trust trust, and as a result, you may be
unable to stop actions that are adverse
to you.
. The interests of other noteholders of
your series or the noteholders of any
other series may not coincide with
your interests, making it more
difficult for you to receive your
desired results in a situation
requiring the consent or approval of
other noteh olders.
. You may need approval or consent of
other holders of the notes of your
series or the holders of notes of
other series, to take or direct
various actions, including amending
the trust agreement, the trust sale
and servicing agreement or the
receivables purchase agreement or
approving supplemental indentures for
the indenture or the series 2000-1
supplement, declaring the occurrence
of an early amortization event or
approving the termination of an early
amortization period, declaring an
event of default, accelerating the
notes and approving the sale of
receivables following an event of
default, waiving an event of default,
exercising the noteholders' right to
have series 2000-1 notes redeemed
following the breach of a
representation or warranty or
replacing the indenture trustee.
. In addition, if transferor violates
its covenant under the trust sale and
servicing agreement not to create any
lien on any receivable, action by the
holders of
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more than 50% of the aggregate amount
of notes of each class of each series
and by the holder of the residual
interest in the trust, will be
required to direct the indenture
trustee not to sell or otherwise
liquidate the receivables.
. [In addition, the transferor, the
servicer, the owner trustee and the
indenture trustee may amend the trust
agreement, the trust sale and
servicing agreement, the indenture,
the series 2000-1 supplement or the
receivables purchase agreement without
your consent in the circumstances
described in this prospectus. Action
by the holders of more than 50% of the
aggregate amount of the notes of each
class of each series also may be
required to amend the trust agreement,
the indenture and the series 2000-1
supplement, and 66 2/3% of the
aggregate amount of the notes of each
class of each series adversely
affected may be required to amend the
trust sale and servicing agreement.]
Any of the foregoing could result in a
delay or reduction in payment on your
notes.
Dealer Concentration May As of March 31, 2000, VW Credit, Inc.
Result in Larger Losses provided new and used car floorplan
From a Single Dealer financing for approximately 861 dealers
Default or dealer groups. Although no dealer or
dealer group accounted for more than
2.85% of the aggregate principal amount
of the outstanding receivables as of
March 31, 2000, approximately 35% of the
aggregate principal amount of the
receivables outstanding as of that date
were owed by the 30 largest dealers or
dealer groups. A default by one or more
of these dealers or dealer groups could
result in delays or reductions in
payments on your notes.
Receivables May Be VW Credit, Inc. and the transferor will
Uncollectible Due to file financing statements covering the
Superior Interests receivables sold by VW Credit, Inc. to
the transferor and then transferred to
the trust. The financing statements will
perfect the security interests of the
transferor and the trust in the
receivables. However, VW Credit, Inc.
will serve as the custodian of the
receivables and will not physically
segregate or mark the receivables to
indicate that the receivables have been
sold to the transferor and then
transferred to the trust.
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If the receivables are "chattel paper"
under the Uniform Commercial Code and
another party purchases or takes a
security interest in the receivables for
value, in the ordinary course of
business, and without actual knowledge
of the transferor's or the trust's
interest, that purchaser or secured
party will acquire an interest in the
receivables superior to the trust's
interest. The trust will not be able to
collect on the receivable if there is a
superior interest. This may result in
delays or reductions in payments on
your notes.
Receivables May Be When dealers purchase vehicles, they
Unsecured Due to Sales Out give VW Credit, Inc. a security interest
of Trust in the vehicles they purchase to secure
their obligations under the receivables
created by the purchase. When a financed
vehicle is sold by a dealer, VW Credit,
Inc.'s security interest in the vehicle
generally will terminate. If the dealer
who sold the vehicle fails to pay VW
Credit, Inc. the amount owed on the
receivable, the receivable will become
unsecured because the buyer generally
takes the vehicle free of the security
interest of VW Credit, Inc. in the
financed vehicle. If the financed
vehicle is sold "out of trust," i.e.,
sold without the dealer applying the
proceeds of the sale to repay the
receivable, the trust will not be able
to foreclose on the financed vehicle.
This may result in delays or reductions
in payments on your notes.
A Bankruptcy of VW VW Credit, Inc. will sell receivables to
Credit, Inc. or the the transferor, and the transferor will
Transferor May Delay or transfer the receivables to the trust.
Reduce Payments on Your VW Credit, Inc. and the transferor have
Notes taken steps to ensure that the
transactions described in this
prospectus are respected, and to reduce
the likelihood that the transferor would
voluntarily file for bankruptcy, if VW
Credit, Inc. were to become a debtor in
bankruptcy. These steps include the
creation of the transferor as a special
purpose entity. However, a court could
conclude that the receivables
transferred to the trust are not owned
by the trust or by the transferor, but
rather are part of the estate of the
debtor in bankruptcy. The court also may
conclude that the transfer of the
receivables from the party in bankruptcy
was not really a sale, but rather a
secured financing, or the court may
conclude that the party in bankruptcy
and the owner of the receivables should
be treated as a single entity rather
than separate entities. If this were to
occur, you could experience delays or
reductions in payments on your notes as
a result of:
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. the "automatic stay" provisions of the
U.S. Bankruptcy Code, which prevent
creditors from exercising remedies
against a debtor in bankruptcy, and
provisions of the U.S. Bankruptcy Code
that permit substitution of collateral
in specified circumstances;
. some tax or government liens on VW
Credit, Inc.'s or the transferor's
property that arose prior to the
transfer of a receivable to the trust
having a right to be paid from
collections on the receivables before
those collections are used to make
payments on your notes; and
. the fact that the trust or the
indenture trustee may not have a
perfected security interest in the
financed vehicles or cash collections
on the receivables held by VW Credit,
Inc. at the time a bankruptcy
proceeding begins.
If VW Credit, Inc. or the transferor
were to become a debtor in bankruptcy,
it may be able to recover payments made
by it to the trust to repurchase
receivables prior to the date of the
bankruptcy petition. This could result
in delays or reductions in payments on
your notes.
In addition, if VW Credit, Inc., any of
its affiliates, or any of the
manufacturers of the related vehicles
filed for bankruptcy, the dealers might
respond by delaying or withholding
payments on the receivables, even
without legal or contractual
justification. This could result in
delays or reductions in payments on your
notes.
Bankruptcy of One or More A substantial number of the vehicles
Manufacturers Could securing receivables in the trust are
Result in Delays and manufactured by Volkswagen AG and
Reductions in Payments on distributed by Volkswagen of America,
Your Notes Inc. Under a dealer agreement between
Volkswagen of America, Inc. and each
franchised dealer of vehicles
manufactured by Volkswagen AG or its
affiliates, Volkswagen of America, Inc.
agrees to repurchase unsold new vehicles
distributed by Volkswagen of America,
Inc. and in inventory upon termination
of the dealer agreement. Volkswagen of
America, Inc. also agrees under these
dealer agreements to repurchase a
dealer's new parts inventory at the time
of termination of the dealer's
agreement. Finally, Volkswagen of
America, Inc. may provide financial
assistance to its franchised dealers in
the
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form of real estate financing. If
Volkswagen AG or Volkswagen of America,
Inc. were to file for bankruptcy or
otherwise begin insolvency proceedings,
they may become unable to repurchase new
vehicles or parts inventory or otherwise
provide financial assistance to dealers.
This could result in delays or
reductions in payments on your notes.
Other manufacturers of vehicles also may
have agreed with franchised dealers
whose receivables are in the trust to
repurchase vehicles and inventory if and
when a dealer's franchise is terminated
or otherwise to provide financial
assistance to franchised dealers. If any
one of these manufacturers were to file
for bankruptcy or otherwise begin
insolvency proceedings, it may become
unable to repurchase new vehicles or
parts inventory or otherwise provide
financial assistance to dealers. This
could result in delays or reductions in
payments on your notes.
Failure of VW Credit, Inc. The trust depends upon VW Credit, Inc.
to Create Sufficient New to generate new receivables to replace
Receivables May Result in the receivables that are repaid.
the Trust Holding Assets
with a Lower Yield The ability of VW Credit, Inc. to
generate receivables is to a large
extent dependent on the sale of
automobiles manufactured by Volkswagen
AG and its affiliates and by other
automobile manufacturers. VW Credit,
Inc. does not guarantee that it will
continue to generate receivables at
historical rates. The following events
could result in a reduction in the
ability of VW Credit, Inc. to generate
receivables.
. A decline in the manufacture and sale
of automobiles and light duty trucks
due to an economic downturn or other
factors.
. The reduction of automobile production
by Volkswagen AG and other automobile
manufacturers due to labor or supply
disruptions, price increases,
competitive pressures or other factors
. Changes in vehicle distribution
practices.
. Changes in the terms of the franchise
and dealer agreements.
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. The failure of Volkswagen of America,
Inc. to perform under its franchise
agreements, or of VW Credit, Inc. to
perform under its dealer agreements,
or the inability of dealers to perform
under franchise an d dealer
agreements.
. A change in dealer inventory
management practices
. A change in the interest rates charged
by VW Credit, Inc. to dealers.
. A change in the amounts of the credit
lines or other terms offered by VW
Credit, Inc. to dealers.
. Defaults on accounts by dealers.
. Termination of dealer franchises.
. Dealers becoming insolvent or filing
for bankruptcy.
. Seasonal fluctuations in the sale and
leasing of vehicles.
In the event that VW Credit, Inc. is
unable to generate sufficient new
receivables, or is unable to transfer
the receivables it generates because of
restrictions in its financing
arrangements or otherwise, the trust
will be required to hold cash or
investment securities rather than
receivables, which may have a lower
yield. Because the trust's assets are
the sole source of payments on the
series 2000-1 notes, this could result
in delays or reductions in payments on
your notes.
Potential Delays and You may suffer delays and reductions in
Reductions in Payments on payments on your notes because of the
Your Notes Due to Addition addition of accounts to the trust.
of Accounts
. The transferor may, and in some cases
will be obligated by the terms of the
trust sale and servicing agreement to,
designate additional accounts, the
receivables in which will be conveyed
to the trust.
. Additional accounts may include
accounts originated under criteria
different from those which were
applied to previously designated
accounts. Additional accounts may also
provide financing for products of
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types different from those included in
the trust at the time that your series
is issued.
. Additional accounts designated in the
future may not be of the same credit
quality, and may not relate to the
same types of products, as previously
designated accounts. If additional
accounts are not of the same credit
quality as previously designated
accounts or if new product types that
secure the receivables in new accounts
do not provide security that is as
favorable as that provided by existing
product types, then delays and
reductions in payments on your notes
could result.
Potential Delays and You may suffer delays and reductions in
Reductions in Payments on payments on your notes because of the
Your Notes Due to Removal removal of accounts from the trust.
of Accounts
. The transferor may, and in some cases
will be obligated by the terms of the
trust sale and servicing agreement to,
remove accounts from the trust. The
trust sale and servicing agreement
contemplates that receivables in those
accounts will remain in the trust
unless the applicable account was an
ineligible account at the time it was
originally designated as an account.
. Following the removal of an account,
some receivables relating to the
account will be outside of the trust
and other receivables relating to the
account may remain in the trust.
. If the servicer applies collections
relating to an account to receivables
that are outside of the trust rather
than to receivables that remain in the
trust, then delays and reductions in
payments on your notes could occur.
Failure of [___________] [________________], the largest
Distributors to Repurchase distributor of vehicles to the dealers
Vehicles from Terminated generating the receivables, is obligated
Dealers May Result in to repurchase some the dealer's vehicles
Increased Losses on the if its dealership agreement is
Receivables terminated or expires. If [____________]
is unwilling or unable to repurchase
those vehicles, losses on the
receivables of those dealers may
increase. This could result in delays or
reductions in payments on your notes.
The Failure of Dealers to The trust's ability to make payments on
Make Payments on the the series 2000-1 notes generally
depends on collections from dealers on
the
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Receivables Could Delay or receivables. The prospectus
Reduce Payments on Your describes past patterns of dealer
Notes payments on similar receivables.
The timing of the sale and lease of
vehicles is uncertain. It depends on
many economic and social factors that
are beyond the control of VW Credit,
Inc., the transferor and the trust.
Economic factors include interest rates,
unemployment levels, the rate of
inflation and consumer perception of
general economic conditions. The use of
sales incentive programs (e.g.,
manufacturers' rebate programs) and
financing incentive programs may affect
retail sales. We do not guarantee that
dealers will pay on the receivables at
the same rate as in the past or in any
particular pattern. If the dealers'
ability to pay on the receivables
declines for whatever reason, you might
experience delays or reductions in
payments on your notes.
Failure of VW Credit, Inc. VW Credit, Inc., the transferor and
or the Transferor to Fulfill their respective affiliates are not
its Repurchase Obligations obligated to make payments to you on
May Adversely Affect the Trust your notes and do not insure or
guarantee the payment of the receivables
or your notes. However, VW Credit, Inc.
will make representations and warranties
to the transferor regarding the
characteristics of the receivables. The
transferor will assign these
representations and warranties to the
trust, and the transferor will make its
own representations and warranties to
the trust in connection with the
transfer of the receivables to the
trust. If VW Credit, Inc. or the
transferor breaches its representations
and warranties, and the breach
materially and adversely affects the
receivable or the interests of the
holders of the series 2000-1 notes in
that receivable, it will be obligated to
repurchase the receivable from the
trust. If VW Credit, Inc. or the
transferor fails to repurchase the
affected receivable, you may experience
delay or reductions in payments on your
notes.
Geographic Concentration As of March 31, 2000, 24.6% of the
May Increase Risk of Loss outstanding receivables were due from
dealers in California, and 35.6% of the
outstanding receivables were due from
dealers in New Jersey, New York,
Massachusetts, Connecticut,
Pennsylvania, Vermont, Rhode Island,
Maine and New Hampshire. Any significant
economic downturn in California any of
these other states could result in
delays and reductions in payments on
receivables from dealers located
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there and a resultant delays and
reductions in payments on your notes.
Ability to Change Terms of VW Credit, Inc. may change at any time
the Accounts the terms of the accounts, including the
interest rate of the related
receivables. There is no assurance that
the interest rate generated by
receivables will always be sufficient to
cover the LIBOR interest rate on the
series 2000-1 notes. Failing to maintain
an appropriate spread between the
interest rate and the receivables and
the interest rate on the series 2000-1
notes may cause delays or reduction in
the amount on interest paid to the
noteholders and may cause an investment
event or an early amortization event to
occur.
Limited Ability to Resell The underwriters may assist in the
Your Notes resale of the series 2000-1 notes, but
they are not required to do so. A
trading market for the series 2000-1
notes may not develop. If a trading
market does develop, it might not
continue, or it might not be
sufficiently liquid to allow you to
resell any of your notes.
The Ratings on Your Notes The trust will issue the series 2000-1
Are Limited in Scope notes only if they receive a rating from
at least one rating agency. A security
rating is not a recommendation to buy,
sell or hold the series 2000-1 notes.
The ratings may be revised or withdrawn
at any time. Ratings on the series 2000-
1 notes do not address the timing of
distributions or principal on the series
2000-1 notes at the expected principal
payment date prior to the stated final
maturity date.
You Will Not Receive Your ownership of the series 2000-1
Physical Certificates notes will be registered electronically
Representing Your Notes through DTC, Clearstream Luxembourg and
Euroclear. The lack of physical
certificates could:
. cause you to experience delays in
receiving payments on the series 2000-
1 notes because the indenture trustee
will be sending payments on the series
2000-1 notes owned by you through DTC
instead of directly to you;
. limit or prevent you from using your
notes as collateral; and
. hinder your ability to resell your
notes or reduce the price that you
receive for them.
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For definitions of some of the terms used in this prospectus, see the
Glossary beginning on page [113] of this prospectus.
21
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Volkswagen AG, Volkswagen of America, Inc. And VW Credit, Inc.
Volkswagen AG
VWAG and the other components of the VWAG Group manufacture and distribute
passenger cars, commercial vehicles, automotive components, parts and
accessories, machine tools and other engineering products. The VWAG Group
features eight automotive marques: VOLKSWAGEN, AUDI, SEAT, SKODA, BENTLEY,
ROLLS-ROYCE, LAMBORGHINI AND BUGATTI. The VWAG Group also operates an extensive
vehicle rental, leasing and financing business. The principal and registered
office of VWAG is in Wolfsburg, Federal Republic of Germany, with its head
office being located at Berliner Ring 2, D-38436 Wolfsburg.
Volkswagen of America, Inc.
VWOA imports and distributes Volkswagen, Audi, Rolls Royce and Bentley
products. As of March 31, 2000, VWOA distributed Volkswagen, Audi, Rolls Royce
and Bentley vehicles and parts through approximately 603 and 258 dealerships
respectively. Sales of Volkswagen vehicles in the U.S. were 315,563 units for
the year ended December 31, 1999. Sales of Audi vehicles in the U.S. were
65,959 units for the year ended December 31, 1999. VWOA's operations began on
October 27, 1955. VWOA's principal offices are located at 3800 Hamlin Road,
Auburn Hills, Michigan 48326, telephone (248) 340-5000.
VW Credit, Inc.
VCI was incorporated in Delaware on April 2, 1981, and is a wholly-owned
subsidiary of VWOA. VCI's principal activity is acting as a finance subsidiary
of VWOA, including the purchasing of retail installment sales contracts from
Volkswagen, Audi, Rolls Royce and Bentley dealers and financing and leasing of
new automobiles. VCI offers a wide range of automotive related financial
products, including wholesale floorplan financing, retail financing and customer
lease financing. As of March 31, 2000, VCI had approximately 561 employees and
was servicing $872 million in wholesale floor plan receivables of the type to be
transferred to the Trust. During the first quarter of 2000, VCI provided retail
or leased financing for approximately 43,975 vehicles, including approximately
36,857 new Volkswagen and Audi passenger cars, representing 25.5% of Volkswagen
and Audi U.S. retail and fleet sales during that period. VCI also financed at
wholesale approximately 158,239 new Volkswagen and Audi passenger cars,
representing 39% of VWOA's sales to dealers for the year ended December 31,
2000. Wholesale vehicle financing accounted for 9% of the total automotive
financing (measured in units) of VCI as of March 31, 2000 and represented 13% of
gross automotive finance receivables outstanding at March 31, 2000. The
principal offices of VCI are located at 3800 Hamlin Road, Auburn Hills, Michigan
48326, telephone (248) 340-5401.
22
<PAGE>
The Transferor
The Transferor was formed in the State of Delaware on March 30, 2000. VCI
is the sole member of the Transferor. The Transferor's limited purpose is to
purchase wholesale and other receivables from VCI and transfer the receivables
to third parties or issue indebtedness secured by receivables to third parties.
[VCI will make subordinated loans to the Transferor to fund a portion of the
purchase price of the Receivables to be paid by the Transferor.]
The Transferor has taken steps in structuring the transaction described in
this prospectus that are intended to ensure that the voluntary or involuntary
application for relief by VCI under the Insolvency Laws will not result in the
consolidation of the assets and liabilities of the Transferor with those of VCI.
The Transferor is organized as a separate, limited purpose subsidiary of VCI,
and its limited liability company agreement restricts its business to that
described in the prior paragraph and prohibits the Transferor from commencing a
voluntary case or proceeding under any Insolvency Law without the unanimous
affirmative vote of all its directors). See "Risk Factors--A Bankruptcy of VCI
or the Transferor May Delay or Reduce Payments on the Series 2000-1 Notes" and
"Material Matters Relating to Bankruptcy".
The Trust
General
Volkswagen Credit Auto Master Owner Trust (the "Trust") will be a New York
common law trust formed by the Transferor under the Trust Agreement on the
closing date. The Transferor will hold the Residual Interest in the Trust. [The
Trust Agreement does not permit the Transferor to sell, assign, pledge or
otherwise transfer the Residual Interest.]
On the Closing Date the Transferor will have conveyed to the Trust the
Receivables existing in the Accounts on the Initial Cut-Off Date or arising
thereafter, without guaranty that the Trust will be able to collect on the
Receivables. The property of the Trust consists of:
. the Receivables existing in the Accounts on the Initial Cut-Off
Date;
. all Receivables generated in the Accounts after the Initial Cut-Off
Date;
. Receivables existing in or generated in any Accounts added to the Trust
on or after the related addition date (but excluding Receivables in any
Accounts that are removed from the Trust after the Initial Cut-Off
Date);
. an assignment of all the Transferor's rights and remedies under the
Receivables Purchase Agreement;
. all Collections;
23
<PAGE>
. all funds on deposit in specified accounts of the Trust;
. any Enhancement issued for a Series or class of Notes;
. a security interest in the Vehicles; and
. the Collateral Security.
See "The Transfer and Servicing Agreements--Receivables Purchase Agreement" for
an overview of the Receivables Purchase Agreement. The Series 2000-1
Noteholders will not have any interest in any Enhancements provided for the
benefit of the Noteholders of another Series or class. See "The Transfer and
Servicing Agreements--Removal of Accounts" for information regarding the removal
of Receivables and Accounts from the Trust.
The Trust will acquire the Receivables from the Transferor, and the
Servicer will agree to service the Receivables, under the Trust Sale and
Servicing Agreement. The Transferor is conditionally allowed, and in some
circumstances is obligated:
. to designate new Accounts to be included as Accounts and to convey to
the Trust the Receivables of those new Accounts,
. to designate ineligible Accounts to be removed, and
. to require the Owner Trustee to return receivables in the removed
Accounts to the Transferor.
See "The Transfer and Servicing Agreements--Addition of Accounts" for
information regarding the addition of Accounts.
Prior to its formation, the Trust will have no assets or obligations. The
Trust will not engage in any business activity other than:
. acquiring and holding the Receivables, the other assets of the Trust and
proceeds therefrom;
. issuing Notes; and
. making payments on the above and related activities.
As a consequence, the Trust is not expected to have any need for, or source
of, capital resources other than the assets of the Trust.
24
<PAGE>
Capitalization of the Trust
The Trust may issue one or more series (each, a "Series") of Notes. A
portion of the Trust's cash flows will be allocated to the holders of each
Series of Notes. The portion of the Trust's cash flows remaining after
allocation to the Noteholders will be allocated to the Residual Interestholder.
The principal amount of the Residual Interest will fluctuate as the aggregate
principal balance of the Receivables fluctuates, as new Series of Notes are
issued, and as outstanding Series of Notes are repaid or refunded. A portion of
the Residual Interest will be subordinated to the interest of the Noteholders of
each Series of Notes.
Each Series of Notes will be issued under the terms of an Indenture (the
"Indenture"), and a Series Supplement to the Indenture for that Series (each, as
"Series Supplement"), each between the Trust and [_______________], as initial
Indenture Trustee. Forms of the Indenture and the Series Supplement have been
filed as exhibits to the registration statement of which this prospectus forms a
part. The Notes of each Series will evidence obligations of the Trust secured
by the assets of the Trust allocated to the Noteholders of that Series and will
represent the right to receive from those assets funds up to the amounts
required to make payments of interest on and principal of the Notes of that
Series.
On the Closing Date, the Trust will issue the $[___________] Volkswagen
Credit Auto Master Owner Trust Floating Rate Dealer Loan Backed Notes, Series
2000-1 (the "Series 2000-1 Notes").
The Owner Trustee
[__________], a [___________], will serve as Owner Trustee under the Trust
Agreement. The principal executive offices of the Owner Trustee are located at
[___________], and its telephone number is [__________].
Use of Proceeds
The net proceeds from the sale of a the Series 2000-1 Notes will be paid to
the Transferor. The Transferor will use those proceeds to purchase Receivables
from VCI and to make deposits into the Excess Funding Account, if necessary, and
for other general corporate purposes.
The Dealer Floor Plan Financing Business
General
The Transferor will select the Receivables to be sold to the Trust under
the Trust Sale and Servicing Agreement from extensions of credit and advances
(known generally as "wholesale" or
25
<PAGE>
"floorplan" financing) made by VCI to U.S. motor vehicle dealers (the "U.S.
Wholesale Portfolio"). As of March 31, 2000, the principal balance of
receivables in the U.S. Wholesale Portfolio was approximately $872 million. The
dealers use the funds so advanced to purchase both new vehicles distributed by
VWOA and other manufacturers and distributors and used vehicles, in both cases
pending sale or lease to consumers. VCI financed approximately 25% of the total
number of all VWOA-franchised dealers as of March 31, 2000. VCI has extended
credit lines to 158 VWOA-franchised dealers that may also operate non-VWOA
franchises (representing approximately 80.7% of the aggregate balance of $872.4
million of credit lines of dealers in the U.S. Wholesale Portfolio as of March
31, 2000) and to 52 dealers that do not operate VWOA franchises (representing
approximately 19.3% of the aggregate balance of credit lines). Receivables sold
to the Trust are secured by the Vehicles and, in many cases, Non-Vehicle
Collateral Security. See "--Credit Underwriting Process." In some cases, the
Receivables are also guaranteed by the owner of the dealership. Occasionally,
the Receivables are also secured by realty or an affiliate of the Dealer
provides a guarantee of the Receivables.
VCI is the single largest wholesale financing source for VWOA-franchised
dealers in the United States. Volkswagen-manufactured vehicles for which VCI
provides wholesale financing include vehicles manufactured under the VOLKSWAGEN
and AUDI trademarks. VCI also provides wholesale financing for vehicles
manufactured by other U.S. and foreign automobile manufacturers, including
Porsche, Mazda and BMW. VCI has extended credit lines to VWOA-franchised
dealers that also may operate non-VWOA franchises and to non-VWOA dealers. VCI
services the receivables in the accounts in the U.S. Wholesale Portfolio through
its home office located in Auburn Hills, Michigan, its processing center located
in Libertyville, Illinois and through four regional offices located in the
metropolitan areas of Los Angeles, California; Denver, Colorado; Atlanta,
Georgia; and New York, New York.
VCI categorizes under its policies and procedures Vehicles financed by any
dealer under the floorplan program as New Vehicles or Used Vehicles. Currently,
. "New Vehicles" consist of current and prior model year vehicles,
typically purchased by a dealer directly from the
manufacturer/distributor, and
. "Used Vehicles" consist of previously owned vehicles (by a person
other than the dealer or the manufacturer/distributor).
Used Vehicles also include vehicles purchased by a dealer at auctions conducted
by VCI and vehicle manufacturers ("Auction Vehicles"). The categorization of
New Vehicles and Used Vehicles may change in the future based on VCI's practices
and policies.
Creation of Receivables
VCI finances 100% of the wholesale invoice price of New Vehicles, including
destination and other miscellaneous charges, concurrently with the receipt of a
draft or equivalent document from the vehicle manufacturer. The amount advanced
for each Used Vehicle (other than Auction
26
<PAGE>
Vehicles) may equal up to 80% of the wholesale clean book value of the Used
Vehicles in the Black Book Official Used Car Market Guide (or the Kelly Blue
Book in some states). The amount advanced for Auction Vehicles is the auction
purchase price (including auction fees) of the Auction Vehicles.
Once a dealer has commenced its floorplan financing of a specific
manufacturer's or distributor's vehicles through VCI, VCI will finance all
purchases of New Vehicles by the dealer from that manufacturer or distributor.
VCI may modify or cancel a dealer's floorplan financing arrangement in its
discretion if the dealer's inventory is considered by VCI to be seriously
overstocked, if a dealer is experiencing financial difficulties or if a dealer
requests individual vehicle approvals. In the circumstances described in the
preceding sentence, the regional office of VCI will approve financing and
advance funds on a unit-by-unit basis (known as "prior approval").
Credit Underwriting Process
VCI extends credit to dealers from time to time based upon established
credit lines. Dealers may establish lines of credit to finance purchases of New,
Used and/or Auction Vehicles. Dealers that have a New Vehicle line of credit in
place with VCI may also obtain a Used Vehicle and/or an Auction Vehicle credit
line from VCI.
A dealer may request the establishment of a wholesale New Vehicle credit
line by applying to the applicable regional office. After receipt of a
dealership's wholesale floor plan application, the regional office reviews the
dealer's credit references (including, in the case of existing dealers, those of
the dealer's current financing source) and other bank references. The regional
office also investigates the dealer's current state of operations and management
(including evaluating a vehicle manufacturer reference) and its marketing
capabilities. If the regional office approves the application, it prepares a
written recommendation outlining the dealer's request and transmits it to VCI's
Risk Management Department in Auburn Hills, Michigan, along with the requisite
documentation. The Risk Management Department performs an additional analysis
and then makes a recommendation to VCI's Wholesale Credit Committee, which has
the ultimate authority to approve or disapprove the request.
VCI has established the following guidelines in analyzing the financial
statements of a dealer applying for a line of credit:
. The combination of the dealership's cash position and the total new and
used vehicle equity position should meet or exceed one month's average
expenses and exceed 30% of the dealership's working capital.
. The dealership's receivables should be current and represent real
value.
. The dealership's accounts payable should not exceed 80% of the
dealership's average monthly expenses or 25% of working capital.
27
<PAGE>
. All assets of the dealership should be marked to the lower of cost or
current market value.
. The dealership's new vehicle inventory should not substantially
exceed a 60-day supply.
. The dealership's used vehicle inventory should not substantially
exceed a 45-day supply.
. The dealership's inventory of parts and accessories should not exceed
a three-month supply.
. The dealership's working capital needs and net worth should be adequate
for the dealer's operation when compared to the minimum levels of
working capital and net worth as established by VCI based on the
dealer's annual unit sales rate.
. The dealership's sources of investment should be verified in the case
of a newly established dealer.
. VCI prefers an analysis of at least two years of the dealer's
financial statements and the most recent interim statements.
These guidelines may be waived by VCI's [Wholesale Credit Committee] if the
committee believes that a waiver is warranted. standards for approving dealers
of its automobiles are sufficiently stringent enough that dealers that meet
these standards generally meet VCI's credit underwriting standards for obtaining
wholesale credit lines from VCI.
Upon approval, the dealer executes a master security agreement with VCI.
This agreement provides to VCI a security interest in the vehicles being
financed under the line of credit. The security agreement also creates a
security interest in non-vehicle personal property of the dealer. In addition,
the dealer also executes a demand master promissory note in favor of VCI. VCI
requires all dealers under the master security agreements to maintain insurance
coverage for each vehicle for which the dealers receive floorplan financing,
with VCI designated as loss payee.
The size of a credit line initially offered to a dealer is based upon a
number of factors, including the dealer's sales record (or, in the case of a
prospective dealer, expected monthly sales). VCI periodically adjusts the
amount of a dealer's credit line for New Vehicles based upon the dealer's
average New Vehicle sales during the prior 180 days. The amount of the credit
line for New Vehicles generally is an amount sufficient to finance a 60-day
supply of vehicles. VCI also periodically adjusts the amount of a dealer's
credit line for Used Vehicles based on the dealer's average Used Vehicle sales
for the prior 180 days. The amount of the credit line for Used Vehicles
generally is an amount sufficient to finance 50% of a 30-day to 45-day supply of
vehicles. VCI determines the size of a dealer's Auction Vehicle credit line on
a case-by-case
28
<PAGE>
basis and periodically adjusts it based on VCI's policies and procedures. These
credit lines establish guidelines, not limits, which dealers may exceed from
time to time.
As stated above, the agreements constituting the credit lines, including
the Accounts, provide for a first priority security interest in the financed
Vehicles in favor of VCI. The security interest in the Vehicles in favor of VCI
will be assigned by VCI to the Transferor under the Receivables Purchase
Agreement and then by the Transferor to the Trust under the Trust Sale and
Servicing Agreement. In its other lending activities, VCI may make or may have
made capital loans, real estate loans and other advances to the dealers that are
also secured by a security interest in the Vehicles or the Non-Vehicle
Collateral Security. VCI has agreed in the Receivables Purchase Agreement not
to realize upon a security interest in any Vehicle or Non-Vehicle Collateral
Security that it may have until the Trust has fully realized on its security
interest in the Vehicle or Non-Vehicle Collateral Security.
Payment Terms
VCI generally receives payment of principal in full for a floorplan
financing advance promptly after the sale of the related vehicle. Interest on
floorplan loans is generally payable monthly. In most cases, unsold vehicles
must be curtailed (i.e., a specified percentage of the principal amount must be
repaid each month) within a fixed period after the vehicle's initial acquisition
by the dealer. Dealer agreements may vary as to the precise measurement of the
fixed period. Generally, however, the dealer must begin paying the curtailment
at the rate of 10% per month of the total amount originally advanced for a New
Vehicle in the thirteenth month after funds have been advanced to the dealer for
the vehicle. Demonstrator vehicles are generally curtailed at the rate of 2%
per month for six months and 10% per month thereafter. Auction Vehicles are
generally curtailed after 60 days at a rate of 10% per month. Used Vehicles are
generally curtailed after 60 days at a rate of 10% per month for three months
and 70% in the fourth month.
Billing and Collection Procedures
VCI prepares and distributes to each dealer monthly a statement setting
forth billing and related account information for the dealer. Statements are
generated and mailed around the sixth or seventh calendar day of the month.
Interest and insurance, as well as curtailments, are required to be paid by the
end of the month in which they are billed. VCI bills interest and insurance
fees in arrears. Dealers may either remit payments by check directly to VCI's
lockbox in Deerfield, Illinois, or have the funds drawn down by VCI by
electronic funds transfer directly from the dealer's designated bank
account.
From time to time, a dealer may maintain funds with VCI in a cash
management account up to an amount equal to [70% of the new] outstanding
principal balance owed by the dealer to VCI under its credit lines. Funds
maintained by a dealer in a cash management account accrue interest at a rate
equal to the dealer's current New Vehicle wholesale rate and any interest earned
by a dealer in a cash management account is used to directly offset interest
owed by the dealer
29
<PAGE>
under its credit lines. VCI treats funds deposited by dealers in their cash
management accounts as Principal Collections of Receivables and generally treats
withdrawals by dealers from the cash management accounts as creating new
Receivables.
Revenue Experience
VCI generally charges dealers interest on New Vehicles at a floating rate
based on the "prime rate" announced from time to time by a designated financial
institution selected by VCI (the "Prime Rate"), plus or minus a designated
spread ranging from 0% to 0.75%. VCI generally charges dealers interest on Used
Vehicles at a range varying from 0.75% below the Prime Rate to 1.50% above the
Prime Rate. The floating rates, however, may be adjusted up or down in the
future. The Prime Rate is the weighted average Prime Rate for the month and is
applied to all balances outstanding during the month. VCI may adjust the actual
spread above the Price Rate for New Vehicles for each dealer as a result of the
amount and status of the dealer's credit lines and the implementation of various
incentive programs. Currently, one program known as the Compensating Retail
Plan permits a reduction of the designated spread for New Vehicles to 0% based
on the ratio of the number of New Vehicle retail and lease finance contracts
purchased by VCI from the dealer in the previous calendar quarter to the number
of New Vehicle wholesale payoffs, subject to adjustments contained in the plan.
Relationship with VWOA
Under a dealer agreement between VWOA and each VWOA-franchised dealer, VWOA
commits to repurchase unsold New Vehicles distributed by VWOA and in inventory
upon termination of the dealer agreement, at the price at which the New Vehicles
were sold by VWOA, less prior refunds or allowances made by VWOA, if any. VWOA
only repurchases current year models that are new, undamaged and unused. VWOA
also is committed to repurchase from VWOA-franchised dealers, at the time of
termination of the dealer agreement, new parts inventory at current invoice
prices for the parts less a handling charge and any prior refunds or allowances
made by VWOA. If VCI takes possession of a dealer's parts inventory, VWOA may
agree to repurchase the parts inventory from the dealer. In addition, VWOA from
time to time provides financial assistance in the form of real estate financing
to VWOA-franchised dealers. All of the financial assistance, however, is
provided by VWOA in its discretion for the benefit of its dealers and does not
relieve the dealers of any of their obligations to VCI.
VWOA provides much of the financial assistance at its option, and may
terminate any of the programs providing financial assistance in whole or in part
at any time. If VWOA is unable to or elects not to provide financial
assistance, the loss experience in respect of the U.S. Wholesale Portfolio may
be adversely affected. In addition, because a substantial number of the
vehicles sold by the dealers are manufactured by VWAG and distributed by VWOA,
if VWAG or VWOA were temporarily or permanently no longer in the business of
manufacturing and distributing vehicles, the rate of sales of VWOA-distributed
vehicles would decrease, adversely affecting payment rates and the loss
experience of the U.S. Wholesale Portfolio. See "Risk
30
<PAGE>
Factors--The Trust Assets Are Limited to the Receivables and Any Forms of Credit
Enhancement".
Other manufacturers may have agreements similar to those described in the
second preceding paragraph with their franchise dealers to repurchase new,
current model year and unmiled vehicles and original equipment parts and
accessories from the dealer at its request if and when the dealer's franchise is
terminated. Each manufacturer provides the assistance to its franchise dealers
at its option, and may terminate the assistance in whole or in part at any time.
Dealer Monitoring
VCI's regional offices monitor the level of each dealer's wholesale credit
line on a periodic basis through an exception reporting process. VCI permits
dealers to exceed wholesale credit lines on a temporary basis. For example, a
dealer may, immediately prior to a seasonal sales peak, purchase more vehicles
that it is otherwise permitted to finance under its existing credit lines.
Additionally, because of slow inventory turnover, a dealer may exceed its credit
lines until a sufficient portion of its vehicle inventory is liquidated. If at
any time VCI learns that a dealer's balance exceeds its approved credit lines,
VCI will evaluate the dealer's financial position and may temporarily increase
the dealer's credit lines or place the dealer in a category known as "prior
approval". See "--Creation of Receivables". VCI will issue an exception report
if a dealer's inventory levels exceed the dealer's credit line by more than 30%.
VCI's regional offices periodically audit dealer vehicle inventories and
sales records to verify the presence and condition of the collateral and the
promptness of dealer payments on sold vehicles. Regional office personnel
conduct field audits of most dealer vehicle inventories every 30 to 180 days.
Auditors vary the timing of each visit and no advance notice is given to the
audited dealer. Auditors review a portion of the dealers' financial records and
conduct a physical inventory of the vehicles on the dealers' premises. Through
the audit process, VCI reconciles each dealer's physical inventory with its
records of financed vehicles and verifies vehicles in transit and in repair
areas. Audits are intended to identify instances where a dealer sold vehicles
but did not immediately repay the related advances.
In addition to the inventory audits, regional offices may review the
dealership's financial records and monitor payment processing. A field credit
review including [a bank cutoff] is initiated at the request of the regional
offices, and dealers generally receive two weeks' notice to allow time to get a
cutoff bank statement and make the necessary records and personnel available for
the field credit review. Payment processing monitoring is used as an additional
measure against delayed payments that may take place between audits.
In addition, VCI's Risk Management Department reviews dealer financial
statements on a periodic basis.
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<PAGE>
"Dealer Default" Status and VCI's Write-Off Policy
VCI may classify a dealer under "Dealer Default" status if the dealer:
. fails to remit any principal or interest payment when due or to
perform any other obligation under the dealer agreement;
. misrepresents its financial condition, organizational structure or
any matter concerning its collateral;
. conceals or removes assets to hinder, delay or defraud any creditor;
. loses its franchise or privilege to sell any line of inventory;
. fails to insure the its collateral or properly secure the collateral for
the benefit of VCI; or
. experiences bankruptcy or similar events or dissolution.
VCI also may classify a dealer under "Dealer Default" status under other similar
circumstances. Once VCI assigns a dealer to Dealer Default status, VCI
determines any further extension of credit to the dealer on a case-by-case
basis. In some cases, VCI may extend additional credit to a dealer that has
been declared in default as part of a forbearance agreement or workout
agreement, which could include an agreement to allow a dealer to repay an amount
in default over a specified period of time, or as ordered by a court in
conjunction with a bankruptcy action or an action to recover vehicles held by
the dealer.
VCI attempts to work with dealers to resolve instances of Dealer Default
status. If, however, a dealer remains on Dealer Default status, one of the
following events may result:
. an orderly liquidation in which the dealer voluntarily liquidates its
inventory through normal sales to retail customers;
. a voluntary surrender of the dealer's inventory and a liquidation of
the inventory; or
. an involuntary surrender of the dealer's inventory to VCI and a
liquidation of the inventory.
The proceeds of the resulting sales and liquidations are used to repay amounts
due to VCI. Once liquidation has commenced, VCI performs analysis of its
position, writes off any amounts
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<PAGE>
identified at the time as uncollectible and attempts to liquidate all possible
collateral remaining. During the course of a liquidation, VCI may recognize
additional losses or recoveries.
VCI has traditionally maintained a standard wholesale loss reserve of 0.75%
based on its aggregate receivables balance. In addition to the standard loss
reserve, VCI may also establish a special wholesale loss reserves for specific
dealers from time to time. Typically VCI establishes these special wholesale
loss reserves for a dealer only if VCI has identified a material default
condition with respect to the dealer. The size of the special loss reserves are
based on anticipated losses after liquidation of dealership assets.
As of March 31, 2000, 1.6% of the total number of dealers in the U.S.
Wholesale Portfolio were subject to [prior approval] versus 3.2% as of December
31, 2000. As of March 31, 2000, zero (0) dealers (0% of the total number of
dealers in the U.S. Wholesale Portfolio) were assigned to Dealer Default status,
versus zero (0) dealers (0% of the total number of dealers in the U.S. Wholesale
Portfolio) as of December 31, 2000.
Loss Experience
The following tables set forth VCI's average principal balance of
Receivables and loss experience for each of the periods shown on the U.S.
Wholesale Portfolio. Information concerning affiliated dealers is present on an
individual basis and is not aggregated. Because the Eligible Accounts will be
only a portion of the entire U.S. Wholesale Portfolio, actual loss experience
with respect to the Eligible Accounts may be different. There can be no
assurance that the loss experience for the Receivables in the future will be
similar to the historical experience set forth below with respect to the U.S.
Wholesale Portfolio. In addition, the historical experience set forth below
reflects financial assistance provided by VWOA to VWOA-franchised dealers as
described in this prospectus under "The Dealer Floorplan Financing Business--
Relationship with VWOA". If VWOA is not able to or elects not to provide
financial assistance, the loss experience in respect of the U.S. Wholesale
Portfolio may be adversely affected. See "Risk Factors--The Trust Assets Are
Limited to the Receivables and Any Forms of Credit Enhancement" in this
prospectus.
Loss Experience for the U.S. Wholesale Portfolio
<TABLE>
<CAPTION>
Year Ended December 31,
Three Months Ended ------------------------------------------------
March 31, 2000 1999 1998 1997 1996 1995
------------------ -------- ------- -------- ------- -------
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C>
Average Principal Receivables
Balance(1)......................... $827.8 $703.1 $546.2 $493.6 $471.4 $450.1
Net Losses(2)...................... $ 0.0 $ 0.0 $ 0.1 $ 2.2 $ 0.2 $ 4.5
Net Losses/Liquidations............
Net Losses/Average Principal
Receivables Balance(1)............ 0.0% 0.0% 0.0% 0.5% 0.0% 1.0%
</TABLE>
------------------
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<PAGE>
(1) Except for the March 31, 2000 Average Principal Receivables Balance, Average
Principal Receivables Balance is the average of the month-end principal
balances for the 12 months ending on the last day of the period. The March
31, 2000 Average Principal Receivables Balance is the average of the month-
end principal balances for the 3 months ending on March 31, 2000.
(2) Net losses in any period are gross losses less recoveries for the period and
are recognized as occurring approximately six months from the date an
account went into default status. For this purpose, include recoveries from
non-vehicle collateral security in addition to the vehicles.
For the past five years, VCI's net credit losses have been less than 1% of
the average aggregate receivable balance, while loss reserves have averaged less
than 2% for the same time period. VCI's loss experience has improved over the
last two to three years. VCI attributes this improvement primarily to the
financial success of Volkswagen and Audi dealers as well as to improved
analytical tools developed by VCI.
Aging Experience
The following table provides the age distribution of vehicle inventory for
all dealers in the U.S. Wholesale Portfolio, as a percentage of total principal
outstanding at the date indicated. Information concerning affiliated dealers is
present on an individual basis and is not aggregated. Because the Eligible
Accounts will only be a portion of the entire U.S. Wholesale Portfolio, actual
age distribution with respect to the Eligible Accounts may be different.
Age Distribution for the U.S. Wholesale Portfolio
<TABLE>
<CAPTION>
(1) As of Year Ended
December 31,
Three Months ---------------------------------------
Days Ended 1999 1998 1997 1996 1995
---- March 31, 2000
---------------- ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1-30....... % % % % % %
31-60...... % % % % % %
61-90...... % % % % % %
91-120..... % % % % % %
121-150.... % % % % % %
151-180.... % % % % % %
181-210.... % % % % % %
211-240.... % % % % % %
241-270.... % % % % % %
Over 270... % % % % % %
</TABLE>
_____________
(1) May not add to 100% due to rounding.
[Will provide discussion of any trends or noteworthy events following receipt of
data.]
The Accounts
General
The Receivables arise in the Accounts. The Accounts will be selected from
all the wholesale accounts in the U.S. Wholesale Portfolio that are Eligible
Accounts (the "Eligible Portfolio"),
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<PAGE>
and will be selected in a manner that VCI believes will not be adverse to the
interests of the Series 2000-1 Noteholders. The Accounts may include Receivables
secured by Vehicles manufactured by manufacturers other than VWAG. Each Eligible
Account included in the Eligible Portfolio must be:
. established by VCI in the ordinary course of business under a Dealer
financing agreement,
. in favor of a Dealer that is not subject to voluntary or involuntary
bankruptcy proceedings (or voluntary or involuntary liquidation),
. in existence and maintained and serviced by VCI (or a Successor
Servicer), and
. an Account for which no amounts have been charged off as uncollectible or
have been classified as past due or delinquent.
See "The Transfer and Servicing Agreements--Eligible Accounts and Eligible
Receivables". VCI and the Transferor will represent that each believes that the
Initial Accounts will be representative of the accounts in the Eligible
Portfolio and that the inclusion of the Accounts, as a whole, will not represent
an adverse selection from the Eligible Portfolio.
Under the Trust Sale and Servicing Agreement, the Transferor, and, under the
Receivables Purchase Agreement, VCI, will have the right from time to time
(subject to limitations and conditions concerning eligibility, notice, selection
procedures and related matters), and in some circumstances will be obligated, to
designate additional qualifying wholesale accounts to be included as Accounts.
These accounts must meet the eligibility criteria set forth above as of the date
the accounts are designated as Additional Accounts. VCI will convey the
Receivables then existing or thereafter created under the designated Additional
Accounts to the Transferor, which will in turn convey them to the Trust. See
"The Transfer and Servicing Agreements--Addition of Accounts". In addition, VCI
will represent and warrant to the Transferor, and the Transferor will represent
and warrant to the Trust, in each case as of any Additional Cut-Off Date in
respect of Additional Accounts and the date any new Receivables are generated,
that the Receivables meet the eligibility requirements set forth in the Trust
Sale and Servicing Agreement. See "The Transfer and Servicing Agreements--
Conveyance of Receivables and Collateral Security". The Transferor will have the
right to remove Accounts, and the Receivables arising in those Accounts, from
the Trust. See "The Transfer and Servicing Agreements--Removal of Accounts". The
Transferor may not remove Accounts unless the removed Accounts will not
represent an adverse selection of Accounts removed from the Trust. Throughout
the term of the Trust, the Accounts from which the Receivables arise will be the
same Accounts designated by the Transferor on the Initial Cut-Off Date, plus any
Additional Accounts, minus any Removed Accounts.
The Accounts in which the initial Receivables are to be sold to the Trust by
the Transferor under the Trust Sale and Servicing Agreement initially will be
selected from extensions of credit made by VCI to approximately 246 U.S. motor
vehicle dealers. As of the Initial Cut-Off Date,
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<PAGE>
with respect to Accounts in the Trust, there were [___] Accounts in the Trust
and the aggregate principal balance of Receivables in the Trust was
approximately $[___] million.
New Vehicles represented approximately [_]% of the aggregate principal
amount of receivables in the Trust as of the Initial Cut-Off Date. Used
Vehicles and Auction Vehicles together represented approximately [__]% of the
aggregate principal amount of receivables in the Trust as of the Initial Cut-Off
Date, with Auction Vehicles representing approximately [____]% of the aggregate
principal amount of receivables in the Trust as of the Initial Cut-Off
Date.
As of the Initial Cut-Off Date, the average credit lines per dealer in the
Trust for New Vehicles, Used Vehicles and Auction Vehicles were $[__________],
$[_______] and $[________], respectively, and the average principal balance
of receivables per dealer was $[_________] million. As of the Initial Cut-Off
Date, the aggregate total receivables balance of the Trust as a percentage of
the aggregate total credit line of Accounts in the Trust was approximately
[___]%. As of the Initial Cut-Off Date, [__]% of the aggregate total
receivables balances in the Trust were in dealer accounts in respect of which
the related credit lines were initially established in 2000, [__]% in 1999,
[__]% in 1998, [__]% in 1997 and [__]% prior to 1997. As of the Initial Cut-Off
Date, the weighted average spread under the Prime Rate charged to dealers in the
Trust was approximately [__]%.
The following tables set forth the composition of the receivables in the
Trust as of the Initial Cut-Off Date by account balance of such receivables.
Due the variability and uncertainty with respect to the rates at which
receivables are created, paid or otherwise reduced, the characteristics set
forth below may vary significantly as of any other date of determination.
Composition of Receivables in the Trust by Account Balance
As of the Initial Cut-Off Date
<TABLE>
<CAPTION>
Receivables
Balance Percentage of
(Dollars in Receivables Number of Percentage of
Account Balance Range Millions) Balances Accounts Number of Accounts
--------------------- ------------ ----------- -------- -------------------
<S> <C> <C> <C> <C>
$1 to $999,999.99...................
$1,000,000 to $2,499,999.99.........
$2,500,000 to $4,999,999.99.........
$5,000,000 to $9,999,999.99.........
Over $10,000,000.00.................
Total............................
</TABLE>
36
<PAGE>
Geographic Distribution
The following table provides as of the Initial Cut-Off Date the geographic
distribution of the Vehicle inventory for all Dealers in the Trust on the basis
of receivables outstanding and the number of Dealers generating the
portfolio.
Geographic Distribution of Accounts in the Trust
As of the Initial Cut-Off Date
<TABLE>
<CAPTION>
Total
Receivables Percentage Number Percentage
Outstanding in of Receivables of of Number of
Millions Outstanding (1)(3) Dealers Dealers(1)(4)
-------------- ----------------- ------- -------------
<S> <C> <C> <C> <C>
California................ % %
New Jersey................ % %
New York.................. % %
Massachusetts............. % %
Illinois.................. % %
Other(2).................. % %
</TABLE>
_____________
(1) May not add to 100% due to rounding.
(2) No other state includes more than 5% of the outstanding Receivables.
(3) Includes Excluded Receivables
(4) Includes Excluded Dealers
Maturity and Principal Payment Considerations
Full payment of the Series 2000-1 Notes by the Series 2000-1 Expected
Principal Payment Date depends in large part on repayment by Dealers of the
Receivables. Timely payment on the Notes may not occur if Dealer payments are
insufficient. Because a Dealer generally pays a Receivable upon retail sale of
the underlying Vehicle, the timing of Receivable payments is uncertain. In
addition, there is no assurance that VCI will generate additional Receivables
under the Accounts or that any particular pattern of Dealer payments will occur.
In addition, the shorter the Accumulation Period Length, the greater the
likelihood that payment of the Series 2000-1 Notes in full by the Series 2000-1
Expected Principal Payment Date may be dependent on the reallocation of
Principal Collections from other outstanding Series of Notes. If one or more
other Series from which Principal Collections are expected to be reallocated to
pay the Series 2000-1 Notes enters into an Early Amortization Period or
Investment Period after the start of the Accumulation Period for the Series
2000-1 Notes, Principal Collections allocated to the Series that has entered
into an Early Amortization Period or Investment Period generally will not be
reallocated to pay principal of the Series 2000-1 Notes. In that event, the
final payment of principal of the Series 2000-1 Notes may be later than the
Series 2000-1 Expected Principal Payment Date.
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<PAGE>
Principal for the Series 2000-1 Notes will be payable if an Early
Amortization Period has commenced and is not terminated. Because an Early
Amortization Event for the Series 2000-1 Notes may occur and initiate an Early
Amortization Period, the final distribution of principal on the Series 2000-1
Notes may be made prior to the scheduled termination of the Series 2000-1
Revolving Period or prior to the Series 2000-1 Expected Principal Payment Date.
The amount of new Receivables generated in any month and monthly payment
rates on the Receivables may vary because of seasonal variations in Vehicle
sales and inventory levels, retail incentive programs provided by Vehicle
manufacturers and various economic factors affecting Vehicle sales generally.
The following table sets forth the highest and lowest monthly payment rates for
the U.S. Wholesale Portfolio during any month in the periods shown and the
average of the monthly payment rates for all months during the periods shown, in
each case calculated as the percentage equivalent of a fraction, the numerator
of which is the aggregate of all collections of principal during the period and
the denominator of which is the average aggregate principal balance (calculated
as the average of the principal balance at the beginning of the month and the
end of the month) for the period. Monthly payment rates reflected in the table
include [principal credit adjustments.] The monthly payment rates presented for
all periods reflect actual monthly data. There can be no assurance that the
rate of Principal Collections will be similar to the historical experience set
forth below. Because the Eligible Accounts will be only a portion of the entire
U.S. Wholesale Portfolio, historical actual monthly payment rates for the
Eligible Accounts may be different than those shown below.
Monthly Payment Rates for the U.S. Wholesale Portfolio
<TABLE>
<CAPTION>
Year Ended December 31,
Three Months Ended ---------------------------------------
March 31, 2000 1999 1998 1997 1996 1995
------------------ ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Highest Month......................... 58.1% 65.6% 64.8% 62.5% 56.9% 59.9%
Lowest Month.......................... 47.8% 45.1% 42.0% 39.3% 39.2% 30.3%
Average of the Months in the Period... 53.1% 56.8% 55.9% 49.1% 45.5% 43.3%
</TABLE>
The Series 2000-1 Notes
General
The following is a description of material provisions of the Series 2000-1
Notes. You also should refer to the remainder of this prospectus as well as to
the Trust Agreement, the Receivables Purchase Agreement, the Trust Sale and
Servicing Agreement, the Indenture and the Series 2000-1 Supplement when
deciding whether to purchase any Series 2000-1 Notes. The form of the Trust
Agreement, the Receivables Purchase Agreement, the Trust Sale and Servicing
Agreement, the Indenture and the Series 2000-1 Supplement have been filed with
the SEC as exhibits to the registration statement relating to the Series 2000-1
Notes. The Transferor will provide a copy of the Indenture and the Series 2000-
1 Supplement (each without exhibits) upon request of a holder of a Series 2000-1
Note.
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<PAGE>
The Trust will issue the Series 2000-1 Notes on the Closing Date under the
terms of the Indenture, as supplemented by a Series Supplement (the "Series
2000-1 Supplement"), between the Trust and the Indenture Trustee. Where
particular provisions or terms used in the Indenture or a Series Supplement are
referred to, the actual provisions, including definition of terms, are
incorporated by reference as part of this summary.
The Series 2000-1 Notes will initially be represented by one or more Series
2000-1 Notes registered in the name of the nominee of the Depository in the
United States, or Clearstream Luxembourg or Euroclear in Europe, except as set
forth below. Series 2000-1 Notes will be available for purchase in
denominations of $1,000 and integral multiples thereof in book-entry form only.
The Transferor has been informed by DTC that DTC's nominee will be Cede.
Accordingly, Cede is expected to be the holder of record of the Series 2000-1
Notes.
Unless and until the Trust issues Definitive Notes under the limited
circumstances described in this prospectus, see "--Definitive Notes," no Series
2000-1 Noteholder will be entitled to receive a physical certificate
representing a Series 2000-1 Note. All references in this prospectus to actions
by Series 2000-1 Noteholders refer to actions taken by DTC upon instructions
from its participants. All references in this prospectus to distributions,
notices, reports and statements to Series 2000-1 Noteholders refer to
distributions, notices, reports and statements to DTC or Cede, as the registered
holder of the Series 2000-1 Notes, as the case may be, for distribution to
Series 2000-1 Noteholders in accordance with DTC's procedures. See "--Book-
entry Registration" and "--Definitive Notes".
Interest
The timing and amounts of interest distributions in general for all Series of
the Trust are described in "--Trust Distributions--Distributions of Interest"
below. Interest on the principal balance of the Series 2000-1 Notes will accrue
at the Note Rate and will be payable to the Series 2000-1 Noteholders on each
Payment Date, commencing _______, 2000. Interest payable on any Payment Date
will accrue during the related Interest Period. Interest will be calculated on
a basis of the actual number of days in each Interest Period divided by 360.
Interest due for any Payment Date but not paid on that Payment Date will be due
on the next Payment Date, together with interest on the interest not paid, and
will accrue at the applicable Note Rate, to the extent permitted by applicable
law. Interest payments on the Series 2000-1 Notes will generally be paid from
Noteholder Non-Principal Collections for a Collection Period, any withdrawals
from the Reserve Account and Investment Proceeds. However, if Noteholder Non-
Principal Collections, withdrawals from the Reserve Account and Investment
Proceeds are not sufficient on a Payment Date to make required Interest
Payments, interest payments will also be made from Additional Noteholder
Collections, to the extent of the Series 2000-1 Available Subordinated Amount.
The Note Rate for each Interest Period will be determined on the LIBOR
Determination Date preceding the Interest Period and will be calculated on the
basis of LIBOR. If the Note Rate for a Payment Date calculated on the basis of
LIBOR is greater than the Assets Receivables Rate, then the Note Rate for the
Payment Date will be the Assets Receivables Rate.
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<PAGE>
If the Note Rate for any Payment Date is based on the Assets Receivables
Rate, the Carry-over Amount, if any, will be paid on the Payment Date from
amounts on deposit in the Yield Supplement Account. If, however, the amounts on
deposit in the Yield Supplement Account are depleted, the Carry-over Amount will
be paid from any remaining funds that are available after making all other
required payments and deposits with respect to the Series 2000-1 Notes on that
Payment Date, including all required payments and deposits of principal
(including deposits to the Excess Funding Account), Monthly Interest, the
Monthly Servicing Fee, the Reserve Account Deposit Amount and the Noteholder
Default Amount, as described below under "--Distributions from the Collection
Account for the Series 2000-1 Notes; Reserve Account". In addition, if there is
any Carry-over Amount outstanding on the Series 2000-1 Stated Maturity Date
after the payments and deposits described in the preceding sentence have been
made, the outstanding Carry-over Amount will be paid on the Series 2000-1 Stated
Maturity Date from amounts on deposit in the Reserve Account (to the extent
amounts on deposit in the Reserve Account would otherwise be available to the
Residual Interestholder) and Additional Noteholder Collections on deposit in the
Collection Account (to the extent Additional Noteholder Collections amounts
would otherwise be available to the Residual Interestholder), as described under
"--Distributions from the Collection Account for the Series 2000-1 Notes;
Reserve Account; Yield Supplement Account". The ratings of the Series 2000-1
Notes do not address the likelihood of payment of any Carry-over Amount.
Principal
The timing and amounts of principal distributions in general for all Series
of the Trust are described in "--Trust Distributions--Distributions of
Principal" below. In general, with respect to the Series 2000-1 Notes, no
principal payments will be made to the Series 2000-1 Noteholders until the
earlier of the Series 2000-1 Expected Principal Payment Date and the first
Payment Date after the commencement of an Early Amortization Period.
On each Payment Date during the Series 2000-1 Revolving Period, collections
of Principal Receivables will either be:
. allocated to one or more other Series of Notes which (a) are in
Amortization, Early Amortization or Accumulation Periods to cover
principal payments due to the Noteholders of the other Series or (b)
provide for excess funding accounts or similar arrangements,
. deposited into the Excess Funding Account, or
. if no Series is then amortizing or accumulating principal or otherwise
does not provide for excess funding accounts or similar arrangements, paid
to the Residual Interestholder.
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<PAGE>
See "--Allocations of Collections; Deposits in the Collection Account", " --
Allocation Percentages", "--Trust Distributions", "--Distributions from the
Collection Account for the Series 2000-1 Notes; Reserve Account" and "--Series
2000-1 Principal Funding Account".
Unless an Early Amortization Period shall have commenced that is not
terminated as described herein, see "--Early Amortization Events," the Series
2000-1 Notes Accumulation Period will be from [one to three months long] and
will be calculated as described in the following paragraph.
On the __________ Payment Date and each Payment Date thereafter that occurs
prior to the Series 2000-1 Accumulation Period Commencement Date, the Servicer
will calculate the Accumulation Period Length. The "Accumulation Period Length"
will be calculated on each Payment Date as the lesser of:
. the number of full Collection Periods between the Payment Date and the
Series 2000-1 Expected Principal Payment Date, and
. the product, rounded upwards to the nearest integer not greater than
three, of:
(a) one divided by the lowest Monthly Payment Rate on the Receivables
during the last 12 months, and
(b) a fraction,
(1) the numerator of which is the sum of:
(A) the Series 2000-1 Invested Amount as of the Payment Date
(after giving effect to all changes therein on the Payment
Date), and
(B) the Invested Amounts of all other Series (other than any
Series specifically excluded by the terms of its Series
Supplement) currently in their Amortization or Accumulation
Periods or expected to be in their Amortization or
Accumulation Periods by the Series 2000-1 Expected Principal
Payment Date, and
(2) the denominator of which is the sum of:
(X) the Series 2000-1 Invested Amount, and
(Y) the Invested Amounts of all other Series as of the Payment
Date (after giving effect to all changes therein on the
Payment Date) of all other outstanding Series (other than
41
<PAGE>
any Series specifically excluded by the terms of its Series
Supplement) which are scheduled to be outstanding on the
Series 2000-1 Expected Principal Payment Date.
The "Series 2000-1 Accumulation Period Commencement Date" (which will be the
first day of a Collection Period) will occur when the number of full Collection
Periods remaining until the Series 2000-1 Expected Principal Payment Date first
equals the Accumulation Period Length as calculated in the preceding paragraph
and will not thereafter be changed. In addition, if at any time after the
______________ Payment Date, any other outstanding Series (other than any Series
specifically excluded by the terms of its Series Supplement) shall have entered
into an Investment Period or an Early Amortization Period, the Series 2000-1
Accumulation Period Commencement Date will be the earlier of (1) the date that
the outstanding Series shall have entered into its Investment Period or Early
Amortization Period and (2) the Series 2000-1 Accumulation Period Commencement
Date as previously determined.
The determination of the Series 2000-1 Accumulation Period Commencement Date
as described in the preceding paragraph will result in:
. a shorter Series 2000-1 Accumulation Period in the event of increases in
the principal payment rate, and
. a longer Series 2000-1 Accumulation Period in the event other Series
shall have entered into an Investment Period or Early Amortization Period.
Unless and until an Early Amortization Period shall have occurred that is not
terminated as described herein, see "--Early Amortization Events," and until the
outstanding principal balance of the Series 2000-1 Notes is paid in full, on
each Deposit Date during the Series 2000-1 Accumulation Period, collections of
Principal Receivables allocable to Series 2000-1 Noteholders will no longer be
paid for the benefit of another Series or the Residual Interestholder. The
amount described in the preceding sentence will instead be deposited into the
Series 2000-1 Principal Funding Account up to the Series 2000-1 Controlled
Deposit Amount for the Payment Date related to the Collection Period in which
the Deposit Date falls. The funds deposited in the Series 2000-1 Principal
Funding Account, and the Series 2000-1 Notes share of amounts in the Excess
Funding Account, will be used to pay the outstanding principal balance of the
Series 2000-1 Notes on the Series 2000-1 Expected Principal Payment Date. If on
the Series 2000-1 Expected Principal Payment Date the sum of the Principal
Funding Account Balance and the Series 2000-1 share of amounts in the Excess
Funding Account is less than the outstanding principal balance of the Series
2000-1 Notes, the Early Amortization Period will commence and on each Payment
Date the Series 2000-1 Noteholders will receive distributions of Series 2000-1
Monthly Principal and Series 2000-1 Monthly Interest until the outstanding
principal balance of the Series 2000-1 Notes has been paid in full or the Series
2000-1 Stated Maturity Date has occurred. Even if, on the Series 2000-1
Expected Principal Payment Date, the sum of the Principal Funding Account
Balance and the Series 2000-1 share of amounts in the Excess Funding Account is
insufficient to pay the outstanding principal balance of the Series 2000-1
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<PAGE>
Notes in full, both of the amounts will be distributed to the Series 2000-1
Noteholders on the Series 2000-1 Expected Principal Payment Date.
It is expected that the final principal payment on the Series 2000-1 Notes
will be made on the Series 2000-1 Expected Principal Payment Date. However,
principal of the Series 2000-1 Notes may be paid earlier or, depending on the
actual payment rate on the Receivables, later, as described under "Risk Factors-
-A Bankruptcy of VCI or the Transferor May Delay or Reduce Payments on the
Notes" and "--The Failure of Dealers to Make Payments on the Receivables Could
Delay or Reduce Payments on the Series 2000-1 Notes".
Credit Enhancement
Credit enhancement for the Series 2000-1 Noteholders is provided by
subordination of a portion of the Residual Interest of the Trust, the Reserve
Account and by the availability under some circumstances of Excess Principal
Collections to the Series 2000-1 Noteholders.
The Residual Interest in the Trust is subordinated to the rights of the
Series 2000-1 Noteholders, but only to the extent of the Series 2000-1
Available Subordinated Amount. Collections on the Receivables otherwise
allocable to the Residual Interest may be used to pay interest and principal on
the notes in an amount up to the Series 2000-1 Available Subordinated Amount.
The Series 2000-1 Available Subordinated Amount will initially be $___________,
but is subject to reduction from time to time. See "Allocation of Collections;
Limited Subordination of the Residual Interest" for more information about the
Series 2000-1 Available Subordinated Amount.
The Reserve Account will also provide credit enhancement to the Series 2000-1
Noteholders. The Transferor will deposit $_________ into the Reserve Account
on the Closing Date. The Indenture requires that the amount on deposit in the
Reserve Account on any Payment Date equal the Reserve Account Required Amount.
The Reserve Account Required Amount for any Payment Date will equal [___]% of
the outstanding principal balance of the Series 2000-1 Notes for that Payment
Date, after giving effect to any change in the principal balance on that Payment
Date. Amounts on deposit in the Reserve Account will be available to pay
monthly interest on the Series 2000-1 Notes, the Monthly Servicing Fee and
amounts covering Receivables that become defaulted and that have been allocated
to the Series 2000-1 Noteholders. In addition, on the Series 2000-1 Stated
Maturity Date or on the date on which the principal amount of the Series 2000-1
Notes has been reduced to zero, amounts on deposit in the Reserve Account will
be available to pay any Carry-over Amount that remains unpaid. See
"Distributions from the Collection Account for Series 2000-1 Notes; Reserve
Account; Yield Supplement Account--Collection Account."
Principal collections allocable to other Series of Notes, to the extent not
needed to make payments on the other Series of Notes, will also be applied to
make principal payments on the Series 2000-1 Notes when required as described in
this prospectus. The Servicer will allocate Excess Principal Collections to
cover any Principal Shortfalls for the Series 2000-1 Notes.
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<PAGE>
However, Excess Principal Collections generally will not be used to cover
Investor Charge-Offs for the Series 2000-1 Notes. See "Excess Principal
Collections."
Collection Account
The Servicer has established and will maintain an Eligible Deposit Account
for the benefit of the Noteholders (including the Series 2000-1 Noteholders) in
the name of the Indenture Trustee (the "Collection Account"). The Servicer will
deposit into the Collection Account collections as described in "--Allocation of
Collections; Deposits in Collection Account."
The Servicer will have the revocable power to instruct the Indenture Trustee
to make withdrawals and payments from the Collection Account for the purpose of
carrying out its duties under the Indenture. The Servicer may select an
appropriate agent as representative of the Servicer for the purpose of
designating investments. The Servicer or its designated agent generally will
direct that funds in the Collection Account will be invested in Eligible
Investments. Any earnings (net of losses and investment expenses) on funds in
the Collection Account will be credited to the Collection Account.
Allocation of Collections; Deposits in Collection Account
The Servicer, no later than two business days after the processing date, will
deposit all collections received with respect to the Receivables (excluding
portions allocable to the Transferor) in each Collection Period into the
Collection Account. However, in spite of this requirement that the Servicer
make daily deposits, for so long as:
. VCI remains the Servicer under the Trust Sale and Servicing Agreement,
. no Servicing Default has occurred and is continuing, and
. VCI does any of the following:
. it maintains a net worth of at least $250,000,000 as certified in
writing at least annually in a certificate delivered to the Rating
Agencies, or
. it arranges for and maintains a letter of credit or other form of
Enhancement for the Servicer's obligations to make deposits of
collections on the Receivables in the Collection Account that is
acceptable in form and substance to each Rating Agency, or
. it otherwise obtains the Rating Agency confirmations described below
in this paragraph,
then, subject to any limitations in the confirmations referred to below,
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<PAGE>
VCI need not make daily deposits of collections into the Collection Account but
may use for its own benefit all of collections received during a Collection
Period until the Payment Date relating to that Collection Period (whether or not
the funds will be distributed to Noteholders, retained in the Collection Account
or deposited in another account on the Payment Date). On that Payment Date VCI
will make deposits into the Collection Account in an amount equal to the net
amount of the deposits and withdrawals that would have been made had VCI made
daily deposits of collections into the Collection Account. However, VCI may not
cease making daily deposits of collections into the Collection Account unless it
shall have delivered to the Indenture Trustee and the Owner Trustee written
confirmation from the applicable Rating Agencies that the failure by VCI to make
daily deposits will not result in a reduction or withdrawal of the rating of any
outstanding Series or class of Notes. In addition, during any Collection
Period, the Servicer generally will be required to deposit collections into the
Collection Account only up to the aggregate amount of collections required to be
deposited into any deposit, trust, reserve or similar account maintained for the
benefit of Noteholders of any Series or, without duplication, distributed on the
related Payment Date to Noteholders, to any agent or to any Enhancement Provider
under the terms of any Series Supplement or Enhancement Agreement. If, at any
time prior to that Payment Date the amount of collections deposited in the
Collection Account exceeds the amount required to be deposited, the Servicer
will be permitted to withdraw the excess from the Collection Account.
On any date on which collections are deposited in the Collection Account, the
Servicer will distribute to the Residual Interestholder, in accordance with the
Trust Sale and Servicing Agreement, the portion of the Non-Principal Collections
allocable to each Series and allocated to the Residual Interestholder as
specified in the related Series Supplement, if the Residual Participation Amount
(determined after including any Receivables transferred to the Trust on the
date) exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Payment Date
immediately following the preceding Determination Date). In addition, during
the Revolving Period for any Series of Notes, the Servicer will distribute to
the Residual Interestholder on each date of deposit the amount of Principal
Collections allocable to each Series (as specified in the related Series
Supplements) if the Residual Participation Amount (determined after including
the principal balance of any Receivables transferred to the Trust on the date of
deposit) exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Payment Date
immediately following the preceding Determination Date).
Excess Funding Account
The Servicer has established and will maintain an Eligible Deposit Account in
the name of the Indenture Trustee for the benefit of the Noteholders of all
Series (the "Excess Funding Account"). The Trust Sale and Servicing Agreement
provides that deposits will be made in the Excess Funding Account from available
funds if the Required Pool Balance exceeds the Pool Balance in the amount of the
excess. Available funds for this purpose may include the net
45
<PAGE>
proceeds from the issuance of any new Series of Notes. In addition, the Residual
Interestholder may direct the Servicer, Owner Trustee and Indenture Trustee to
deposit any amounts otherwise distributable to the Residual Interestholder into
the Excess Funding Account.
The Indenture Trustee, at the direction of the Servicer, generally will
invest funds on deposit in the Excess Funding Account. Any earnings (net of
losses and investment expenses) on funds in the Excess Funding Account will be
credited to the Collection Account and will be Non-Principal Collections when
deposited into the Collection Account.
Funds on deposit in the Excess Funding Account will be withdrawn and paid to
the Residual Interestholder or allocated to one or more other Series of Notes
which are in Controlled Amortization, Early Amortization, Investment or
Accumulation Periods. The Series 2000-1 Notes' share of funds on deposit in the
Excess Funding Account on the Series 2000-1 Expected Principal Payment Date will
be deposited in the Series 2000-1 Principal Funding Account on the Series 2000-1
Expected Principal Payment Date.
The Series 2000-1 Noteholders will not be entitled to any funds in the Excess
Funding Account after the deposit to the Series 2000-1 Principal Funding Account
has been made.
Allocation Percentages
Allocations among Series. The Servicer will allocate to each outstanding
Series its share of Non-Principal Collections, Principal Collections, Defaulted
Receivables and Miscellaneous Payments during each Collection Period based on
the applicable Series Allocable Non-Principal Collections, Series Allocable
Principal Collections, Series Allocable Defaulted Amount and Series Allocable
Miscellaneous Payments.
Allocation of Collections for Series 2000-1. The Servicer will allocate
amounts initially allocated to each Series between the Notes and the Residual
Interest for each Collection Period as described in the Series Supplement for
each Series. The Servicer will allocate amounts initially allocated to Series
2000-1 as described in the preceding paragraph between the Series 2000-1
Noteholders and the Residual Interestholder for each Collection Period as
follows:
. Series Allocable Non-Principal Collections and the Series Allocable
Defaulted Amount will be allocated to Series 2000-1 Noteholders based on
the Series 2000-1 Floating Allocation Percentage;
. during the Series 2000-1 Revolving Period, Series Allocable Principal
Collections will be treated as Excess Principal Collections and allocated
based on the Series 2000-1 Floating Allocation Percentage;
. during the Series 2000-1 Accumulation Period and any Early Amortization
Period, Series Allocable Principal Collections will be allocated to Series
2000-1 Noteholders based on the Principal Allocation Percentage; and
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. Series Allocable Miscellaneous Payments will be treated as Series
Allocable Principal Collections; [except that Series Allocable
Miscellaneous Payments consisting of the amount of Adjustment Payments
that
. were paid after their due date,
. have been included in the Monthly Dilution Amount for any prior
Collection Period,
will be treated as Series Allocable Non-Principal Collections.]
Amounts not allocated to the Series 2000-1 Noteholders as described in the
prior paragraph will be allocated to the Residual Interestholder, or may be made
available to pay the Noteholders of other Series.
Excess Principal Collections
Principal Collections allocated to the Notes of a Series with respect to a
Collection Period during an Accumulation Period, Amortization Period, Investment
Period or Early Amortization Period for that Series or a class of that Series,
will first be allocated to make required payments of principal to the Principal
Funding Account for that Series or to the Noteholders of that Series or a class
of that Series. The Servicer also will determine the amount of the Excess
Principal Collections, if any, for that Collection Period. The Servicer will
allocate Excess Principal Collections to cover any Principal Shortfalls for any
Series. However, Excess Principal Collections generally will not be used to
cover Investor Charge-Offs for any Series. If Principal Shortfalls exceed
Excess Principal Collections for any Collection Period, the Servicer generally
will allocate Excess Principal Collections pro rata among the applicable Series
based on the relative amounts of Principal Shortfalls. To the extent that
Excess Principal Collections exceed Principal Shortfalls, the Servicer will pay
the balance first to the Residual Interestholder if the Residual Participation
Amount (determined after including the principal balance of any Receivables
transferred to the Trust on the Determination Date on which the balance is paid)
exceeds the Trust Available Subordinated Amount for the immediately preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Payment Date immediately following
the preceding Determination Date). Any amount not allocated to the Residual
Interestholder because the Residual Participation Amount does not exceed the
Trust Available Subordinated Amount will be held unallocated ("Unallocated
Principal Collections") until the Residual Participation Amount exceeds the
Trust Available Subordinated Amount, at which time the amount will be allocated
to the Residual Interestholder, or until an Early Amortization Period,
Accumulation Period, Investment Period or Amortization Period commences for any
Series, after which time the amount will be treated as a Series Allocable
Miscellaneous Payment.
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Allocation of Collections; Limited Subordination of Residual Interest
On each Deposit Date, the Servicer will allocate and distribute to the
Residual Interest an amount equal to:
. the Excess Residual Percentage for the related Collection Period of
Series Allocable Principal Collections for the Deposit Date, and
. the Excess Residual Percentage for the related Collection Period of
Series Allocable Non-Principal Collections for the Deposit Date;
if the Residual Participation Amount (determined after giving effect to any
Principal Receivables transferred to the Trust on the Deposit Date) exceeds the
Trust Available Subordinated Amount for the immediately preceding Determination
Date (after giving effect to the allocations, distributions, withdrawals and
deposits to be made on the Payment Date immediately following the preceding
Determination Date). In addition, on each Deposit Date during the Revolving
Period the Servicer will distribute to the Residual Interestholder an amount
equal to the Additional Noteholder Principal Collections for the Deposit Date
if:
(1) the Residual Participation Amount (determined after giving effect to any
Principal Receivables transferred to the Trust on the Deposit Date)
exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Payment Date
immediately following the preceding Determination Date), and
(2) all amounts then required to be on deposit in the Reserve Account and
Yield Supplement Account are on deposit therein and no Deficiency Amount
from the prior Payment Date remains unpaid.
During an Early Amortization Period, Additional Noteholder Principal Collections
will be retained in the Collection Account and treated as Available Noteholder
Principal Collections.
[Any remaining Additional Noteholder Collections for a Deposit Date not
required to be retained in the Collection Account as described in the preceding
paragraph or distributed in the amount of the Required Draw Amount will be
distributed to the Residual Interestholder if the Residual Participation Amount
(determined after giving effect to any Principal Receivables transferred to the
Trust on the Deposit Date) exceeds the Trust Available Subordinated Amount for
the immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the Payment
Date immediately following the preceding Determination Date).]
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Trust Distributions
Non-Principal Collections, Principal Collections and other amounts allocable
to a Series of Notes generally will be used to make interest payments to
Noteholders of that Series on each date established for that Series. The Notes
of each Series also will have a revolving period during which no principal
payments are made on the Notes of that Series (the "Revolving Period"). If the
principal of the Notes of a Series is scheduled to be paid in full on an
expected date, (the "Expected Principal Payment Date"), the Notes will have an
accumulation period (the "Accumulation Period"). During an Accumulation Period,
the Indenture Trustee, at the direction of the Servicer, will deposit Principal
Collections and other specified amounts allocable to a Series into a trust
account established for the benefit of the Noteholders of that Series (a
"Principal Funding Account"). The Principal Collections and other amounts so
deposited into that Principal Funding Account will be used to make principal
distributions to the Noteholders of that Series when due. The amount to be
deposited in the Principal Funding Account for any Series of Notes on any
Payment Date may, but will not necessarily, be limited to a specified amount
(the "Controlled Deposit Amount").
If the principal of the Notes of a Series is scheduled to be paid in
installments commencing on a Principal Commencement Date, the Notes of that
Series will have an amortization period during which Principal Collections and
other specified amounts allocable to that Series will be used on each Payment
Date to make principal distributions. The payment of principal of the Notes of
a Series may commence earlier than the applicable Expected Principal Payment
Date or Principal Commencement Date, and the final principal payment for the
Notes of a Series may be made earlier or later than the applicable Expected
Principal Payment Date or other expected date if an Early Amortization Event
occurs for that Series.
The Notes of a Series also may have an investment period (the "Investment
Period"). The Investment Period for a Series of Notes will begin on the day
(the "Investment Period Commencement Date") on which an investment event
specified in the related Series Supplement for that Series has occurred (an
"Investment Event"). During the Investment Period, the Indenture Trustee, at
the direction of the Servicer, will deposit into a Principal Funding Account
Principal Collections and other specified amounts allocable to the Notes or a
Series on each Payment Date. The Principal Collections so deposited into that
Principal Funding Account will be used to make principal distributions to the
Noteholders of that Series when due. There are no Investment Events for the
Series 2000-1 Notes.
Unless the Revolving Period for a Series recommences, after the Fully Funded
Date for a Series of Notes, Noteholders of that Series will no longer have any
interest in the Receivables and all the representations and covenants of the
Transferor and the Servicer relating to the Receivables, as well as other
specified provisions of the Indenture, and all remedies for breaches of those
representations and warranties, will no longer accrue to the benefit of the
Noteholders of that Series. In addition, upon the occurrence of the Fully
Funded Date for a Series, no Non-Principal Collections, Principal Collections,
defaulted Receivables or Miscellaneous Payments
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will be allocated to that Series unless the Revolving Period for that Series
recommences. See "The Transfer and Servicing Agreements--Termination; Fully
Funded Date".
During the period (the "Early Amortization Period") beginning on the day on
which an Early Amortization Event has occurred for a Series of Notes and ending
on the earliest of:
. the payment in full of (a) the outstanding principal balance of the Notes
of that Series and (b) accrued and unpaid interest on those Notes,
. the recommencement of the Revolving Period for that Series, and
. the Termination Date for that Series,
the Revolving Period, the Investment Period, the Amortization Period or the
Accumulation Period, as the case may be, for that Series will terminate. See
"--Early Amortization Events" for a description of events that might result in
the commencement of an Early Amortization Period for a Series of Notes. During
the Early Amortization Period for a Series of Notes, the Indenture Trustee will
distribute Principal Collections and other specified amounts allocable to the
Notes of a Series as principal payments to the applicable Noteholders monthly on
each Payment Date. During the Early Amortization Period for a Series of Notes,
distributions of principal to Noteholders of that Series will not be limited to
any Controlled Deposit Amount or Controlled Amortization Amount.
Distributions from the Collection Account for Series 2000-1 Notes; Reserve
Account; Yield Supplement Account
Non-Principal Collections. On each Payment Date, commencing with the initial
Payment Date, the Servicer will instruct the Indenture Trustee to apply
Noteholder Non-Principal Collections and Investment Proceeds, if any, for the
related Collection Period to make the following distributions in the following
priority:
(1) first, an amount equal to the Noteholder Monthly Servicing Fee for the
Payment Date will be distributed to the Servicer (unless the amount has
been netted against deposits to the Collection Account as described
under "--Allocation of Collections; Deposits in Collection Account" or
waived by the Servicer);
(2) second, an amount equal to Series 2000-1 Monthly Interest for the
Payment Date, plus the amount of any Series 2000-1 Monthly Interest
previously due but not distributed on a prior Payment Date (plus, but
only to the extent permitted under applicable law, interest at the Note
Rate on Series 2000-1 Monthly Interest previously due but not
distributed), will be distributed to the Series 2000-1 Noteholders;
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(3) third, an amount equal to the Reserve Account Deposit Amount, if any,
for the Payment Date will be deposited in the Reserve Account;
(4) fourth, an amount equal to the Noteholder Default Amount [and the
Monthly Dilution Amount, if any,] for the Payment Date will be treated
as a portion of Additional Noteholder Principal Collections for the
Payment Date;
(5) fifth, an amount equal to any outstanding Carry-over Amount will be
distributed to the Series 2000-1 Noteholders;
(6) sixth, an amount equal to the Yield Supplement Account Deposit Amount,
if any, for the Payment Date will be deposited to the Yield Supplement
Account;
(7) seventh, an amount equal to the aggregate amount of Series 2000-1
Noteholder Charge-Offs which have not been previously reversed will be
treated as a portion of Available Noteholder Principal Collections with
respect to the Payment Date and will increase the Series 2000-1
Invested Amount (the "Noteholder Charge-Off Reversal Amount");
(8) eighth, an amount equal to the amount of reductions of the Series 2000-
1 Available Subordinated Amount on account of Noteholder Default
Amounts [and Monthly Dilution Amounts] that have not previously been
reinstated will be distributed to the Residual Interestholder and will
increase the Series 2000-1 Available Subordinated Amount;
(9) ninth, an amount equal to the aggregate outstanding amounts of Monthly
Servicing Fee which have been previously waived will be distributed to
the Servicer; and
(10) tenth, the balance will be distributed to the Residual Interestholder.
If Noteholder Non-Principal Collections and Investment Proceeds for the
Payment Date are not sufficient to make the entire distributions required by
clauses (1), (2) and (4) and, in the case of the Series 2000-1 Stated Maturity
Date or the date on which the principal amount of the Series 2000-1 Notes has
been reduced to zero only, clause (5), the Indenture Trustee will withdraw funds
from the Reserve Account (in the case of clause (5) only to the extent the
amounts to be withdrawn would otherwise be distributed to the Residual
Interestholder) and apply the withdrawn funds to complete the distributions as
described in clauses (1), (2), (4) and (5). [However, during any Early
Amortization Period funds will not be withdrawn from the Reserve Account to make
distributions required by clause (4) to the extent that, after giving effect to
the withdrawal, the amount on deposit in the Reserve Account will be less than
$[________].]
If, on any Payment Date, the Noteholder Non-Principal Collections, Investment
Proceeds for the Payment Date and funds withdrawn from the Reserve Account are
not sufficient to make the
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entire distributions required by clauses (1), (2) and (4) (the resulting
shortfall being the "Deficiency Amount"), the Indenture Trustee will apply the
amount of Additional Noteholder Collections for the related Collection Period
then on deposit in the Collection Account to make any portion of the
distributions required by clauses (1), (2) and (4) above that have not been made
(the amount of Additional Noteholder Collections so applied being referred to as
the "Required Draw Amount"). Also to the extent the distribution required by
clause (5) has not been made on the Payment Date that is either the date on
which the principal amount of the Series 2000-1 Notes has been reduced to zero
or the Series 2000-1 Stated Maturity Date, the Additional Noteholder Collections
in the Collection Account will also be applied to make the distribution required
by clause (5). However, on any Payment Date the total amount of the payment of
the Additional Noteholder Collections made as described in this paragraph will
not exceed the Series 2000-1 Available Subordinated Amount, and the Series 2000-
1 Available Subordinated Amount will be reduced by the amount of Additional
Noteholder Collections applied is described in this paragraph. If the amount
necessary to complete the distributions referred to in this paragraph exceeds
the amount of Additional Noteholder Collections for the related Collection
Period on deposit in the Collection Account, the Series 2000-1 Available
Subordinated Amount also will be reduced by the amount of the excess, but not by
more than the sum of the Noteholder Default Amount and the portion of Adjustment
Payments not paid by the Transferor, in order to maintain the Series 2000-1
Invested Amount.
Reserve Account. The Servicer will establish and maintain the "Reserve
Account," which will be an Eligible Deposit Account established in the name of
the Indenture Trustee for the benefit of the Series 2000-1 Noteholders. On the
Closing Date, the Trust will deposit $___________ (____% of the principal
balance of the Series 2000-1 Notes) into the Reserve Account. The Indenture
Trustee, at the direction of the Servicer, will invest funds in the Reserve
Account in Eligible Investments that will mature on or prior to the next Payment
Date. On each Determination Date, the Servicer will apply any investment
earnings (net of losses and investment expenses) with respect to the Reserve
Account as set forth under "--Distributions from the Collection Account for the
Series 2000-1 Notes; Reserve Account". After the earlier of the payment in full
of the outstanding principal balance of the Series 2000-1 Notes and the Series
2000-1 Stated Maturity Date, the Indenture Trustee will pay any funds remaining
on deposit in the Reserve Account to the Residual Interestholder.
If, after giving effect to the allocations, distributions and deposits in the
Reserve Account described above under "--Non-Principal Collections" for a
Payment Date, the amount in the Reserve Account is less than the Reserve Account
Required Amount for the Payment Date, the Indenture Trustee will deposit any
remaining Additional Noteholder Collections for the related Collection Period
into the Reserve Account until the amount in the Reserve Account is equal to the
Reserve Account Required Amount for the Payment Date.
Yield Supplement Account. The Servicer will establish and maintain the Yield
Supplement Account, which will be an Eligible Deposit Account established in the
name of the Indenture Trustee for the benefit of the Series 2000-1 Noteholders.
On the Closing Date, the Transferor will deposit $__________ (___% of the
principal balance of the Series 2000-1 Notes) into the
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Yield Supplement Account. On any Payment Date on which there is a Carry-over
Amount, the Indenture Trustee will apply, up to the amount of any Carry-over
Amount, the amount on deposit in the Yield Supplement Account on the Payment
Date to satisfy the Carry-over Amount. The Indenture Trustee, at the direction
of the Servicer, will invest funds in the Yield Supplement Account in Eligible
Investments that mature on or prior to the next Payment Date. After the earlier
of the payment in full of the outstanding principal balance of the Series 2000-1
Notes and the Series 2000-1 Stated Maturity Date, the Indenture Trustee will pay
any funds remaining on deposit in the Yield Supplement Account to the
Transferor.
Available Subordinated Amount
Available Subordinated Amounts for all Series. The Residual Interest will be
subordinated to the rights of the Noteholders of each Series to the extent
described in the related Series Supplement. The amount of the subordination for
any Series of Notes is referred to in this prospectus as the "Available
Subordinated Amount" for that Series.
Series 2000-1 Available Subordinated Amount. The Residual Interestholder may
at any time in its sole discretion increase the Series 2000-1 Available
Subordinated Amount for so long as the cumulative amount of the increases does
not exceed the lesser of (1) $________ or (2) ____% of the Series 2000-1
Invested Amount. The Residual Interestholder is not under any obligation to
increase the Series 2000-1 Available Subordinated Amount at any time. If the
Series 2000-1 Available Subordinated Amount were reduced to less than the
Required Subordinated Amount, an Early Amortization Event would occur. However,
the Residual Interestholder could elect to increase the Series 2000-1 Available
Subordinated Amount at the time an Early Amortization Event would otherwise
occur, thus preventing or delaying the occurrence of the Early Amortization
Event.
Limitations of Subordination. The presence of the Series 2000-1 Available
Subordinated Amount is intended to enhance the likelihood of receipt by Series
2000-1 Noteholders of the full amount of principal of and interest on the Series
2000-1 Notes and to decrease the likelihood that the Series 2000-1 Noteholders
will experience losses. However, the presence of the Series 2000-1 Available
Subordinated Amount will not provide protection against all risks of loss, nor
will it guarantee repayment of the entire principal balance of and interest on
the Series 2000-1 Notes. If losses occur that exceed the amount covered by the
Series 2000-1 Available Subordinated Amount or which are not covered by the
Series 2000-1 Available Subordinated Amount, the Series 2000-1 Noteholders will
bear their allocable share of deficiencies.
Principal Collections
On each Deposit Date during the Series 2000-1 Revolving Period, all Series
Allocable Principal Collections allocated to the Series 2000-1 Noteholders [will
be treated as Excess Principal Collections and made available to other Series,
deposited into the Excess Funding Account or paid to the Residual
Interestholder.]
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On each Deposit Date during the Series 2000-1 Accumulation Period or any
Early Amortization Period, the Servicer will allocate all Available Noteholder
Principal Collections as follows:
. first, to the Series 2000-1 Principal Funding Account in an amount equal
to the Series 2000-1 Monthly Principal for the Payment Date for the
Collection Period; and
. second, the balance, if any, will be allocated to Excess Principal
Collections and made available to other Series.
In the event that the aggregate principal amount of the Series 2000-1 Notes
is greater than zero on the Series 2000-1 Stated Maturity Date, any funds
remaining in the Reserve Account (after the application of funds in the Reserve
Account as described above under "Distributions from the Collection Account for
Series 2000-1 Notes; Reserve Account--Non-Principal Collections") will be
treated as a portion of Available Noteholder Principal Collections for the
Payment Date occurring on the Series 2000-1 Stated Maturity Date.
Series 2000-1 Principal Funding Account
The Servicer will establish and maintain in the name of the Indenture
Trustee, on behalf of the Trust, an Eligible Deposit Account for the benefit of
the Series 2000-1 Noteholders (the "Series 2000-1 Principal Funding Account").
On each Payment Date during the Series 2000-1 Accumulation Period, the Indenture
Trustee, at the direction of the Servicer, will deposit the Series 2000-1
Monthly Principal in the Series 2000-1 Principal Funding Account, as provided
above under "--Principal Collections". If, however, an Early Amortization
Period commences during the Series 2000-1 Accumulation Period and is not
terminated, the Principal Funding Account Balance will be paid to the Series
2000-1 Noteholders on the first Payment Date thereafter.
On any Payment Date prior to the Series 2000-1 Expected Principal Payment
Date, the Indenture Trustee, at the direction of the Servicer, will invest the
Principal Funding Account Balance (after giving effect to distributions to be
made on the Payment Date) in Eligible Investments that will mature on or prior
to the Series 2000-1 Expected Principal Payment Date. On and after the Series
2000-1 Expected Principal Payment Date, the Indenture Trustee will invest
amounts on deposit in the Series 2000-1 Principal Funding Account in Eligible
Investments that will mature on or prior to the following Payment Date. The
Servicer may select an appropriate agent as representative of the Servicer for
the purpose of designating the investments. On each Payment Date, the Indenture
Trustee will apply the interest and other investment income on the Principal
Funding Account Balance as provided above under "--Distributions from the
Collection Account for the Series 2000-1 Notes; Reserve Account".
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Distributions to Series 2000-1 Noteholders
Payments to Series 2000-1 Noteholders will be made from the Collection
Account, the Reserve Account, the Series 2000-1 Principal Funding Account and
the Excess Funding Account.
(a) The Servicer will instruct the Indenture Trustee to distribute on each
Payment Date funds on deposit in the Collection Account and the Reserve
Account that are payable to the Series 2000-1 Noteholders with respect to
accrued interest to the Series 2000-1 Noteholders.
(b) The Servicer will instruct the Indenture Trustee to distribute on the
Series 2000-1 Expected Principal Payment Date and each Payment Date
thereafter the funds on deposit in the Series 2000-1 Principal Funding
Account and the Collection Account as are payable to Series 2000-1
Noteholders with respect to principal to the Series 2000-1 Noteholders,
up to a maximum amount on any date equal to the outstanding principal
amount of the Series 2000-1 Notes.
(c) On each Payment Date on which there is an unpaid Carry-over Amount, the
Servicer will instruct the Indenture Trustee to distribute to the Series
2000-1 Noteholders the unpaid Carry-over Amount to the extent funds are
available therefor first, from amounts on deposit in the Yield Supplement
Account and second, from any Non-Principal Collections remaining after
making all required distributions and deposits with respect to the Series
2000-1 Notes and prior to paying any remaining Non-Principal Collections
to the Residual Interestholder as provided above under "--Distributions
from the Collection Account for the Series 2000-1 Notes; Reserve Account-
-Non-Principal Collections".
(d) If on the Series 2000-1 Stated Maturity Date there is any Carry-over
Amount (after giving effect to any distributions on the date as described
in (a) through (c) directly above), the Indenture Trustee will distribute
to the Series 2000-1 Noteholders (1) a portion of the amounts on deposit
in the Reserve Account (to the extent the amounts would otherwise be
distributed to the Residual Interestholder) and (2) Additional Noteholder
Collections on deposit in the Collection Account (to the extent the
Additional Noteholder Collections would otherwise be distributed to the
Residual Interestholder) which are available to satisfy the Carry-over
Amount on the Series 2000-1 Stated Maturity Date, as described above
under "--Distributions from the Collection Account; Reserve Account for
the Series 2000-1 Notes; Reserve Account--Non-Principal Collections".
Amounts on deposit in the Reserve Account and Additional Noteholder
Collections on deposit in the Collection Account, to the extent that both
amounts would otherwise be distributed to the Residual Interestholder,
will also be available to pay any outstanding Carry-over Amount on the
date on which the principal balance of the Series 2000-1 Notes has been
reduced to zero.
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All distributions will be made to the Series 2000-1 Noteholders of record at
the close of business on the day immediately preceding the related Payment Date
(a "Record Date"), except that the final distribution with respect to any Series
2000-1 Note will be made only upon surrender of the Series 2000-1 Note.
Series 2000-1 Noteholder Charge-Offs
If, on any Payment Date, the Series 2000-1 Available Subordinated Amount is
reduced to zero and the Deficiency Amount is greater than zero, the Series 2000-
1 Invested Amount will be reduced by the Deficiency Amount, but not by more than
the sum of the Noteholder Default Amount [and the Monthly Dilution Amount] for
the Payment Date (a "Series 2000-1 Noteholder Charge-Off"), and not below zero.
Any reduction in the Series 2000-1 Invested Amount will have the effect of
slowing or reducing the return of principal to the holders of Series 2000-1
Notes. If the Series 2000-1 Invested Amount has been reduced by any Series
2000-1 Noteholder Charge-Offs, it will thereafter be increased on any Payment
Date (but not by an amount in excess of the aggregate unreversed Series 2000-1
Noteholder Charge-Offs) by the Noteholder Charge-Off Reversal Amount as
described above under "--Distributions from the Collection Account; Reserve
Account--Non-Principal Collections".
Early Amortization Events
Commencing on the first Payment Date following the Collection Period in which
an Early Amortization Event has occurred for any Series of Notes, Principal
Collections allocable to the Series will no longer be paid to the Transferor,
allocated to any other Series or retained in the Principal Funding Account for
the Series, but instead will be distributed to Noteholders of the Series monthly
on each Payment Date. The Controlled Deposit Amount or Amortization Amount, if
any, will no longer apply to distributions of principal on the Notes of the
Series, unless the related Series Supplement permits otherwise.
An Early Amortization Event refers to, for any Series of Notes, any of the
events described as Early Amortization Events in the Series Supplement relating
to the Series, as well as any of the following events:
(1) the occurrence of specified events of bankruptcy, insolvency or
receivership relating to VWOA, the Trust or the Transferor;
(2) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940;
(3) a failure of the Transferor to convey Receivables in Additional
Accounts to the Trust within five business days after the day on which
it is required to convey the Receivables in Additional Accounts under
the Trust Sale and Servicing Agreements; and
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(4) on any Determination Date, as of the last day of each of the two
preceding Collection Periods, the aggregate balance of Receivables
relating to Used Vehicles exceeds [20]% of the Pool Balance on each of
the last days.
The Early Amortization Events with respect to the Series 2000-1 Notes will
also include each of the following events:
(5) failure on the part of the Transferor, the Servicer or VCI, as
applicable, (a) to make any payment or deposit required by the Trust
Sale and Servicing Agreement or the Receivables Purchase Agreement,
including but not limited to any Transfer Deposit Amount or Adjustment
Payment, on or before the date occurring five business days after the
date the payment or deposit is required to be made therein; (b) to
deliver a Payment Date Statement on the date required under the Trust
Sale and Servicing Agreement (or within the applicable grace period
which will not exceed five business days); (c) to comply with its
covenant not to create any lien on a Receivable; or (d) to observe or
perform in any material respect any other covenants or agreements set
forth in the Trust Sale and Servicing Agreement or the Receivables
Purchase Agreement, which failure continues unremedied for a period of
60 days after written notice of the failure;
(6) any representation or warranty made by VCI in the Receivables Purchase
Agreement or by the Transferor in the Trust Sale and Servicing
Agreement or any information required to be given by the Transferor to
the Indenture Trustee to identify the Accounts proves to have been
incorrect in any material respect when made and continues to be
incorrect in any material respect for a period of 60 days after written
notice and as a result the interests of the Noteholders are materially
and adversely affected; however, an Early Amortization Event will not
be deemed to occur thereunder if the Transferor has repurchased the
related Receivables or all of the Receivables, if applicable, during
the 60 day period following delivery of written notice in accordance
with the provisions of the Trust Sale and Servicing Agreement;
(7) on any Determination Date, the Series 2000-1 Available Subordinated
Amount for the next Payment Date will be reduced to an amount less than
the Required Subordinated Amount on the Determination Date after giving
effect to the distributions to be made on the next Payment Date;
(8) any Servicing Default with respect to the Series 2000-1 Notes occurs;
(9) on any Determination Date, the average of the Monthly Payment Rates for
the six preceding Collection Periods, is less than [__]%;
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(10) the occurrence of an Event of Default with respect to the Series 2000-1
Notes and the declaration that the Series 2000-1 Notes are due and
payable; and
(11) any Carry-over Amount is outstanding on six consecutive Payment Dates.
The events described in clauses 1 through 11 above are known in this prospectus
as "Early Amortization Events".
In the case of any event described in clause 3, 5, 6, 8 or 10 above, an Early
Amortization Event with respect to Series 2000-1 will occur only if, after the
grace period, if any, described in the applicable clause, either the Indenture
Trustee or Series 2000-1 Noteholders holding more than 50% of the aggregate
unpaid principal amount of the Series 2000-1 Notes, by written notice to the
Trust, the Transferor and the Servicer (and the Indenture Trustee, if given by
Noteholders) declare that an Early Amortization Event has occurred as of the
date of the written notice. In the case of any Early Amortization Event
described in clause 1, 2, 4, 7, 9, and 11 above, an Early Amortization Event
with respect to Series 2000-1 will occur without any notice or other action on
the part of the Indenture Trustee or the Series 2000-1 Noteholders, immediately
upon the occurrence of the event.
The Early Amortization Period for the Series 2000-1 Notes will commence as of
the close of business on the business day immediately preceding the day on which
the Early Amortization Event is deemed to have occurred. Monthly distributions
of principal to the Series 2000-1 Noteholders will begin on the first Payment
Date following the Collection Period in which an Early Amortization Period has
commenced, except as described in the next paragraph.
Under limited circumstances, an Early Amortization Period which commences
prior to the scheduled end of the Series 2000-1 Revolving Period may terminate
and the Series 2000-1 Revolving Period recommence. If an Early Amortization
Event occurs, the Series 2000-1 Revolving Period will recommence following
receipt of:
. written confirmation by each Rating Agency that its rating of the Series
2000-1 Notes will not be withdrawn or lowered as a result of the
recommencement, and
. the consent to the recommencement of Series 2000-1 Noteholders holding
more than 50% of the aggregate unpaid principal amount of the Series 2000-
1 Notes,
except that the Series 2000-1 Revolving Period will not recommence if another
Early Amortization Event that has not been cured or waived has occurred or the
scheduled termination of the Series 2000 -1 Revolving Period has occurred.
In addition to the consequences of an Early Amortization Event discussed
above, if the Transferor violates its covenant in the Trust Sale and Servicing
Agreement not to create any lien on any Receivable, on the day of the violation,
the Transferor will (subject to the actions of the Noteholders) immediately
cease transferring Receivables to the Trust and promptly give notice to
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the Indenture Trustee of the violation. The terms of the Trust Sale and
Servicing Agreement require the Indenture Trustee to publish a notice of the
violation within 15 days stating that the Indenture Trustee intends to sell,
liquidate or otherwise dispose of the Receivables in a commercially reasonable
manner and on commercially reasonable terms, unless within a specified period of
time holders of Notes of each outstanding Series representing more than 50% of
the aggregate unpaid principal amount of the Notes of each Series (or, for any
Series with two or more classes, the Notes of each class of the Series) [and
each person holding a portion of the Residual Interest that is not the
Transferor or an affiliate of the Transferor], instruct the Indenture Trustee
not to sell, dispose of or otherwise liquidate the Receivables and to continue
transferring Receivables as before the insolvency event or violation, as
applicable. Noteholders will incur a loss if the portion of the proceeds
allocated to the Notes and the proceeds of any collections on the Receivables in
the Collection Account allocable to the Notes are not sufficient to pay the
aggregate unpaid principal balance of the Notes in full plus accrued and unpaid
interest thereon.
Stated Maturity Date
The last payment of principal and interest on the Series 2000-1 Notes will be
due and payable no later than the Series 2000-1 Stated Maturity Date. In the
event that the aggregate outstanding principal amount of the Series 2000-1 Notes
is greater than zero on the Series 2000-1 Stated Maturity Date (after giving
effect to deposits and distributions otherwise to be made on the Series 2000-1
Stated Maturity Date), upon receipt of an opinion of counsel to the effect that
its action will not result in the trust being characterized as an association
(or a publicly traded partnership) taxable as a corporation, the Indenture
Trustee will sell or cause to be sold Receivables or an interest in the
Receivables, as specified in the Indenture, in an amount so that the proceeds of
the sale equal the aggregate outstanding principal balance of and accrued and
unpaid interest on the Series 2000-1 Notes on the Series 2000-1 Stated Maturity
Date (after giving effect to the deposits and distributions to occur on the
Series 2000-1 Stated Maturity Date). However, the amount of Receivables sold by
the Indenture Trustee may not exceed the sum of the Series 2000-1 Invested
Amount and the Series 2000-1 Available Subordinated Amount on the preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Payment Date following the preceding
Determination Date). The amount of Receivables sold will reduce the Series
2000-1 Invested Amount, but not to below zero. The net proceeds of the sale and
any collections on the Receivables will be paid pro rata to Series 2000-1
Noteholders on the Series 2000-1 Stated Maturity Date as the final payment of
the Series 2000-1 Notes, and the Series 2000-1 Noteholders will not receive any
additional payments with respect to the Series 2000-1 Notes.
Payment Event of Default
If an Event of Default relating to the failure to make any required payment
of interest or principal on the Series 2000-1 Notes has occurred and the Series
2000-1 Notes have been declared due and payable, the holders of a majority of
the aggregate outstanding principal amount of the Series 2000-1 Notes may direct
the Indenture Trustee to sell or cause to be sold Receivables or an interest in
the Receivables in an amount so that the net proceeds of the sale
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equal the aggregate outstanding principal balance of and accrued and unpaid
interest on the Series 2000-1 Notes then outstanding. The sale described in the
prior sentence may not occur, however, unless the Indenture Trustee receives an
opinion of counsel stating that the sale will not cause the Trust to be
characterized as an association (or a publicly traded partnership) taxable as a
corporation. Also, the amount of Receivables or interest therein sold may not
exceed the lesser of:
. the sum of the Series 2000-1 Invested Amount and the Series 2000-1
Available Subordinated Amount on the preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits
to be made on the Payment Date following the preceding Determination
Date); and
. the Series Allocation Percentage of Receivables on the Determination
Date.
The Indenture Trustee will pay the net proceeds of the sale pro rata to the
Series 2000-1 Noteholders in an amount up to the aggregate outstanding principal
balance of and accrued and unpaid interest on the Series 2000-1 Notes, and the
Series 2000-1 Noteholders will not receive any additional payments with respect
to the Series 2000-1 Notes.
Optional Repurchase
VCI may repurchase the Series 2000-1 Notes at its option on any Payment Date
after the Series 2000-1 Invested Amount is reduced to an amount less than or
equal to $_______ (10% of the initial outstanding principal amount of the Series
2000-1 Notes). The purchase price will equal the sum of:
. the [Series 2000-1 Invested Amount] on the Determination Date preceding
the Payment Date on which the purchase is scheduled to be made,
. accrued and unpaid interest on the Series 2000-1 Notes to be repurchased
at the Note Rate (together with interest on overdue interest), and
. any outstanding Carry-over Amount (together with interest thereon).
VCI will deposit the purchase price into the Collection Account in
immediately available funds on the Payment Date on which it exercises the
optional repurchase. Following any optional purchase, the Series 2000-1
Noteholders will have no further rights in the Receivables or other property
securing the Notes, other than the right to receive the final distribution on
the Series 2000-1 Notes. Also, as the Series 2000-1 Noteholders are creditors of
the Trust and not holders of an interest therein, it is highly unlikely and
extremely remote that by virtue of the purchase of their Series 2000-1 Notes,
the Series 2000-1 Noteholders will incur any liability to third parties for the
sale of the Receivables to VCI. In the event that VCI fails for any reason to
deposit the purchase price for an optional repurchase into the Collection
Account, payments will continue to be made to the Series 2000-1 Noteholders as
described in this prospectus.
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Reports
On Determination Date, the Servicer will allocate the Collections on
Receivables received during the related Collection Period to the Series 2000-1
Noteholders or to the Transferor in accordance with the Series 2000-1 Supplement
and the Transfer and Servicing Agreements.
The Indenture Trustee will forward to each Series 2000-1 Noteholder of record
on each Payment Date (including the Series 2000-1 Expected Principal Payment
Date), commencing on the initial Payment Date, a Payment Date Statement prepared
by the Servicer for the Series 2000-1 Notes, setting forth the following
information:
. the aggregate amount of Collections, the aggregate amount of Non-
Principal Collections and the aggregate amount of Principal Collections
processed during the immediately preceding Collection Period and the Pool
Balance, the Residual Participation Amount and the Excess Funding Account
Balance as of the close of business on the last day of the preceding
Collection Period;
. the Series Allocation Percentage, the Series 2000-1 Floating Allocation
Percentage and the Principal Allocation Percentage for the preceding
Collection Period;
. the total amount, if any, distributed on the Series 2000-1 Notes (which
will be stated on the basis of an original principal amount of $1,000 per
Series 2000-1 Note if the Series 2000-1 Accumulation Period or an Early
Amortization Period has commenced);
. the amount of the distribution allocable to principal of Series 2000-1
Notes (which will be stated on the basis of an original principal amount
of $1,000 per Series 2000-1 Note if the Series 2000-1 Accumulation Period
or an Early Amortization Period has commenced);
. the amount of the distribution allocable to interest of Series 2000-1
Notes (which will be stated on the basis of an original principal amount
of $1,000 per Series 2000-1 Note if the Series 2000-1 Accumulation Period
or an Early Amortization Period has commenced);
. the Noteholder Default Amount for the Payment Date;
. the Required Draw Amount, if any, for the related Collection Period;
. the amount of the Noteholder Charge-Offs and the amounts of the reversals
thereof for the related Collection Period;
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. the amount of the Monthly Servicing Fee and the Noteholder Monthly
Servicing Fee for the related Collection Period;
. the Series 2000-1 Controlled Deposit Amount for the following Payment
Date, if any;
. the Invested Amount and the outstanding principal balance of Series 2000-
1 Notes for the Payment Date (after giving effect to all distributions
which will occur on the Payment Date);
. the Series 2000-1 Available Subordinated Amount as of the last day of the
preceding Collection Period;
. the Carry-over Amount for the Payment Note (after giving effect to all
payments, deposits and withdrawals to occur on the Payment Date)
. the Reserve Account balance for the Payment Date (after giving effect to
all deposits and withdrawals to occur on the Payment Date); and
. the Principal Funding Account Balance and the Yield Supplement Account
Balance for the Payment Date (after giving effect to all deposits and
withdrawals to occur on the Payment Date).
The Indenture Trustee will furnish (or cause to be furnished) to each person
or entity who at any time during the preceding calendar year was a holder of
record of a Series 2000-1 Note (initially Cede, as the nominee of DTC) and
received any payment on a Series 2000-1 Note, a statement containing information
required to be provided by an issuer of indebtedness under the U.S. Internal
Revenue Code for the proceeding calendar year or applicable portion thereof.
This statement will be forwarded for the purpose of assisting each Series 2000-1
Noteholder in the preparation of its federal income tax returns. As long as the
holder of record of the Series 2000-1 Notes is Cede, as nominee of DTC,
beneficial owners of Series 2000-1 Notes will receive tax and other information
from Participants and Indirect Participants and not from the Indenture Trustee.
See "Material Federal Income Tax Consequences" in this prospectus.
The Indenture and the Series 2000-1 Supplement
The Indenture will contain provisions that generally apply to all Series of
Notes, including the Series 2000-1 Notes. Each Series Supplement will contain
provisions that generally apply only to the Series of Notes issued under that
Series Supplement.
Modification of Indenture or Series 2000-1 Supplement Without Noteholder
Consent. The Trust and the Indenture Trustee may, without consent of the Series
2000-1 Noteholders, enter into one or more supplemental indentures or amendments
to the Series 2000-1 Supplement for any of the following purposes:
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. to correct or amplify the description of the collateral or add
additional collateral;
. to provide for the assumption of the Series 2000-1 Notes and the
Indenture obligations by a permitted successor to the Trust;
. to add additional covenants for the benefit of the Series 2000-1
Noteholders;
. to convey, transfer, assign, mortgage or pledge any property to or with
the Indenture Trustee;
. to cure any ambiguity or correct or supplement any provision in the
Indenture or in the Series 2000-1 Supplement or supplemental indenture
which may be inconsistent with any other provision of the Indenture or
of the Series 2000-1 Supplement or supplemental indenture;
. to provide for the acceptance of the appointment of a permitted
successor Indenture Trustee or to add to or change any of the provisions
of the Indenture or the Series 2000-1 Supplement as may be necessary and
permitted to facilitate the administration by more than one trustee;
. to modify, eliminate or add to the provisions of the Indenture or any
Series 2000-1 Supplement in order to comply with the Trust Indenture Act
of 1939; and
. to add any provisions to change in any manner or eliminate any of the
provisions of the Indenture or modify in any manner the rights of Series
2000-1 Noteholders under the Indenture or the Series 2000-1 Supplement
if any action specified in this clause does not adversely affect in any
material respect the interests of any Noteholder unless the Noteholder
consent is obtained as described below in "--Modification of Indenture
or Series 2000-1 Supplement with Series 2000-1 Noteholder."
Modification of Indenture or Series 2000-1 Supplement with Series 2000-1
Noteholder Consent. With the consent of the holders of a majority in principal
amount of the Series 2000-1 Notes and prior written notice to the Rating
Agencies, the Trust and the Indenture Trustee may execute a supplemental
indenture to add provisions to, change in any manner or eliminate any provisions
of the Indenture or the Series 2000-1 Supplement, or modify in any manner the
rights of the Series 2000-1 Noteholders.
However, without the consent of the holder of each outstanding Series 2000-1
Note affected thereby, no supplemental indenture will:
. change the due date of any instalment of principal of or interest on any
Series 2000-1 Note, reduce the principal amount of any instalment or the
applicable interest rate of the Series 2000-1 Note, unless specifically
permitted under the
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terms of the Series 2000-1 Note, reduce the redemption price for a Series
2000-1 Note, change any place of payment where the currency in which any
Series 2000-1 Note or any interest thereon is payable, or modify any of
the provisions of the Indenture in a manner that would affect the
calculation of the amount of any payment of interest or principal due on
any Series 2000-1 Note on any Payment Date;
. impair the right to institute suit for the enforcement of specified
provisions of the Indenture regarding payment;
. reduce the percentage of the aggregate principal amount of the
outstanding Series 2000-1 Notes the consent of the holders of which is
required for any specified supplemental indenture, or reduce the
percentage of the aggregate principal amount of the outstanding Series
2000-1 Notes the consent of the holders of which is required for any
waiver of compliance with specified provisions of the Indenture or of
specified defaults under the Indenture and their consequences as provided
for in the Indenture;
. modify or alter the provisions of the Indenture regarding the voting of
any Series 2000-1 Notes held by the Trust, any other obligor on the Series
2000-1 Notes, the Transferor or an affiliate of any of them;
. reduce the percentage of the aggregate outstanding principal amount of
any Series 2000-1 Notes the consent of the holders of which is required to
direct the Indenture Trustee to sell or liquidate the Trust Estate if the
proceeds of the sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding Series 2000-1 Notes;
. decrease the percentage of the aggregate outstanding principal amount of
the Series 2000-1 Notes required to amend the sections of the Indenture
which specify the applicable percentage of aggregate outstanding principal
amount of the Series 2000-1 Notes necessary to amend the Indenture;
or
. permit the creation of any lien ranking prior to or on a parity with the
lien of the Indenture on any part of the Trust Estate or, except as
otherwise permitted or contemplated in the Indenture, terminate the lien
of the Indenture on the Trust Estate or deprive the holder of any Series
2000-1 Note of the security afforded by the lien of the Indenture.
Events of Default; Rights upon Event of Default. If an Event of Default
should occur and be continuing with respect to any Series 2000-1 Notes, the
Indenture Trustee or the holders of a majority of all of the outstanding Series
2000-1 Notes may declare the principal of the Series 2000-1 Notes to be
immediately due and payable. This declaration will constitute an Early
Amortization Event for the Series 2000-1 Notes and may, under specified
circumstances, be
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rescinded by the holders of a majority of all of the outstanding Series 2000-1
Notes. See "--Early Amortization Events".
The amount of principal required to be paid to the Series 2000-1 Noteholders
under the Indenture will generally be limited to amounts available to be
deposited in the Principal Funding Account for the Series 2000-1 Notes.
Therefore, the failure to pay principal on the Series 2000-1 Notes generally
will not result in the occurrence of an Event of Default until the applicable
stated final payment date for the Series 2000-1 Notes.
If the Series 2000-1 Notes are declared due and payable following an Event of
Default, the Indenture Trustee may institute proceedings to:
. collect amounts due or foreclose on Trust property,
. exercise remedies as a secured party,
. if the Event of Default relates to the failure to make any required
payment of interest or principal, and the principal amount of the Series
2000-1 Notes has been declared due and payable, sell the portions of the
related Trust Estate allocated to the Series 2000-1 Notes, as described in
"--Payment Event of Default" above, or
. elect to have the Trust maintain possession of the portions of the Trust
Estate allocated to the Series 2000-1 Notes and continue to apply
Collections as if there had been no declaration of acceleration (although
the Early Amortization Period commenced by that declaration will continue
unless the declaration is rescinded).
Except to the extent permitted following a payment Event of Default relating to
the Series 2000-1 Notes, the Indenture Trustee is prohibited from selling any
Receivables held by the Trust following an Event of Default, unless:
. the holders of all the outstanding Notes consent to the sale,
. the proceeds of the sale are sufficient to pay in full the principal of
and the accrued interest on the outstanding Series 2000-1 Notes at the
date of the sale, or
. in specified cases, the Indenture Trustee determines that the Trust
Estate would not provide sufficient funds on an ongoing basis to make all
payments on the Notes as those payments would have become due if the
Series 2000-1 Notes had not been declared due and payable, and the
Indenture Trustee obtains the consent of the holders of a majority of the
aggregate outstanding principal amount of the Controlling Class of each
Series of the Notes.
Following a declaration that the Series 2000-1 Notes are immediately due and
payable,
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. the Series 2000-1 Noteholders will be entitled to pro rata repayment of
principal on the basis of their respective unpaid principal balances, and
. repayment in full of the accrued interest on and unpaid principal
balances of the Series 2000-1 Notes will be made prior to any further
distribution on the subordinated portion of the Residual Interest.
Subject to the provisions of the Indenture regarding the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing with respect
to the Series 2000-1 Notes, the Indenture Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the holders of the Series 2000-1 Notes, if the Indenture
Trustee reasonably believes it will not be adequately indemnified against the
costs, expenses and liabilities which might be incurred by it in complying with
that request. Subject to the provisions for indemnification and limitations
specified in the Indenture, the holders of a majority in aggregate principal
amount of the Series 2000-1 Notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Indenture
Trustee for the Series 2000-1 Notes. The holders of a majority in aggregate
principal amount of the then outstanding Series 2000-1 Notes may, in specified
cases, waive any default with respect to the Series 2000-1 Notes, except a
default in the payment of principal or interest or a default in respect of a
covenant or provision of the Indenture or the Series 2000-1 Supplement that
cannot be modified without the waiver or consent of all of the holders of the
Series 2000-1 Notes.
No holder of a Series 2000-1 Note will have the right to institute any
proceeding under the Indenture, unless:
. the holder previously has given to the Indenture Trustee written notice
of a continuing Event of Default,
. the holders of not less than 25% in aggregate principal amount of the
outstanding Series 2000-1 Notes, have made written request of the
Indenture Trustee to institute a proceeding in its own name as Indenture
Trustee,
. the holder or holders have offered the Indenture Trustee reasonable
indemnity,
. the Indenture Trustee has for 60 days failed to institute a proceeding,
and
. no direction inconsistent with the written request has been given to the
Indenture Trustee during the 60-day period by the holders of a majority in
aggregate outstanding principal amount of the outstanding Series 2000-1
Notes.
However, you have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on your Series 2000-1 Note on or after
due dates for principal and interest under the terms of the Series 2000-1 Notes,
the Indenture and the Series 2000-1
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Supplement, and you have the right to institute suit for the enforcement of any
of these payments, and this right may not be impaired without your consent.
If an Event of Default known to the Indenture Trustee occurs and is
continuing with respect to the Series 2000-1 Notes, the Indenture Trustee will
mail notice of the Event of Default to each Series 2000-1 Noteholder within 60
days after it occurs. Except in the case of a failure to make any required
payment of principal or interest on any Series 2000-1 Note, the Indenture
Trustee may withhold the notice beyond the 60 day period if it determines in
good faith that withholding the notice is in the interests of the Series 2000-1
Noteholders.
In addition, the Indenture Trustee and each Series 2000-1 Noteholder and Note
Owner of Series 2000-1 Notes, by accepting a Series 2000-1 Note (or interest of
a Series 2000-1 Note), will covenant that they will not, for a period of one
year and one day after the termination of the Indenture, institute against the
Trust or Transferor any bankruptcy, reorganization or other proceeding under any
federal or state bankruptcy or similar law.
Neither the Indenture Trustee in its individual capacity nor the Owner
Trustee in its individual capacity, nor any holder of the Residual Interest,
including the Transferor, nor any of their respective owners, beneficiaries,
agents, officers, directors, employees, affiliates, successors or assigns will,
in the absence of an express agreement to the contrary, be personally liable for
the payment of the principal of or interest on the Series 2000-1 Notes or for
the agreements of the Trust contained in the Indenture or in the Series 2000-1
Supplement.
Merger Covenants of the Trust. The Indenture provides that the Trust may not
consolidate with or merge into any other entity, unless, among other
things:
. the entity formed by or surviving the merger or the consolidation is
organized under the laws of the United States, any state or the District
of Columbia,
. the entity expressly assumes the Trust's obligation to make due and
punctual payments on the Notes and the performance or observance of every
agreement and covenant of the Trust under the Indenture and each Series
Supplement,
. no Event of Default shall have occurred and be continuing immediately
after the merger or consolidation,
. the Trust has been advised that the ratings of the Notes (including the
Series 2000-1 Notes) would not be reduced or withdrawn by any Rating
Agency as a result of the merger or consolidation, and
. any action necessary to maintain the lien and security interest created
by the Indenture has been taken, and
. the Trust has received a Tax Opinion regarding the merger or
consolidation.
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The Trust will not, among other things, except as expressly permitted by a
Related Document or the Related Documents,
. sell, transfer, exchange or otherwise dispose of any of the assets of the
Trust,
. claim any credit on or make any deduction from the principal or interest
payable in respect of the Notes (including the Series 2000-1 Notes) (other
than amounts withheld under the U.S. 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 the Trust
Estate,
. dissolve or liquidate in whole or in part,
. permit the validity or effectiveness of the Indenture to be impaired or
permit any person to be released from any covenants or obligations with
respect to the Notes (including the Series 2000-1 Notes) under the
Indenture except as may be expressly permitted thereby,
. permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof, or any interest therein or
the proceeds thereof, or
. permit the lien of the Indenture not to constitute a valid first priority
security interest in the Trust Estate.
Except as specified in the related Series Supplement, the Trust may not
engage in any activity other than as described above under "The Trust". The
Trust will not incur, assume or guarantee any indebtedness other than
indebtedness incurred under the Notes, the Indenture, or otherwise in accordance
with the Transfer and Servicing Agreements.
Annual Compliance Statement. The Trust will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee will be required to
mail each year to all Series 2000-1 Noteholders, to the extent required under
the Trust Indenture Act of 1939, a brief report relating to:
. its eligibility and qualification to continue as Indenture Trustee under
the Indenture,
. any amounts advanced by it under the Indenture,
. the amount, interest rate and maturity date of specified indebtedness
owing by the Trust to the Indenture Trustee in its individual
capacity,
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. the property and funds physically held by the Indenture Trustee as
trustee, and
. any action taken by it that materially affects the Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. The Indenture will be discharged
with respect to the Series 2000-1 Notes upon the delivery of all Series 2000-1
Notes to the Indenture Trustee for cancellation or upon deposit of funds
sufficient for the payment in full of all of the Series 2000-1 Notes with the
Indenture Trustee.
New Issuances
The Indenture provides that the Trust may issue additional Series of Notes
under one or more Series Supplements. There is no limit to the number of Series
of Notes that may be issued under the Indenture. The Indenture provides that
the Transferor may specify principal terms of a new Series of Notes that differ
substantially from any other Series. Moreover, different Series of Notes may
have the benefits of different forms of Enhancement issued by different
entities. Under the Indenture, the Indenture Trustee will hold each form of
Enhancement only on behalf of the Series of Notes (or a particular class within
a Series) to which it relates. The terms of any new Series of class will not be
subject to prior review by or consent of the Noteholders of any previously
issued Series of Notes, including the Series 2000-1 Noteholders.
The Indenture Trustee
_____________, a ________________, will serve as trustee under the Indenture
(the "Indenture Trustee"). The principal executive offices of the Indenture
Trustee are located at ____________, and its telephone number is
________________.
The Indenture Trustee may give notice of its intent to resign at any time, in
which event the Trust will be obligated to appoint a successor trustee. The
Trust may also remove the Indenture Trustee if the Indenture Trustee ceases to
be eligible to continue as Indenture Trustee under the Indenture, becomes
insolvent, or otherwise becomes incapable of acting. In these circumstances,
the Trust will be obligated to appoint a successor trustee with the approval of
the Transferor. The holders of a majority of the aggregate principal amount of
the outstanding Notes, including the Series 2000-1 Notes, will also be entitled
to remove the Indenture Trustee and appoint a successor. Any resignation or
removal of the Indenture Trustee and appointment of a successor trustee does not
become effective until acceptance of the appointment by the successor trustee.
Book-entry Registration
DTC is a limited purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered under Section 17A of the Securities Exchange Act of 1934.
DTC was created to hold securities for its participating
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organizations ("Participants") and to facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to the DTC system also is available to others,
including banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Owners of beneficial interest in Series 2000-1 Notes sold under this
prospectus ("Note Owners") that are not Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of or interests in
Series 2000-1 Notes generally may do so only through Participants and Indirect
Participants. In addition, Note Owners will receive all distributions of
principal and interest through Participants. Under a book-entry format, Note
Owners may experience some delay in their receipt of payments since the payments
will be forwarded by the Indenture Trustee to Cede, as nominee for DTC. DTC
will forward the payments to Participants, which thereafter will forward them to
Indirect Participants or Note Owners. It is anticipated that the only "Series
2000-1 Noteholder" of record will be Cede, as nominee of DTC. Note Owners will
not be recognized by the Indenture Trustee as Series 2000-1 Noteholders, as the
term is used in the Indenture, and Note Owners will be permitted to exercise the
rights of Series 2000-1 Noteholders only indirectly through DTC and its
Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of Series 2000-1
Notes among Participants on whose behalf it acts with respect to the Series
2000-1 Notes and to receive and transmit payments of principal of, and interest
on, the Series 2000-1 Notes. Participants and Indirect Participants with which
Note Owners have accounts with respect to the Series 2000-1 Notes similarly are
required to make book-entry transfers and receive and transmit the payments on
behalf of their respective Note Owners. Accordingly, although Note Owners will
not possess Series 2000-1 Notes, these rules provide a mechanism by which Note
Owners will receive payments and will be able to transfer their interests in
Series 2000-1 Notes.
Because DTC can only act on behalf of Participants, who in turn act on behalf
of Indirect Participants and some banks, the ability of a holder to pledge
Series 2000-1 Notes to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to the Series 2000-1 Notes, may be
limited due to the lack of a physical certificate for the Series 2000-1 Notes.
DTC has advised the Transferor that it will take any action permitted to be
taken by a Series 2000-1 Noteholder under the Indenture or other Related
Document only at the direction of one or more Participants to whose accounts
with DTC the Series 2000-1 Notes are credited. DTC may take conflicting actions
with respect to other Series 2000-1 Noteholders to the extent that the actions
are taken on behalf of Participants whose holdings include Series 2000-1 Notes.
In addition to holding Series 2000-1 Notes through Participants or Indirect
Participants of DTC in the United States as described in the preceding
paragraphs of "--Book-entry
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Registration," holders of Series 2000-1 Notes may hold their Series 2000-1 Notes
through Clearstream Luxembourg or Euroclear in Europe if they are participants
of the systems, or indirectly through organizations which are participants in
the systems.
Clearstream Luxembourg and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Clearstream
Luxembourg's and Euroclear's names on the books of their respective depositories
which in turn will hold the positions in customers' securities accounts in the
depositories' names on the books of DTC.
Transfers between the Clearstream Participants and the Euroclear Participants
will occur in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly through
DTC, on the one hand, and directly or indirectly through Clearstream
Participants or Euroclear Participants, on the other hand, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing systems by its depositary. Cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in the system in accordance with its rules
and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Clearstream
Participants and Euroclear Participants may not deliver instructions directly to
the depositories.
Because of time-zone differences, credits of securities received in
Clearstream Luxembourg or Euroclear as a result of a transaction with a
Participant will be made during subsequent securities settlement processing and
dated the Business Day following the DTC settlement date. Any credits or any
transactions in the securities settled during securities settlement processing
will be reported to the relevant Euroclear or Clearstream Participants on that
Business Day. Cash received in Clearstream Luxembourg or Euroclear as a result
of sales of securities by or through a Clearstream Participant or a Euroclear
Participant to a Participant will be received with value on the DTC settlement
date but will be available in the relevant Clearstream Luxembourg or Euroclear
cash account only as of the Business Day following settlement in DTC. For
information with respect to tax documentation procedures, see "Material Federal
Income Tax Consequences--Consequences to Holders of the Series 2000-1 Notes--
Foreign Holders".
Clearstream Luxembourg is incorporated under the laws of Luxembourg as a
professional depository. Clearstream Luxembourg holds securities for the
Clearstream Participants and facilitates the clearance and settlement of
securities transactions between Clearstream Participants through electronic
book-entry changes in accounts of Clearstream Participants, thereby eliminating
the need for physical movement of certificates. Transactions may be settled in
Clearstream Luxembourg in any of 28 currencies, including United States dollars.
Clearstream Luxembourg provides to Clearstream Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream Luxembourg interfaces with domestic markets in
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several countries. As a professional depository, Clearstream Luxembourg is
subject to regulation by the Luxembourg Monetary Institute. Clearstream
Participants are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and other organizations and may include the underwriters of the
Series 2000-1 Notes. Indirect access to Clearstream Luxembourg is also available
to others, including as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Clearstream Participant,
either directly or indirectly.
Euroclear was created in 1968 to hold securities for the Euroclear
Participants and to clear and settle transactions between Euroclear Participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 29 currencies, including United States dollars. Euroclear
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described in the third
preceding paragraph. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under
contract with Euro-clear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial relationship
with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System, and is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and the applicable Belgian
law. These terms and conditions govern transfers of securities and cash with
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear Operator acts under these
terms and conditions only on behalf of Euroclear Participants, and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Series 2000-1 Notes held through Clearstream
Luxembourg or Euroclear will be credited to the cash accounts of Clearstream
Participants or Euroclear Participants in accordance with the relevant
system's rules and procedures, to the extent received
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by its depositary. The distributions will be subject to tax reporting in
accordance with relevant United States tax laws and regulations. See "Material
Federal Income Tax Consequences--Consequences to Holders of the Series 2000-1
Notes--Foreign Holders" and "--Backup Withholding". Clearstream Luxembourg or
the Euroclear Operator, as the case may be, will take any other action permitted
to be taken by a Series 2000-1 Noteholder under the Indenture or other Related
Document on behalf of a Clearstream Participant or Euroclear Participant only in
accordance with its relevant rules and procedures and subject to its
depositary's ability to effect the actions on its behalf through DTC.
Although DTC, Clearstream Luxembourg and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of Series 2000-1 Notes
among participants of DTC, Clearstream and Euroclear, they are under no
obligation to perform or continue to perform the procedures and the procedures
may be discontinued at any time.
Except as required by law, neither the Administrator, the Owner Trustee nor
the Indenture Trustee will have any liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of the
Series 2000-1 Notes held by Cede, as nominee for DTC, by Clearstream or by
Euroclear in Europe, or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.
Definitive Notes
Series 2000-1 Notes generally will be issued in Definitive Notes to Series
2000-1 Noteholders or their nominees, rather than to the Depository or its
nominee, only if
. the Administrator advises the Indenture Trustee in writing that the
Depository is no longer willing or able to discharge properly its
responsibilities with respect to the Series 2000-1 Notes, and the Trust is
unable to locate a qualified successor,
. the Administrator, at its option, elects to terminate the book-entry
system through the Depository, or
. after the occurrence of an Event of Default or a Servicing Default, Note
Owners representing beneficial interests aggregating at least a majority
of the outstanding principal amount of the Series 2000-1 Notes advise the
appropriate trustee through the Depository in writing that the
continuation of a book-entry system through the Depository (or a successor
thereto) is no longer in the best interest of the Note Owners.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Depository will notify the Note Owners and the Indenture Trustee
of the occurrence of the event and of the availability of Definitive Notes.
Upon surrender by the Depository of the definitive certificates representing the
Series 2000-1 Notes and receipt of instructions for re-registration,
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the Indenture Trustee will reissue the related Series 2000-1 Notes as Definitive
Notes to holders thereof.
Payments of principal of, and interest on, the Definitive Notes will
thereafter be made in accordance with the procedures set forth in the Indenture
directly to holders of Definitive Notes in whose names the Definitive Notes were
registered at the close of business on the last day of the preceding month. The
payments will be made by check mailed to the address of the holder as it appears
on the register maintained by the Indenture Trustee. The final payment on any
Definitive Note, however, will be made only upon presentation and surrender of
the Definitive Note at the office or agency specified in the notice of final
payment to the holders thereof.
Definitive Notes will be transferable and exchangeable at the offices of the
appropriate trustee or of a registrar named in a notice delivered to holders of
Definitive Notes. No service charge will be imposed for any registration of
transfer or exchange, but the appropriate trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
The Transfer and Servicing Agreements
The following summary describes material terms of:
. the Receivables Purchase Agreement under which the Transferor will
purchase Receivables from VCI,
. the Trust Sale and Servicing Agreement under which the Trust will acquire
those Receivables from the Transferor and the Servicer will agree to
service the Receivables,
. the Trust Agreement under which the Trust will be created; and
. the Administration Agreement under which the Administrator will undertake
specified administrative duties for the Trust and some of the duties of
the Trust under the Indenture.
Collectively, these four agreements are referred to as the "Transfer and
Servicing Agreements".
Forms of the Transfer and Servicing Agreements have been filed as exhibits to
the registration statement of which this prospectus forms a part. The
Transferor will provide a copy of the Transfer and Servicing Agreements (without
exhibits) upon request of a Series 2000-1 Noteholder. Although material terms
of the Transfer and Servicing Agreements have been summarized in this section of
this prospectus, this summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all of the provisions of the
Transfer and Servicing Agreements. Where particular provisions or terms used in
the Transfer and
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Servicing Agreements are referred to, the actual provisions are incorporated by
reference as part of the summary.
Receivables Purchase Agreement
Sale of Receivables. Under the Receivables Purchase Agreement, VCI sells and
transfers to the Transferor the Receivables and related Collateral Security. As
described herein, under the Trust Sale and Servicing Agreement, the Transferor
transfers to the Trust all of its interest in and to the Receivables Purchase
Agreement. See "The Trust--General." All new Receivables arising under the
Accounts during the term of the Trust will be sold to the Transferor and
transferred by the Transferor to the Trust. Accordingly, the aggregate amount
of Receivables in the Trust will fluctuate from day to day as new Receivables
are generated and as existing Receivables are collected, charged off as
uncollectible or otherwise adjusted.
In connection with its sale of Receivables to the Transferor, VCI indicates
in its computer files that the Receivables have been sold to the Transferor and
that the Receivables have been transferred by the Transferor to the Trust. In
addition, VCI will deliver to the Transferor a list specifying all of the
Receivables. The records and agreements relating to the Accounts and
Receivables will not be segregated by VCI from other documents and agreements
relating to other accounts and receivables and will not be stamped or marked to
reflect the sale or transfer of the Receivables to the Seller. However, the
computer records of VCI will be marked to evidence the sale or transfer. VCI
will file UCC financing statements with respect to the Receivables meeting the
requirements of Michigan state law. See "Risk Factors -Receivables May Be
Uncollectible Due to Superior Interests" and "Material Legal Aspects of the
Receivables-Transfer of Receivables".
Representations and Warranties. VCI has represented to the Transferor that
as of the Closing Date it was duly incorporated and in good standing and that it
has the authority to consummate the transactions contemplated by the Receivables
Purchase Agreement.
VCI also represents to the Transferor regarding the Receivables that:
. each Receivable and all Collateral Security existing on the Closing Date
or, in the case of Additional Accounts, on the applicable Addition Date,
and on each Transfer Date, has been conveyed to the Transfer Date free and
clear of any lien (other than the lien held by VCI);
. with respect to each Receivables and all Collateral Security existing on
the Closing Date or, in the case of Additional Accounts, on the applicable
Addition Date, and on each Transfer Date, all consents, licenses,
approvals or authorizations of or registrations or declarations with any
governmental authority required to be obtained, effected or given by VCI
in connection with the conveyance of the Receivable or Collateral Security
to the Transferor have been duly obtained, effected or given and are in
full force and effect;
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. on the Initial Cut-off Date and the Closing Date, each Initial Account is
an Eligible Account or in the case of an Additional Account, on the
applicable Additional Cut-Off Date and Addition Date, each Account or
Additional Account is an Eligible Account; and
. on the Closing Date, in the case of the Initial Accounts, and, in the
case of the Additional Accounts, on the applicable Additional Cut-Off
Date, and on each Transfer Date, each Receivable conveyed to the
Transferor on the Transfer Date is an Eligible Receivable, except that an
Ineligible Receivable may be conveyed to the Transferor under the
Receivables Purchase Agreement, if on the Closing Date, Additional Cut-Off
Date or Transfer Date, as the case may be, the Account in which it has
arisen is an Eligible Account.
In the event of a breach of representation described in the preceding
paragraph results in a Disqualified Receivable and the requirement that the
Transferor accept retransfer of that Disqualified Receivable under the Trust
Sale and Servicing Agreement, then VCI will repurchase that Disqualified
Receivable from the Transferor on the date of the retransfer. The purchase
price for the Disqualified Receivables will be the face amount of the
Disqualified Receivable, of which at least the amount of any cash deposit
required to be made by the Transferor under the Trust Sale and Servicing
Agreement for the retransfer of the Disqualified Receivables will be paid in
cash.
VCI also represents to the Transferor that as of the:
. the execution and delivery of the Receivables Purchase Agreement, the
performance of the transactions contemplated therein and the fulfillment
of the terms thereof, will not conflict with, result in any breach of any
of the material terms and provisions of, or constitute (with or without
notice or lapse of time or both) a material default under, any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which
VCI is a party or by which it or its properties are bound,
. the execution and delivery of the Receivables Purchase Agreement, the
performance of the transactions contemplated by the Receivables Purchase
Agreement and the fulfillment of the terms thereof applicable to VCI, will
not conflict with or violate any material requirements of law applicable
to VCI,
. there are no proceedings or, to the best knowledge of VCI,
investigations, pending or threatened against VCI, before any governmental
authority asserting the invalidity of the Receivables Purchase Agreement
or seeking (a) to prevent the consummation of the transactions under the
Receivables Purchase Agreement, (b) an adverse ruling concerning the
Receivables, (c) an adverse ruling concerning the enforceability of the
Receivables Purchase Agreement or (d) an adverse ruling
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concerning the federal income tax attributes of the Trust, other than
those disclosed in the Receivables Purchase Agreement,
. all appraisals, authorizations, consents, orders, approvals or other
actions of any person or of any governmental body or official required in
connection with the execution and delivery of the Receivables Purchase
Agreement, the performance of the transactions contemplated therein, and
the fulfillment of the terms thereof, have been obtained,
. the Receivables Purchase Agreement constitutes a legal, valid and binding
obligation of VCI,
. the schedule of various Accounts attached to the Receivables Purchase
Agreement is an accurate and complete listing in all material respects of
all Accounts as of specified dates, and
. the Receivables Purchase Agreement or, in the case of Additional
Accounts, the related assignment, constitutes a valid sale, transfer and
assignment to the Transferor of all right, title and interest of VCI in
the Receivables and the Collateral Security and the proceeds thereof and,
upon the filing of uniform commercial code financing statements in the
offices required by law, the Transferor will have a first priority
perfected ownership interest in the Receivables, the Collateral Security
and the proceeds thereof.
If the breach of any of the representations and warranties set forth above
results in the obligation of the Transferor to redeem the Notes under to the
Trust Sale and Servicing Agreement and the Indenture, VCI will repurchase the
Receivables and the Collateral Security and pay to the Transferor an amount of
cash equal to the amount the Transferor is required to deposit into the Series
2000-1 Principal Funding Account.
Covenants of VCI. In the Receivables Purchase Agreement, VCI agrees to
perform its obligations under the agreements relating to the Receivables and the
Accounts in conformity with its then-current policies and procedures (as the
policies and procedures may be modified from time to time as permitted under the
Trust Sale and Servicing Agreement).
VCI also agrees that, except for the transactions occurring under the
Transfer and Servicing Agreements, VCI will not sell, pledge, assign or transfer
any interest in the Receivables to any other person. VCI will also covenant to
defend and indemnify the Transferor for any loss, liability or expense incurred
by the Transferor in connection with a breach by VCI of any of its
representations, warranties or covenants contained in the Receivables Purchase
Agreement.
VCI will agree not to realize upon any security interest in a Vehicle or the
Non-Vehicle Collateral Security that it may have in respect of advances or loans
to Dealers other than the
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related Receivable until the Trust has fully realized on its security interest
in the Vehicle or Non-Vehicle Collateral Security.
In addition, VCI will expressly acknowledge and consent to the Transferor's
assignment of its rights relating to the Receivables under the Receivables
Purchase Agreement to the Trustee.
Termination. The Receivables Purchase Agreement will terminate immediately
after the Trust terminates. In addition, if VCI becomes party to any bankruptcy
or similar proceeding (other than as a claimant), VCI will immediately cease to
sell or transfer Receivables to the Transferor and will promptly give notice of
that event to the Transferor, the Trust and the Indenture Trustee. VCI may,
however, resume sales upon satisfying specified conditions.
Conveyance of Receivables and Collateral Security
On the Closing Date, the Transferor will transfer and assign to the Trust all
of its right, title and interest in and to the Receivables and the related
Collateral Security as of the Cut-Off Date, all Receivables thereafter created
in the Accounts and its interests in the related Collateral Security and the
Receivables Purchase Agreement, and the proceeds of all of the foregoing.
The Transferor is required to provide to the Trust and to the Indenture
Trustee a true and complete list showing for each Account, as of the Cut-Off
Date or the applicable Additional Cut-Off Date,
. its account number, and
. the outstanding amount of Principal Receivables in the Account.
Representations and Warranties by the Transferor
The Transferor represents to the Trust relating to the Accounts, the
Receivables and the Collateral Security that:
. for each Account, including each Additional Account, as of each of the
applicable Representation Dates, the Account or Additional Account was an
Eligible Account,
. for each Receivable in an Account, including each Receivable in an
Additional Account, the Receivable is an Eligible Receivable or, if the
Receivable is not an Eligible Receivable, the Receivable is conveyed to
the Trust as described below under "--Ineligible Receivables",
. each Receivable and all Collateral Security conveyed to the Trust on the
Transfer Date, and all of the Transferor's right, title and interest in
the Receivables Purchase Agreement, have been conveyed to the Trust free
and clear of any liens,
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. all appropriate consents and governmental authorizations required to be
obtained by the Transferor in connection with the conveyance of each
Receivable or Collateral Security have been duly obtained, and
. in the Transferor's reasonable belief, the procedures used to select the
Accounts were not adverse to the interests of the Noteholders or the
Enhancement Providers.
If the Transferor breaches any representation described in the preceding
paragraph with respect to any Receivable and the breach remains uncured for 30
days, or any longer period as may be agreed to by the Indenture Trustee, after
the earlier to occur of the discovery of the breach by the Transferor or the
Servicer or receipt of written notice of the breach by the Transferor or the
Servicer, if the breach has a materially adverse effect on the interest of
Noteholders in the Receivable (a "Disqualified Receivable"), the Disqualified
Receivable will be reassigned to the Transferor on the terms and conditions set
forth in the immediately succeeding paragraph. If, the breach should relate to
an Account and have a materially adverse effect on the interest of Noteholders
in the Receivables in the Account, all of the Receivables in the Account will be
Disqualified Receivables and will be reassigned to the Transferor on the terms
and conditions set forth in the immediately succeeding paragraph, and the
Account will no longer be included as an Account.
Each Disqualified Receivable will be reassigned to the Transferor on or
before the end of the Collection Period in which the reassignment obligation
arises. The Transferor will direct the Servicer to deduct the principal balance
of the Disqualified Receivable from the Pool Balance. If the deduction would
cause the Residual Participation Amount to be less than the Trust Available
Subordinated Amount on the preceding Determination Date (after giving effect to
the allocations, distributions, withdrawals and deposits to be made on the
Payment Date following the preceding Determination Date), on the date on which
the reassignment is to occur the Transferor will make a deposit into the
Collection Account in immediately available funds in an amount equal to the
amount by which the Residual Participation Amount would be less than the Trust
Available Subordinated Amount (the amount of the deposit being referred to
herein as a "Transfer Deposit Amount"). If, however, the Indenture Trustee does
not deposit if the Transfer Deposit Amount as described in the immediately
preceding sentence, the principal balance of the related Receivables will be
deducted from the Pool Balance only to the extent the Residual Participation
Amount is not reduced below the Trust Available Subordinated Amount. Any
principal balance not deducted as described in the preceding sentence will not
be reassigned and will remain part of the Trust. Upon reassignment of any
Receivable, but only after payment by the Transferor of any Transferor Deposit
Amount, the Trust will automatically transfer, without recourse, representation
or warranty, all of the right, title and interest of the Trust in and to the
Receivable, all Collateral Security and all monies due or to become due on the
Receivable and all proceeds of the Receivable. The reassignment of the
Receivable to the Transferor and the payment of any related Transfer Deposit
Amount will be the sole remedy for any breach of the representations and
warranties described in the preceding paragraph available to Noteholders or the
Indenture Trustee on behalf of Noteholders.
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The Transferor will also represent to the Trust, among other
representations, that as of the Closing Date:
. it is duly organized and in good standing, it has the authority to
consummate the transactions contemplated by the Trust Sale and
Servicing Agreement and the Trust Sale and Servicing Agreement
constitutes a valid, binding and enforceable agreement of the
Transferor, and
. the Trust Sale and Servicing Agreement or, in the case of Additional
Accounts, the related assignment constitutes a valid sale, transfer
and assignment to the Trust of all right, title and interest of the
Transferor in the Receivables and the Collateral Security and the
proceeds thereof and, upon the filing of uniform commercial code
financing statements in the offices required by law, the Transferor
will have a first priority perfected ownership interest in
Receivables, the Collateral Security and the proceeds thereof [(other
than the liens in favor VCI contemplated by the intercreditor
provisions of the Receivables Purchase Agreement).]
In the event that the breach of any representation made by the Transferor
has a materially adverse effect on the Noteholders, and the holders of a
majority of the aggregate unpaid principal amount of the Notes (including the
Series 2000-1 Noteholders) have exercised their right to have the Notes redeemed
under the Indenture, the Transferor will deposit in the Principal Funding
Account for each Series an amount equal to the sum of the amounts specified for
each outstanding Series in the related Series Supplement. The obligation of the
Transferor to make the deposit into the Principal Funding Accounts for each
Series will constitute the sole remedy respecting a breach of the
representations and warranties available to Noteholders or the Indenture Trustee
on behalf of the Noteholders.
It is not required or anticipated that the Trust or the Indenture Trustee
will make any initial or periodic general examination of the Receivables or any
records relating to the Receivables for the purpose of establishing the presence
or absence of defects, compliance with representations and warranties of the
Transferor or for any other purpose. In addition, it is not anticipated or
required that the Trust or the Indenture Trustee will make any initial or
periodic general examination of the Servicer for the purpose of establishing the
compliance by the Servicer with its representations or warranties, the
observation of its obligations under the Trust Sale and Servicing Agreement or
for any other purpose.
Ineligible Receivables
For the purpose of facilitating the administration and reporting
requirements of the Servicer under the Trust Sale and Servicing Agreement, all
Ineligible Receivables will be transferred to the Trust.
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In addition, the Incremental Subordinated Amount will be adjusted on each
Determination Date to reflect:
. the Overconcentration Amount and the aggregate amount of Ineligible
Receivables on the Determination Date, and
. the aggregate amount of Ineligible Receivables included in the Trust
on the last day of the preceding Collection Period.
Addition of Accounts
Subject to the conditions described in the next paragraph below, the
Transferor has the right to designate Additional Accounts. In addition, the
Transferor is required to add the Receivables of Additional Accounts if, on the
last day of any Collection Period, the Pool Balance on the Reset Date is less
than the Required Participation Amount as of the following Payment Date (after
giving effect to the allocations, distributions, withdrawals and deposits to be
made on that Payment Date). In that case, unless the failure was solely the
result of the unavailability of a sufficient amount of Eligible Receivables, the
Transferor will, within ten business days following the end of the Collection
Period, designate and transfer to the Trust the Receivables (and the Collateral
Security) of Additional Accounts in a sufficient amount so that, after giving
effect to the addition, the Pool Balance as of the close of business on the
Addition Date is at least equal to the Required Participation Amount as of the
following Payment Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on that Payment Date).
Any designation of Additional Accounts will be subject to the following
conditions, among others:
. the Transferor must give timely notice of the addition of the
Additional Accounts to the Owner Trustee, the Indenture Trustee, any
agent, the Rating Agencies and any Enhancement Providers;
. each Additional Account must be an Eligible Account;
. the Transferor must deliver to the Owner Trustee a duly executed
written assignment and must deliver to the Owner Trustee and the
Indenture Trustee the computer file or microfiche or written list
required to be delivered under the Trust Sale and Servicing
Agreement;
. the addition of the Receivables arising in the Additional Accounts
must not result in the occurrence of an Early Amortization Event or
Investment Event for any Series of Notes;
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. the Transferor must not use selection procedures in selecting
Additional Accounts that it reasonably believes is adverse to the
interests of the Noteholders or any Enhancement Provider; and
. the Transferor must, to the extent required, deposit all Collections
with respect to Additional Accounts since the Additional Cut-Off Date
in the Collection Account.
The Transferor also may voluntarily designate Additional Accounts to be
included as Accounts and transfer to the Trust the Receivables and the
Collateral Security of those Additional Accounts, subject only to the
limitations described in this paragraph. (Additional Accounts designated in
accordance with the provisions described in this paragraph are referred to
herein as "Automatic Additional Accounts".) Unless each Rating Agency otherwise
consents, the number of Automatic Additional Accounts designated for any
calendar quarter must not exceed 10% of the number of Accounts as of the first
day of the calendar quarter, and the number of Automatic Additional Accounts
designated during any calendar year must not exceed 20% of the number of
Accounts as of the first day of that calendar year.
Each Additional Account (including each Automatic Additional Account) must
be an Eligible Account at the time of its inclusion as an Account. However,
Additional Accounts may not have been a part of the initial U.S. Wholesale
Portfolio and may not be of the same credit quality as the initial Accounts.
Additional Accounts also may have been originated by VCI at a later date using
credit criteria different from the credit criteria which were applied to the
initial Accounts, or may have been acquired by VCI from another wholesale lender
that had different credit criteria. In addition, the Transferor will be
permitted to designate as Additional Accounts which contain receivables that
have been sold or pledged to third parties; however, following the applicable
Additional Cut-Off Date, no Receivables thereafter arising in any Additional
Accounts will be sold or pledged to any third parties.
Removal of Accounts
The Transferor will have the right at any time to remove Eligible Accounts
from the Trust. To remove any Eligible Account, the Transferor (or the Servicer
on its behalf) must, among other things:
(a) not less than five business days prior to the Removal Commencement
Date, furnish to the Owner Trustee, Indenture Trustee, any agent, any
Enhancement Provider and the Rating Agencies a Removal Notice
specifying the Removal Commencement Date on which removal of one or
more Accounts will commence and the Designated Accounts to be removed
from the Trust,
(b) determine on the Removal Commencement Date the Designated Balances of
each Designated Account and deliver to the Trust on the Removal
Commencement Date a computer file or microfiche or written list
containing a true and complete list of the Designated Accounts
specifying for each Designated Account its
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account number and the aggregate amount of Receivables outstanding in
the Designated Account,
(c) from and after the Removal Commencement Date, cease to transfer to the
Trust any and all Receivables arising in the Designated Accounts,
(d) from and after the Removal Commencement Date, allocate all Principal
Collections in respect of each Designated Account, first to the oldest
outstanding principal balance of the Designated Account, until the
Determination Date on which the Designated Balance in the Designated
Account is reduced to zero,
(e) on each business day from and after the Removal Commencement Date to
and until the related Removal Date, allocate:
. to the Trust (to be further allocated under the Trust Sale and
Servicing Agreement), Non-Principal Collections in respect of
each Designated Account for Receivables in all Designated
Accounts transferred to the Trust, and
. to the Transferor the remainder of the Non-Principal Collections
in the Designated Accounts,
(f) represent and warrant that the removal of the Eligible Account on any
Removal Date will not, in the reasonable belief of the Transferor,
cause an Early Amortization Event or Investment Event to occur for any
Series of Notes,
(g) represent and warrant that no selection procedures believed by the
Transferor to be materially adverse to the interests of the
Noteholders were utilized in selecting the Designated Accounts,
(h) represent and warrant that the removal will not result in a reduction
or withdrawal of the rating of any outstanding Series or class of
Notes by any applicable Rating Agency, and
(i) on or before the related Removal Date, deliver to the Indenture
Trustee and any Enhancement Provider an officers' certificate
confirming the items set forth in clauses (f), (g) and (h) above and
confirming that the Transferor reasonably believes that the removal of
the Removed Accounts will not result in the occurrence of an Early
Amortization Event or Investment Event.
No Designated Accounts will be removed if the removal will result in a reduction
or withdrawal of the rating of any outstanding Series or class of Notes.
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On the fifth business day after any date on which an Account becomes an
Ineligible Account (which will be the Removal Commencement Date for the
Account), the Transferor will commence the removal of the Receivables of the
Ineligible Account from the Trust by taking each of the actions described above
for the removal of Eligible Accounts.
Upon satisfaction of the described in the second preceding paragraph above,
on the Removal Date for the Designated Account, the Transferor will cease the
allocation of collections of Receivables from the Designated Account and the
Designated Account will be removed from the Trust for all purposes (a "Removed
Account").
In addition to the removal rights described in the immediately preceding
paragraphs, the Transferor will have the right at any time to remove Ineligible
Accounts from the Trust and repurchase the Receivables in those Ineligible
Accounts. To remove Ineligible Accounts and repurchase Receivables in the
Ineligible Accounts, the Transferor (or the Servicer on its behalf) must, among
other things:
(1) not less than five business days prior to the Removal and Repurchase
Date, furnish to the Trust and the Owner Trustee, the Indenture
Trustee, any agent, each Enhancement Provider and the Rating Agencies
a Removal Notice specifying the Designated Accounts which are to be
removed, the Designated Receivables which are to be repurchased, and
the Removal and Repurchase Date on which the removal of the Designated
Accounts and the purchase of the Designated Receivables will
occur,
(2) deliver to the Trust on the Removal and Repurchase Date a computer
file or microfiche or written list containing a complete list of the
Removed Accounts specifying for each Removed Account its account
number and the aggregate amount of Receivables outstanding in the
Removed Account,
(3) deposit into the Collection Account on the Removal and Repurchase Date
funds in an amount equal to the Repurchased Receivables Purchase Price
on the Removal and Repurchase Date,
(4) represent and warrant that the removal of any Ineligible Account and
the repurchase of the Receivables then existing in the Ineligible
Account on any Removal and Repurchase Date will not, in the reasonable
belief of the Transferor, cause an Early Amortization Event or
Investment Event to occur for any Series of Notes or cause the Pool
Balance to be less than the Required Participation Amount,
(5) represent and warrant that no selection procedures believed by the
Transferor to be materially adverse to the interests of the
Noteholders were utilized in selecting the Designated Accounts,
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(6) represent and warrant as of the Removal and Repurchase Date that the
list of Removed Accounts delivered as described in clause (2) above,
as of the Removal and Repurchase Date, is true and complete in all
material respects,
(7) represent and warrant that the removal and repurchase will not result
in a reduction or withdrawal of the rating of any outstanding Series
or class of Notes by the applicable Rating Agencies, and
(8) deliver to the Trust, the Indenture Trustee and any Enhancement
Providers an officers' certificate confirming the items set forth in
clauses (4) through (7) above and confirming that the Transferor
reasonably believes that the removal of the Removed Accounts and the
repurchase of the Repurchased Receivables will not result in the
occurrence of an Early Amortization Event or Investment Event for any
Series of Notes.
Upon satisfaction of these conditions, the Designated Account will be
removed and the Designated Receivables ("Repurchased Receivables") will
repurchased from the Trust on the Removal and Repurchase Date.
On each Payment Date, any amounts on deposit in the Collection Account
resulting from payment by the Transferor of any Repurchased Receivables Purchase
Price will be treated as Collections.
The Transferor will also have the right to remove Ineligible Accounts and
reassign the then existing Receivables in the Ineligible Accounts ("Automatic
Removed Accounts"), upon satisfaction by the Transferor (or the Servicer on its
behalf) of the following conditions:
(a) on or before the fifth business day immediately preceding the date
upon which Accounts are to be removed, the Transferor must furnish to
the Owner Trustee, the Indenture Trustee, any agent, any Enhancement
Providers and the Rating Agencies a Removal Notice specifying the
Automatic Removal Date on which the removal of the Automatic Removed
Accounts and reassignment of the Receivables therein is to occur;
(b) on or prior to the date that is five business days after the Automatic
Removal Date, the Transferor must have delivered to the Trust and the
Indenture Trustee a computer file or microfiche or written list
containing a complete list of the Automatic Removed Accounts
specifying for each Automatic Removed Account, as of the removal
notice date, its account number and the aggregate amount of
Receivables outstanding in the Automatic Removed Account;
(c) the Transferor must have represented and warranted as of each
Automatic Removal Date that the list of Automatic Removed Accounts
delivered as
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described in clause (b) directly above, as of the Automatic Removal
Date, is true and complete in all material respects; and
(d) if any of the Accounts to be removed is not liquidated and does not
have a zero balance:
. the Transferor must deliver to the Indenture Trustee
confirmation from each Rating Agency that the removal will not
result in a reduction or withdrawal of the Ratings Agency's
rating of any outstanding Series or class of Notes (including the
Series 2000-1 Notes); and
. the Transferor must have delivered to the Owner Trustee,
Indenture Trustee, any agent and any Enhancement Providers an
officers' certificate, dated the Automatic Removal Date, to the
effect that the Transferor reasonably believes that the removal
will not cause an Early Amortization Event or Investment Event to
occur for any Series of Notes.
Upon satisfaction of the conditions described in the preceding paragraph,
on the Automatic Removal Date, the Receivables arising in the Automatic Removed
Accounts will be removed from the Trust.
The Residual Interest
The Transfer and Servicing Agreements permit the Transferor to transfer a
portion of its Residual Interest to another person upon the execution and
delivery of a supplement to the Trust Agreement (which supplement must comply
with the requirements of the amendment section of the Trust Agreement if it
amends any of the terms of the Trust Agreement), if:
(a) the Transferor has delivered to the Owner Trustee, the Indenture
Trustee, the Rating Agencies and any Enhancement Provider a Tax
Opinion of regarding the transfer, and
(b) the Transferor has given the Rating Agencies notice five days prior to
the transfer and has delivered to the Owner Trustee and the Indenture
Trustee written confirmation from the applicable Rating Agencies that
the transfer will not result in a reduction or withdrawal of the
rating of any outstanding Series or class of Notes (including the
Series 2000-1 Notes).
Any subsequent transfer or assignment of any portion of the Residual Interest is
also subject to the conditions described in clauses (a) and (b) in the preceding
sentence.
Adjustment Payments and Rebate Payments
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If the Servicer adjusts downward the amount of any Principal Receivable
because of a rebate, refund, credit adjustment or billing error to a Dealer, or
because the Principal Receivable was created for inventory that was refused or
returned by a Dealer, then, the Residual Participation Amount and the Pool
Balance will automatically be reduced by the amount of the adjustment.
Furthermore, to the extent that the reduction would reduce the Residual
Participation Amount below the Trust Available Subordinated Amount for the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the Payment
Date immediately following the preceding Determination Date), the Transferor
will pay an amount equal to the deficiency (up to the amount of the adjustment)
into the Collection Account within five business days after the day on which the
adjustment or reduction occurs (each payment, an "Adjustment Payment").
If the Servicer adjusts downward the amount of interest otherwise payable
on any Receivable for any Collection Period as a result of any interest rebate
program, the Servicer will deposit into the Collection Account on or prior to
the Payment Date related to the Collection Period an amount equal to the rebate
(the payment, a "Rebate Payment").
Termination; Fully Funded Date
Termination. The Indenture will terminate on the earlier to occur of:
. the day following the Payment Date on which the aggregate Invested
Amounts for all Series of Notes is zero, and
. the date on which proceeds from the sale, disposal or other
liquidation of the Receivables are distributed to the Noteholders
following any violation by the Transferor of its covenant not to
create any lien on any Receivable as provided in the Trust Sale and
Servicing Agreement and as described above under "The Series 2000-1
Notes-- Early Amortization Events".
Upon termination of the Indenture, all right, title and interest in the
Receivables and other funds of the Trust (other than amounts in the Collection
Account, any Principal Funding Account, Interest Funding Account, Excess Funding
Account or other account for the final distribution of principal and interest to
Noteholders) will be conveyed and transferred to the Trust.
Fully Funded Date. Following the occurrence of the Fully Funded Date for
any Series of Notes, including the Series 2000-1 Notes, Noteholders of that
Series will no longer have any interest in the Receivables and all the
representations and covenants of the Transferor and the Servicer relating to the
Receivables, as well as other specified provisions of the Indenture, and all
remedies for breaches thereof, will no longer accrue to the benefit of the
Noteholders of that Series, in each case, unless the Revolving Period for the
Series recommences as provided in the related Series Supplement. The
representations, covenants and other provisions the benefit of which the
Noteholders of that Series will no longer enjoy will include the conditions to
the
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[transfer of any portion of the Residual Interest described under "The Transfer
and Servicing Agreements --The Residual Interest",] the conditions to the
issuance of a new Series of Notes described under "The Series 2000-1 Notes--New
Issuances", the representations described under "The Transfer and Servicing
Agreements--Representations and Warranties by the Transferor" to the extent they
relate to the Receivables and the Collateral Security, the limitations on
additions and removals of Accounts described under "The Transfer and Servicing
Agreements--Addition of Accounts" and "--Removal of Accounts", respectively, and
the obligations of the Servicer to service the Receivables described under "The
Transfer and Servicing Agreements--Collection and Other Servicing Procedures"
and "--Servicer Covenants". In addition, upon the occurrence of the Fully Funded
Date for any Series of Notes, including the Series 2000-1 Notes, no Non-
Principal Collections, Principal Collections, Defaulted Receivables or
Miscellaneous Payments will be allocated to that Series, unless the Revolving
Period with respect thereto recommences as described above in "The Series 2000-1
Notes--Early Amortization Events."
Indemnification
The Trust Sale and Servicing Agreement provides that the Servicer will
indemnify the Trust, for the benefit of the Residual Interestholder, the
Noteholders, any Enhancement Providers, the Owners Trustee and the Indenture
Trustee, and their respective officers, directors, employees and agents, from
and against any taxes that may at any time be asserted against any of them with
respect to the transactions contemplated under the Trust Sale and Servicing
Agreement. Taxes included in this right to indemnification include, among
others, any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes, and will also include the right to
indemnification for any cost and expenses in defending against the taxes. The
right to indemnification, however, will not apply to any taxes asserted with
respect to, or arising out of:
. the sale of any Eligible Receivables to the Trust,
. the issuance and original sale of any Notes,
. ownership or sale of any Eligible Receivables in the Accounts, or of
the Notes or the Residual Interest,
. distributions or the receipt of payment on the Notes and Residual
Interest, or
. any fees or other compensation payable to anyone.
The Trust Sale and Servicing Agreement further provides that the Servicer
will indemnify the Trust, for the benefit of the Residual Interestholder, the
Noteholders, any Enhancement Providers, the Owner Trustee and the Indenture
Trustee, and their respective officers, directors, employees and agents, from
and against any loss, liability, expense, damage or injury suffered or sustained
by reason of any acts, omissions or alleged acts or omissions arising out of
activities of
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the Servicer under the Trust Sale and Servicing Agreement. The Servicer,
however, will not be required to indemnify anyone:
. if the acts, omissions or alleged acts or omissions constitute fraud,
gross negligence, breach of fiduciary duty or wilful misconduct by the
Owner Trustee or the Indenture Trustee, and
. for any liabilities, cost or expense of the Trust with respect to any
action taken by the Owner Trustee at the request of the Residual
Interestholder, or any Noteholders or Enhancement Providers to the
extent the Owner Trustee is fully indemnified by the Residual
Interestholder, Noteholders or Enhancement Providers with respect to
the action.
The Trust Sale and Servicing Agreement further provides that the Servicer
will indemnify the Indenture Trustee and the Owner Trustee, and their respective
officers, directors, employees and agents, from and against any loss, liability,
expense, damage or injury arising out of or incurred in connection with:
. in the case of the Indenture Trustee, the Indenture Trustee's
performance of its duties under the Indenture,
. in the case of the Owner Trustee, the Owner Trustee's performance of
its duties under the Trust Agreement, or
. the acceptance, administration or performance by, or action or
inaction of, the Indenture Trustee or the Owner Trustee, as
applicable, of the trusts and duties under the transactions
contemplated by the Trust Sale and Servicing Agreement and related
documents.
The Indenture Trustee and the Owner Trustee, and their respective officers,
directors, employees and agents, will not, however, be entitled to
indemnification to the extent that any cost, expense, loss, claim, damage or
liability:
. is due to the wilful misfeasance, bad faith or negligence (except for
errors in judgment) of the person seeking to be indemnified,
. to the extent otherwise payable to the Indenture Trustee, arises from
the Indenture Trustee's breach of any of its representations or
warranties under the Indenture,
. to the extent otherwise payable to the Owner Trustee, arises from the
Owner Trustee's breach of any of its representations or warranties
under the Trust Agreement, or
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. arises out of or is incurred in connection with the performance by
the Indenture Trustee of the duties of successor Servicer under the
Trust Sale and Servicing Agreement.
The Trust Sale and Servicing Agreement provides that, except as described
in the prior paragraphs above, and except for other specified exceptions,
neither the Transferor, the Servicer nor any of their directors, officers,
employees or agents will be under any liability to the Trust, the Owner Trustee,
the Indenture Trustee, the Noteholders or any other person for taking any
action, or for refraining from taking any action, under the Trust Sale and
Servicing Agreement. However, neither the Transferor, the Servicer nor any of
their directors, officers, employees or agents will be protected against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence of that person in the performance of their duties or
by reason of reckless disregard of their obligations and duties thereunder.
In addition, the Trust Sale and Servicing Agreement provides that the
Servicer is not under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its servicing responsibilities under the Trust
Sale and Servicing Agreement. The Servicer may, in its sole discretion,
undertake any reasonable legal action which it may deem necessary or desirable
for the benefit of the Noteholders with respect to the Trust Sale and Servicing
Agreement and the rights and duties of the parties thereto and the interest of
the Noteholders thereunder.
Collection and Other Servicing Procedures
The Servicer will for service, collect, enforce, and administer the
Receivables under the Trust Sale and Servicing Agreement. The Servicer will
service the Receivables in accordance with its customary and usual servicing
procedures for servicing wholesale receivables comparable to the Receivables
that the Servicer services for its own account and in accordance with its own
servicing guidelines, except where the failure to so act would not materially
and adversely affect the rights of the Trust, the Noteholders or any Enhancement
Provider.
The Servicer covenants that it may only change the terms relating to the
Accounts if, in the Servicer's reasonable judgment:
. no Early Amortization Event or Investment Event will occur for any
Series of Notes (including the Series 2000-1 Notes) as a result of the
change,
. the change is made applicable to the comparable segment of the
portfolio of dealer wholesale financing revolving line of credit
accounts with similar characteristics owned or serviced by the
Servicer and not only to the Accounts, and
. in the case of a reduction in the rate of any finance charges, the
Servicer does not expect any reduction to result in the weighted
average of the reference rates applicable to the finance charges for
any Collection Period being less than the
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weighted average for all Series of the interest rates and Servicing
Fee Rates payable on the Series.
Servicing activities to be performed by the Servicer include collecting and
recording payments, communicating with dealers, investigating payment
delinquencies, evaluating the increase of credit limits, and maintaining
internal records for each Account. The Servicer will perform managerial and
custodial services on behalf of the Trust, which will include providing
reasonable assistance in any inspections of the documents and records relating
to the Accounts and Receivables by the Trust and the Indenture Trustee under the
Trust Sale and Servicing Agreement and Indenture, maintaining the agreements,
documents and files relating to the Accounts and Receivables as custodian for
the Trust and providing related data processing and reporting services for
Noteholders and on behalf of the Trust and the Indenture Trustee.
Servicer Covenants
In the Trust Sale and Servicing Agreement the Servicer covenants that:
. it will duly satisfy all obligations on its part to be fulfilled
under or in connection with the Receivables and the Accounts, will
maintain in effect all qualifications required in order to service the
Receivables and the Accounts and will comply in all material respects
with all requirements of law in connection with servicing the
Receivables and the Accounts, the failure to comply with which would
have a materially adverse effect on the Noteholders or Enhancement
Providers of any outstanding Series;
. it will not permit any rescission or cancellation of a Receivable
except in accordance with its customary practices for servicing dealer
wholesale financing revolving line of credit loans or except as
ordered by a court of competent jurisdiction or other government
authority;
. it will do nothing to impair the rights of the Noteholders or
Enhancement Providers in the Receivables or the Account;
. it will not reschedule, revise or defer payments due on any
Receivable except in accordance with its customary practices for
servicing dealer wholesale financing revolving line of credit loans;
and
. it will not sell, pledge, assign or transfer to any person or grant,
create, incur, assume or suffer to exist any lien on any Receivable
sold or assigned to the Trust other than as contemplated by the
Related Documents.
Under the terms of the Trust Sale and Servicing Agreement, if the
Transferor or the Servicer discovers, or receives written notice, that any
covenant of the Servicer described in the preceding paragraph has not been
complied with in all material respects and the noncompliance
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has not been cured within 30 days thereafter (or any longer period as the Owner
Trustee may agree to) and has a materially adverse effect on the value of any
Receivable, the Servicer will purchase the Receivable or all Receivables in the
Account, as applicable. The purchase will be made on the Determination Date
following the expiration of the 30-day cure period, and the Servicer will be
obligated to deposit into the Collection Account in immediately available funds
the amount of the Receivable plus accrued and unpaid interest thereon. The
amount of the deposit will be deemed a Transfer Deposit Amount. The purchase by
the Servicer constitutes the sole remedy available to the Noteholders if the
covenant or warranty of the Servicer is not satisfied, and the Trust's interest
in any the purchased Receivables will be automatically assigned to the Servicer.
Servicing Compensation and Payment of Expenses
The Servicing Fee will be payable in arrears on each Payment Date on or
before the Trust Termination Date.
The Monthly Servicing Fee for any Series will be payable to the Servicer
solely to the extent amounts are available to pay the Monthly Servicing Fee for
the Series in accordance with the terms of the Trust Sale and Servicing
Agreement. The share of the Monthly Servicing Fee allocable to the Noteholders
of a Series (for each Series, the "Noteholder Monthly Servicing Fee") will equal
one-twelfth of the product of
. the Servicing Fee Rate, and
. the Invested Amount for the Series (as defined in the related Series
Supplement) as of the last day of the Collection Period preceding the
Payment Date.
The remainder of the Monthly Servicing Fee will be paid by the Residual
Interestholder and, in no event, will the Trust or the Noteholders be liable for
the share of the Monthly Servicing Fee to be paid by the Residual
Interestholder.
The Servicer will pay from its servicing compensation specified expenses
incurred in connection with servicing the Accounts and the Receivables,
including the fees and disbursements of the Indenture Trustee, the Owner
Trustee, attorneys and independent accountants and all other fees and expenses
that are not expressly stated in the Trust Sale and Servicing Agreement to be
payable by the Trust, the Residual Interestholder, the Noteholders or the
Enhancement Providers, other than federal, state and local income and franchise
taxes, if any, of the Trust or the Noteholders.
The Servicing Fee Rate for the Series 2000-1 Notes for any Payment Date
will equal 1.0% per annum.
The Servicer may waive its right to receive the Monthly Servicing Fee for
any Series on any Payment Date, so long as it believes that sufficient Non-
Principal Collections will be
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available on a future Payment Date to pay the Monthly Servicing Fee that has
been waived. On any Payment Date on which the Servicer waives the Monthly
Servicing Fee, the Monthly Servicing Fee for that Payment Date will be deemed to
be zero.
Material Matters Regarding the Servicer
The Servicer may not resign from its obligations and duties under the Trust
Sale and Servicing Agreement, except upon determination that the duties are no
longer permissible under applicable law, and there is no reasonable action that
the Servicer could take to make the performance of its duties under the Trust
Sale and Servicing Fee permissible under applicable law. The Servicer may also
resign if each Rating Agency shall have stated in writing that the resignation
will not result in the reduction or withdrawal of the rating of all Notes rated
by the Rating Agency. No resignation of the Servicer will become effective
until the Indenture Trustee or a successor to the Servicer has assumed the
Servicer's responsibilities and obligations under the Trust Sale and Servicing
Agreement. If the Indenture Trustee is unable to appoint a successor to the
Servicer within 120 days of the date on which the Servicer determines that the
duties of the Servicer are no longer permissible under applicable law, the
Indenture Trustee will serve as successor to the Servicer.
Any person into which the Servicer may be merged or consolidated (in
accordance with the Trust Sale and Servicing Agreement), or any person resulting
from any merger or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Trust Sale and Servicing Agreement.
Servicing Default
In the event of any Servicing Default, the Indenture Trustee, by written
notice to the Servicer, may terminate all of the rights and obligations of the
Servicer, as servicer, under the Trust Sale and Servicing Agreement and in and
to the Receivables and the proceeds thereof and appoint a new Servicer (a
"Service Transfer"). The rights and interest of the Transferor in the Residual
Interest under the Trust Sale and Servicing Agreement will not be affected by
any Service Transfer. The Indenture Trustee will appoint a successor Servicer
as promptly as possible. If no successor Servicer has been appointed by the
Indenture Trustee that has accepted the appointment by the time the Servicer
ceases to act as Servicer, all rights, authority, power and obligations of the
Servicer under the Trust Sale and Servicing Agreement will pass to and be vested
in the Indenture Trustee. Prior to any Service Transfer, the Indenture Trustee
will review any bids, obtained from potential servicers meeting specified
eligibility requirements set forth in the Trust Sale and Servicing Agreement, to
serve as successor Servicer for servicing compensation not in excess of the
Servicing Fee, plus specified excess amounts payable to the Transferor. The
Servicer will immediately notify the Owner Trustee in writing of any Servicing
Default.
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Rights upon Servicing Default
As long as a Servicing Default under the Trust Sale and Servicing Agreement
remains unremedied, the Indenture Trustee may terminate all the rights and
obligations of the Servicer under the Trust Sale and Servicing Agreement.
Following receipt of a Termination Notice, the Servicer will continue to perform
all servicing functions under the Trust Sale and Servicing Agreement until the
date specified by the Indenture Trustee or otherwise agreed to by the Indenture
Trustee and the Servicer. The Indenture Trustee will, as promptly as possible
after the delivery of a Termination Notice, appoint a Successor Servicer meeting
the eligibility requirements for the Servicer set forth in the Trust Sale and
Servicing Agreement (which include the consent of any Enhancement Providers).
If no Successor Servicer shall have accepted appointment as Successor Servicer
by the time the Servicer ceases to act as Servicer, then the Indenture Trustee
automatically will be appointed as Successor Servicer. However, if the
Indenture Trustee is legally unable to act as Successor Servicer, it may
petition a court of competent jurisdiction to appoint any established
institution either having net worth of not less than $100,000,000 and whose
regular business includes the servicing of wholesale receivables as Successor
Servicer, or concerning which each Rating Agency rating the Series 2000-1 Notes
has indicated that the appointment of that Successor Servicer will not cause the
Rating Agency to reduce or withdraw its rating of the Series 2000-1 Notes.
If, however, a bankruptcy trustee or similar official has been appointed
for the Servicer, and no Servicing Default has occurred other than the
appointment of the bankruptcy trustee or similar official for the Servicer, the
trustee or official may have the power to prevent the Indenture Trustee, the
Owner Trustee or the Residual Interestholder from completing a Service Transfer.
If the Indenture Trustee is unwilling or unable to complete a Service Transfer,
it may appoint, or petition a court of competent jurisdiction to appoint, a
successor servicer that either possesses net worth of at least $100,000,000 and
that otherwise meets the eligibility requirements set forth in the Trust Sale
and Servicing Agreement, or concerning which each Rating Agency rating the
Series 2000-1 Notes has indicated that the appointment of that Successor
Servicer will not cause the Rating Agency to reduce or withdraw its rating of
the Series 2000-1 Notes.. The Indenture Trustee may make arrangements for
compensation to be paid to the successor, which may not be greater than the
servicing compensation paid to the Servicer under the Trust Sale and Servicing
Agreement.
Waiver of Past Defaults
The holders of Notes evidencing at least a majority in principal amount of
the Notes then outstanding (or, if the Notes have been paid in full, the
Residual Interestholder), voting as a single class, may, on behalf of all
Noteholders and the Residual Interestholder, waive any default by the Servicer
in the performance of its obligations under the Trust Sale and Servicing
Agreement and the Receivables Purchase Agreement and the consequences of the
default, except a Servicing Default in making any required distributions,
payments, transfers or deposits in accordance with the Trust Sale and Servicing
Agreement. No waiver will impair the rights of the Indenture Trustee, the Owner
Trustee, or the Noteholders that accrue for subsequent defaults.
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Evidence as to Compliance
The Trust Sale and Servicing Agreement requires that a firm of independent
public accountants furnish to the Owner Trustee, Indenture Trustee, any Rating
Agencies, any agent for any Series or class of Notes, and any Enhancement
Provider, an annual statement, delivered on or before April 30 of each year,
beginning April 30, 2001, to the effect that (a) the firm has examined (1) the
financial statements of the Servicer in accordance with specified standards and
(2) documents and records of the Servicer relating to the servicing of wholesale
receivables (including financing arrangements with automobile dealers to finance
their automobile and light-duty truck inventory), and (b) nothing caused the
firm to believe that the Servicer did not comply with the Trust Sale and
Servicing Agreement during the prior calendar year (or in the case of the first
statement, during the period from the Closing Date to December 31, 2000).
The Trust Sale and Servicing Agreement also requires the delivery to the
Owner Trustee and the Indenture Trustee, any Rating Agencies, any agent with
respect to any Series or class of Notes, and Enhancement Provider, on or before
April 30 of each year, beginning April 30, 2001, a certificate signed by an
officer of the Servicer stating that the Servicer has fulfilled in all material
respects its obligations under the Trust Sale and Servicing Agreement throughout
the preceding twelve months ended December 31 (or in the case of the first
certificate, the period from the Closing Date to December 31, 2000) or, if there
has been a default in the fulfillment of any obligation of the Servicer,
describing each default and the status thereof. The Servicer will give the
Indenture Trustee and the Owner Trustee notice of Servicing Defaults under the
Trust Sale and Servicing Agreement.
Copies of the statements and certificates of the firm of independent public
accountants and the officer of the Servicer may be obtained by Noteholders
(including Series 2000-1 Noteholders) by request in writing addressed to the
Owner Trustee.
Amendments
The Transfer and Servicing Agreements may be amended by the parties thereto
without the consent of the related Noteholders or any Enhancement Provider:
. to cure any ambiguity,
. to correct or supplement any provision therein that may be defective
or inconsistent with any other provision therein,
. to add or supplement any credit, liquidity or other enhancement
arrangement for the benefit of any Noteholders (except that if any
addition of credit, liquidity or enhancement arrangements affects any
Series or class of Noteholders differently than any other Series or
class of Noteholders, then the addition will not, as evidenced by an
opinion of counsel, adversely affect in any material respect the
interests of any Series or class of Noteholders),
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. to add to the covenants, restrictions or obligations of the
Transferor, the Servicer, the Trust, the Owner Trustee or the
Indenture Trustee for the benefit of Noteholders, or
. to add, change or eliminate any other provision of the agreement in
any manner that will not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interests of the
Noteholders.
Each Transfer and Servicing Agreement may also be amended by the parties
thereto with either:
. the consent of the holders of at least a majority in principal amount
of the Controlling Class of each Series of Notes adversely affected in
any material respect thereby, or
. confirmation from each Rating Agency rating a Series or class of
Notes (including the Series 2000-1 Notes) that the amendment will not
result in the reduction or withdrawal of any ratings of the Notes
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the agreement or of modifying in any manner
the rights of the Noteholders. However, no amendment may:
. reduce in any manner the amount of, or accelerate or delay the timing
of, distributions or payments that are required to be made on any
Note, or the amount available under any Enhancement Agreement, without
the consent of the holder thereof,
. change the definition of or the manner of calculating the interest of
any Note without the consent of the holder thereof,
. adversely affect the rating of any Series or class of Notes by any
Rating Agency without the consent of two-thirds of the principal
amount of the outstanding Notes of the affected Series or class,
or
. reduce the percentage of the principal amount of the outstanding
Notes of any Series or class required to consent to any
amendment,
without the consent of two-thirds of the principal amount of the outstanding
Notes of the affected Series or class.
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Intercreditor Arrangements
The agreements between the Dealers and VCI that govern the Accounts grant a
security interest in favor of VCI in the Vehicles relating to the Receivables in
the Accounts. VCI represents in the Receivables Purchase Agreement that, for
the Receivables conveyed to the Trust, the security interest in the related
Vehicles is a first priority perfected security interest. This first priority
perfected security interest will be assigned by VCI to the Transferor under the
Receivables Purchase Agreement, and subsequently assigned to the Trust by the
Transferor under the Trust Sale and Servicing Agreement. [In its other lending
activities, VCI may have made capital loans, real estate loans or other loans to
Dealers ("VCI's Other Loans") that are also secured by a security interest in
the Vehicles. In the Receivables Purchase Agreement, VCI agrees that any
security interests in the Vehicles granted to it to secure VCI's Other Loans
will be junior and subordinate to the security interests in the Vehicles granted
to secured the Receivables. VCI also agrees that it will not realize on any
collateral pledged as part of any security interests in a manner materially
adverse to the Transferor, the Trust and the Noteholders, until the Transferor
and the Trust have been paid in full for their interests in the Receivables
secured by the Vehicles.]
[However, VCI may have security interests in Collateral Security other than
the Vehicles securing VCI's Other Loans. VCI may, in its sole discretion,
realize on Collateral Security other than Vehicles securing VCI's Other Loans
before the Trust or the Indenture Trustee, on behalf of any Noteholders, is
permitted to realize on this Collateral Security in respect of the Receivables.
Thus, the security interests of the Trust and Indenture Trustee in the
Collateral Security other than the Vehicles may be junior and subordinate to the
security interests granted by VCI in connection with VCI's Other Loans. Because
of the subordinate position of the Indenture Trustee in respect of the
Collateral Security other than the Vehicles, there is no assurance that the
Trust or the Indenture Trustee will realize any proceeds in respect of any
Collateral Security other than the Vehicles.]
Administration Agreement
[VCI], in its capacity as the Administrator, will enter into the
Administration Agreement with the Trust and the Indenture Trustee under which
the Administrator will agree, to the extent provided in the Administration
Agreement, to provide the notices and to perform other administrative
obligations required by the Indenture. As compensation for the performance of
the Administrator's obligations under the Administration Agreement and as
reimbursement for its expenses related thereto, the Administrator will be
entitled to a monthly administration fee in an amount equal to $[1,500], which
fee will be paid by the Servicer.
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Material Legal Aspects of the Receivables
Transfer of Receivables
On the Closing Date and each day thereafter, VCI will sell the Receivables
to the Transferor, the Transferor will immediately transfer the Receivables to
the Trust, and the Trust will pledge the Receivables to the Indenture Trustee
for the benefit of the Noteholders. The Transferor represents that:
. the sale or transfer to the Trust constitutes a valid transfer and
assignment to the Trust of all right, title and interest of the
Transferor in, to and under the Receivables;
. under applicable Michigan law, there exists a valid, ownership
interest in the Receivables; and
. in the event the sale by the Transferor to the Trust is
recharacterized as a grant of a security interest instead of a true
sale, the Trust will have an enforceable first priority perfected
security interest in the Receivables following their transfer to the
Trust.
For a discussion of the Trust's rights arising from a breach of these
representations, see "The Transfer and Servicing Agreements--Representations and
Warranties by the Transferor".
Each of VCI and the Transferor has represented that the Receivables are
"instruments", "accounts", "chattel paper" or "general intangibles" for purposes
of Michigan's Uniform Commercial Code. [Any dealer promissory notes evidencing
the Receivables which constitute "instruments" under the Uniform Commercial Code
have been and will continue to be transferred by the Transferor, to the Trust
and to the Indenture Trustee's office located in [__________________________].
However, if the Receivables are deemed to be accounts, chattel paper or general
intangibles and the transfer of the Receivables by VCI to the Transferor, by the
Transferor to the Trust or by the Trust to the Indenture Trustee is deemed
either to be a sale or to create a security interest, the Uniform Commercial
Code or other applicable law applies. In the case of chattel paper, the
Indenture Trustee, as transferee, would then have to take possession of the
chattel paper or file an appropriate financing statement or statements in order
to perfect its interests in the Receivables. As a precautionary measure,
financing statements covering the Receivables have been filed under the Michigan
Uniform Commercial Code by the Transferor, the Trust and the Indenture Trustee,
to perfect their respective interests in the Receivables, and continuation
statements will be filed, as required, to continue the perfection of their
interests in the Receivables.]
There are limited circumstances under the Uniform Commercial Code and
applicable federal law in which prior or subsequent transferees of Receivables
could have an interest in the Receivables with priority over the Trust's and the
Indenture Trustee's interest. A purchaser of the Receivables who gives new
value and takes possession of the documents which evidence the Receivables in
the ordinary course of the purchaser's business may have priority over the
Trust's
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and the Indenture Trustee's interest in the Receivables. A tax or other
government lien on property of VCI or the Transferor arising before a Receivable
is conveyed to the Trust or to the Indenture Trustee may also have priority over
the Trust's and the Indenture Trustee's interest in the transferred Receivable.
Under the Receivables Purchase Agreement, VCI represents to the Transferor,
under the Trust Sale and Servicing Agreement the Transferor represents to the
Trust, and under the Indenture the Trust represents to the Indenture Trustee
that the Receivables have been transferred free and clear of any third party
lien. [In addition, the Transferor agrees under the Trust Sale and Servicing
Agreement to deliver to the Trust, and the Trust agrees under the Indenture to
deliver to the Indenture Trustee any necessary instruments, including any
promissory notes received from Dealers, which evidence the Receivables.] Each of
VCI, the Transferor and the Trust also covenants that it will not transfer or
grant any lien on any Receivable [or, except as described under "The Transfer
and Servicing Agreements--The Residual Interest", the Residual Interest, or any
interest in the Residual Interest,] other than to the Trust or the Indenture
Trustee. [In addition, while VCI is the Servicer, cash collections on the
Receivables may, under specified circumstances, be commingled with the funds of
VCI prior to each Payment Date and, in the event of a VCI bankruptcy, the Trust
and the Indenture Trustee may not have a perfected interest in the commingled
collections.]
Material Matters Relating to Bankruptcy
If VCI were to become a debtor in a bankruptcy case, a creditor or trustee
in bankruptcy of VCI or VCI itself may attempt to characterize the transfer of
the Receivables from VCI to the Transferor as a pledge of the Receivables to
secure a borrowing by VCI, rather than a true sale of the Receivables. VCI
represents to the Transferor in the Receivables Purchase Agreement that the
sales of the Receivables by VCI to the Transferor are valid sales of the
Receivables to the Transferor. In addition, VCI and the Transferor agree to
treat these transfers as sales of the Receivables to the Transferor, and VCI
will take all actions that are required under Michigan law to perfect the
Transferor's ownership interest in the Receivables. If these transfers are
treated as sales, the Receivables would not be part of VCI's bankruptcy estate
and would not be available to VCI's creditors.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993), the
-----------------------------------
United States Court of Appeals for the Tenth Circuit suggested that, even where
a transfer of accounts from a seller to a buyer constitutes a true sale, the
accounts would nevertheless constitute property of the seller's bankruptcy
estate in a bankruptcy of the seller. The Transferor has been advised by
counsel that the reasoning of the Octagon court appears to be inconsistent with
established precedent and the Uniform Commercial Code. In addition, the
Permanent Editorial Board of the Uniform Commercial Code has issued an official
commentary (P&B Commentary No. 14) which characterizes the Octagon court's
interpretation of Article 9 of the Uniform Commercial Code to be erroneous. The
official commentary states that nothing in Article 9 is intended to prevent the
transfer of ownership of accounts or chattel paper.
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In addition, if VCI were to become a debtor in a bankruptcy case, a
creditor of VCI, the bankruptcy trustee of VCI, or VCI itself might request that
VCI be substantively consolidated with the Transferor. Delays or reductions in
payments on the Series 2000-1 Notes could occur while the court decides these
issues. In addition, should a court rule that the Receivables are part of VCI's
bankruptcy estate, or that VCI should be substantively consolidated with the
Transferor, additional reductions or delays in payments on the Series 2000-1
Notes could result. See "Risk Factors--A Bankruptcy of VCI or the Transferor May
Delay or Reduce Payments on the Series 2000-1 Notes".
If the Transferor were to become a bankrupt debtor, an Early Amortization
Event would occur, which may result in a lack of funds available to make full
and timely payment on the Series 2000-1 Notes. The Transferor has attempted to
reduce the likelihood that it will file for bankruptcy. The Transferor's
limited liability company agreement provides that, under specified
circumstances, the Transferor is required to have at least one independent
director meeting the qualifications set forth in its limited liability company
agreement. The Transferor's limited liability company agreement also provides
that the Transferor will not file a voluntary application for relief under the
U.S. Bankruptcy Code without the affirmative vote of its independent director.
Under the Trust Sale and Servicing Agreement, the Indenture Trustee, the Trust,
the Owner Trustee, all the Noteholders and any Enhancement Provider agree that
they will not, until one year and one day after termination of the Indenture,
institute against the Transferor any bankruptcy, reorganization or other
proceedings under any federal or state bankruptcy or similar law. The
Transferor does not intend to file a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law regarding the Transferor so
long as the Transferor is solvent, and the Transferor does not foresee it
becoming insolvent.
If VCI or the Transferor filed for bankruptcy under the federal bankruptcy
code or any state insolvency laws, then VCI or the Transferor may be able to
recover payments they made to the Trust to repurchase Receivables. In general,
VCI or the Transferor might recover any payments made by them to the Trust
during the one-year period before the date VCI or the Transferor filed for
bankruptcy. The one-year period may be extended by the court if it determines
that the bankrupt entity was insolvent more than one year prior to filing its
bankruptcy petition.
Material Federal Income Tax Consequences
General
The following summary describes the material United States federal income
tax consequences of the purchase, ownership and disposition of an investment in
the Series 2000-1 Notes. The following summary has been prepared and reviewed
by Mayer, Brown & Platt as special tax counsel to the Transferor and the Trust.
The summary is based on the U.S. Internal Revenue Code as of the date hereof,
and existing final, temporary and proposed Treasury regulations, revenue rulings
and judicial decisions, all of which are subject to prospective and
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retroactive changes. The summary is addressed only to original purchasers of the
Series 2000-1 Notes, deals only with Series 2000-1 Notes held as capital assets
within the meaning of Section 1221 of the U.S. Internal Revenue Code and, except
as specifically set forth below, does not address tax consequences of holding
Series 2000-1 Notes that may be relevant to investors in light of their own
investment circumstances or their special tax situations, including some
financial institutions, tax-exempt organizations, life insurance companies,
dealers in securities, non-U.S. persons, or investors holding the Series 2000-1
Notes as part of a conversion transaction, as part of a hedge or hedging
transaction, or as a position in a straddle for tax purposes. Further, this
discussion does not address alternative minimum tax consequences or any tax
consequences to holders of interests in a holder of the Series 2000-1 Notes.
Special Tax Counsel is of the opinion that the following summary of federal
income tax consequences is correct in all material respects. An opinion of
Special Tax Counsel, however, is not binding on the IRS or the courts, and no
ruling on any of the issues discussed below will be sought from the IRS.
Moreover, there are no authorities on similar transactions involving interests
issued by an entity with terms similar to those of the Series 2000-1 Notes
described in this prospectus. Accordingly, if you are considering the purchase
of Series 2000-1 Notes, it is suggested that you consult your own tax advisors
with regard to the United States federal income tax consequences of an
investment in the Series 2000-1 Notes and the application of United States
federal income tax laws, as well as the laws of any state, local or foreign
taxing jurisdictions, to your particular situations.
The United States federal income tax opinions of Special Tax Counsel set
forth more fully below are that:
. the Trust will not be classified as an association or as a publicly
traded partnership taxable as a corporation for United States federal
income tax purposes, and
. the Series 2000-1 Notes will be characterized as debt for United
States federal income tax purposes.
Tax Characterization of the Trust and the Series 2000-1 Notes
Treatment of the Trust as an Entity Not Subject to Tax. Based on its
analysis of the substance of the transaction contemplated in this prospectus,
the parties' intentions, and the assumption that the parties will comply with
the terms of the transaction, Special Tax Counsel is of the opinion that,
although no transaction closely comparable to that contemplated herein has been
the subject of any Treasury Regulation, revenue ruling or judicial decision, the
Trust will not be classified as an association or as a publicly traded
partnership taxable as a corporation for federal income tax purposes. As a
result, the Trust will not be subject to federal income tax. However, as
discussed above, this opinion is not binding on the IRS and no assurance can be
given that this characterization will prevail.
The precise tax characterization of the Trust for federal income tax
purposes is not definite. It might be viewed as merely holding assets on behalf
of the Transferor as collateral for
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notes issued by the Transferor. On the other hand, the Trust could be viewed as
a separate entity for tax purposes issuing its own notes. This distinction,
however, should not have a significant tax effect on holders of the Series 2000-
1 Notes except as stated below under "--Possible Alternative Characterizations".
Treatment of the Series 2000-1 Notes as Debt. Based on its analysis of the
substance of the transaction contemplated in this prospectus, the parties'
intentions, and the assumption that the parties will comply with the terms of
the transaction, Special Tax Counsel is of the opinion that, although no
transaction closely comparable to that contemplated herein has been the subject
of any Treasury regulation, revenue ruling or judicial decision, the Series
2000-1 Notes will be characterized as debt for United States federal income tax
purposes. Additionally, the Trust will agree by entering into the Indenture,
and the Series 2000-1 Noteholders agree by their purchase and holding of Series
2000-1 Notes, to treat the Series 2000-1 Notes as debt for United States federal
income tax purposes.
Possible Alternative Characterizations. If, contrary to the opinion of
Special Tax Counsel, the IRS successfully asserted that the Series 2000-1 Notes
did not represent debt for United States federal income tax purposes, the Series
2000-1 Notes might be treated as equity interests in the Trust or some other
entity for United States federal income tax purposes. If so treated, investors
could be treated for United States federal income tax purposes either as
partners in a partnership or, alternatively, as shareholders in a taxable
corporation. Treatment of a Series 2000-1 Noteholder as a partner could have
adverse tax consequences to some Series 2000-1 Noteholders; for example, income
to foreign persons generally would be subject to United States tax and United
States tax return filing and withholding requirements, and individual Series
2000-1 Noteholders might be subject to some limitations on their ability to
deduct their share of partnership expenses. If Series 2000-1 Notes instead were
treated as corporate stock, the taxable corporation would not be able to reduce
its taxable income by deductions for interest expense on Series 2000-1 Notes
recharacterized as equity, and any increase in the corporate tax imposed with
respect to the taxable corporation could materially reduce cash available to
make payments on the Series 2000-1 Notes; further, Series 2000-1 Noteholders
might not be entitled to any dividends received deduction in respect of payments
of interest on Series 2000-1 Notes treated as dividends. In addition, even if
the Series 2000-1 Notes are treated as debt, the Trust is also able to issue
other securities which may be treated as debt or as equity interests in the
Trust. The issuance of the other securities requires the delivery of a new
opinion of counsel generally to the effect that the issuance will not cause the
Trust to become taxable as a separate entity for federal income tax purposes;
however, any new opinion would not bind the IRS, and the Trust could become
taxable as a corporation as a result of the issuance of the other securities,
potentially diminishing cash available to make payments on the Series 2000-1
Notes. Prospective investors should consult with their own tax advisors with
regard to the consequences of each possible alternative characterization to them
in their particular circumstances; the following discussion assumes that the
characterization of the Series 2000-1 Notes as debt is correct.
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Consequences to Holders of the Series 2000-1 Notes
Interest and Original Issue Discount. In general, stated interest on a
Series 2000-1 Note will be includible in gross income as it accrues or is
received in accordance with a Series 2000-1 Noteholder's usual method of tax
accounting if the stated interest is "qualified stated interest." "Qualified
stated interest" ("QSI") generally is interest that is unconditionally payable
in cash or property, other than debt instruments of the issuer, at fixed
intervals of one year or less during the entire term of its instrument at
specified rates. If the Series 2000-1 Notes are issued with original issue
discount ("OID"), the provisions of Sections 1271 through 1273 and 1275 of the
U.S. Internal Revenue Code will apply to the Series 2000-1 Notes. Under those
provisions, a holder of a Series 2000-1 Note (including a cash basis holder)
generally would be required to include the OID on a Series 2000-1 Note in income
for federal income tax purposes on a constant yield basis, resulting in the
inclusion of OID in income in advance of the receipt of cash attributable to
that income. In general, a Series 2000-1 Note will be treated as having OID to
the extent that its "stated redemption price" exceeds its "issue price", if the
excess equals or exceeds 0.25 percent multiplied by the weighted average life of
the Series 2000-1 Note (determined by taking into account the number of complete
years following issuance until payment is made for each partial principal
payment). A Note's "stated redemption price" at maturity is the total of all
payments required to be made on a Note through maturity except QSI. Under
Section 1272(a)(6) of the U.S. Internal Revenue Code, special provisions apply
to debt instruments on which payments may be accelerated due to prepayments of
other obligations securing those debt instruments. However, no regulations have
been issued interpreting those provisions, and the manner in which those
provisions would apply to the Series 2000-1 Notes is unclear, but the
application of Section 1272(a)(6) could affect the rate of accrual of OID and
could have other consequences to holders of the Series 2000-1 Notes.
Additionally, the IRS could take the position based on Treasury regulations that
none of the interest payable on a Series 2000-1 Note is "unconditionally
payable" because the interest rate on the Notes is capped at the Assets
Receivables Rate, so that if the interest rate on the Notes rose above its
relevant Assets Receivables Rate, payment of the excess interest could be
deferred. Hence the IRS could take the position that none of the interest is
QSI and therefore should be included in the Series 2000-1 Note's stated
redemption price at maturity. If sustained, treatment of that kind should not
significantly affect tax liabilities for most holders of the Series 2000-1
Notes, but prospective Series 2000-1 Noteholders should consult their own tax
advisors concerning the impact to them in their particular circumstances. The
Trust believes that the likelihood that the interest rate on the Notes will be
above the relevant Assets Receivables Rate is remote, and therefore, intends to
take the position that interest on the Series 2000-1 Notes constitutes QSI and
that the above consequences do not apply.
Market Discount. A holder of a Series 2000-1 Note who purchases an
interest in a Series 2000-1 Note at a discount that exceeds any OID not
previously includible in income may be subject to the "market discount" rules of
Sections 1276 through 1278 of the U.S. Internal Revenue Code. These rules
provide, in part, that gain on the sale or other disposition of a note and
partial principal payments on a note are treated as ordinary income to the
extent of accrued market discount. The market discount rules also provide for
deferral of interest deductions with respect to debt incurred to purchase or
carry a note that has market discount.
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Market Premium. A holder of a Series 2000-1 Note who purchases an interest
in a Series 2000-1 Note at a premium may elect to amortize the premium against
interest income over the remaining term of the Series 2000-1 Note in accordance
with the provisions of Section 171 of the U.S. Internal Revenue Code.
Disposition of the Series 2000-1 Notes; Defeasance. Upon the sale,
exchange or retirement of a Series 2000-1 Note, the holder of the Series 2000-1
Note generally will recognize taxable gain or loss in an amount equal to the
difference between the amount realized on the disposition (other than amounts
attributable to accrued interest) and the holder's adjusted tax basis in the
Series 2000-1 Note. A taxable exchange of a Series 2000-1 Note could also occur
as a result of the transferor's substitution of money or investments for the
Receivables in the trust portfolio. The holder's adjusted tax basis in the
Series 2000-1 Note generally will equal the cost of the Series 2000-1 Note to
the holder, increased by any market or original issue discount previously
included in income by the holder with respect to the Series 2000-1 Note, and
decreased by the amount of any bond premium previously amortized and any
payments of principal or OID previously received by the holder with respect to
the Series 2000-1 Note. Any gain or loss of that type generally will be capital
gain or loss, except to the extent of accrued market discount not previously
included in income, and will be long-term capital gain or loss if at the time of
sale the Series 2000-1 Note has been held for more than one year.
Foreign Holders. Under United States federal income tax law now in effect,
payments of interest by the Trust to a holder of a Series 2000-1 Note who, as to
the United States, is a nonresident alien individual or a foreign corporation (a
"foreign person") generally will be considered "portfolio interest", and
generally will not be subject to United States federal income tax and
withholding tax if the interest is not effectively connected with the conduct of
a trade or business within the United States by the foreign person and the
foreign person (i) is not for United States federal income tax purposes (a)
actually or constructively a "10 percent shareholder" of the Transferor or the
Trust, (b) a "controlled foreign corporation" with respect to which the
Transferor or the Trust is a "related person" within the meaning of the U.S.
Internal Revenue Code, or (c) a bank extending credit under a loan agreement
entered into in the ordinary course of its trade or business, and (ii) provides
the person who is otherwise required to withhold United States tax with respect
to the Series 2000-1 Notes with an appropriate statement (on IRS Form With-8 or
a successor or substitute form), signed under penalties of perjury, certifying
that the beneficial owner of the Series 2000-1 Note is a foreign person and
providing the foreign person's name and address. If a Series 2000-1 Note is
held through a securities clearing organization or some other financial
institutions (as is expected to be the case unless Definitive Notes are issued),
the organization or institution may provide the relevant signed statement
generally to the withholding agent; in that case, however, the signed statement
generally must be accompanied by an IRS Form With-8 or successor or substitute
form provided by the foreign person that owns the Series 2000-1 Note. If
interest is not portfolio interest, then it will be subject to United States
federal income and withholding tax at a rate of 30%, unless reduced or
eliminated by an applicable tax treaty or because the interest is effectively
connected with the conduct of a trade or business within the United States and,
in either case, the appropriate statement has been provided. The U.S. Treasury
Department recently issued final Treasury
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regulations which will revise some of the foregoing procedures whereby a foreign
person may establish an exemption from withholding generally beginning January
1, 2001; foreign persons should consult their tax advisors concerning the impact
to them, if any, of the revised procedures.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Series 2000-1 Note by a foreign person will be exempt
from United States federal income tax and withholding tax if (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (ii) in the case of an individual foreign
person, the individual is not present in the United States for 183 days or more
in the taxable year.
Backup Withholding. Payments of principal and interest, as well as
payments of proceeds from the sale, retirement or disposition of a Series 2000-1
Note, may be subject to "backup withholding" tax under Section 3406 of the U.S.
Internal Revenue Code at a rate of 31% if a recipient of the payments fails to
furnish to the payor certain identifying information. Any amounts deducted and
withheld would be allowed as a credit against the recipient's United States
federal income tax if appropriate proof is provided under rules established by
the IRS. Furthermore, certain penalties may be imposed by the IRS on a recipient
of payments that is required to supply information but that does not do so in
the proper manner. Backup withholding will not apply with respect to payments
made to certain exempt recipients, including corporations and financial
institutions. Holders of the Series 2000-1 Notes should consult their tax
advisors regarding their qualification for exemption from backup withholding and
the procedure for obtaining that type of exemption.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR INFORMATION ONLY, MAY NOT BE APPLICABLE DEPENDING UPON A SERIES 2000-1
NOTEHOLDER'S PARTICULAR TAX SITUATION, AND DOES NOT PURPORT TO ADDRESS THE
ISSUES DESCRIBED WITH THE DEGREE OF SPECIFICITY THAT WOULD BE PROVIDED BY A
TAXPAYER'S OWN TAX ADVISOR. IT IS SUGGESTED THAT PROSPECTIVE PURCHASERS CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE SERIES 2000-1 NOTES AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL TAX LAWS OCCURRING AFTER THE DATE OF THIS
PROSPECTUS.
State and Local Tax Consequences
The above discussion does not address the tax treatment of the Series 2000-
1 Notes or the holders of the Series 2000-1 Notes under any state or local tax
laws. The activities to be undertaken by the Servicer in servicing and
collecting the Receivables will take place throughout the United States and,
therefore, many different tax regimes could apply to this transaction.
Prospective investors are advised to consult with their tax advisors regarding
the state and local tax treatment of the Trust as well as any state and local
tax consequences to investors by purchasing, holding and disposing of the Series
2000-1 Notes.
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ERISA Considerations
Subject to the following discussion the Series 2000-1 Notes may be acquired
by a Benefit Plan. Section 406 of the ERISA, and Section 4975 of the U.S.
Internal Revenue Code prohibit a Benefit Plan from engaging in specified
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the U.S. Internal Revenue Code with respect to the
Benefit Plan. A violation of these "prohibited transaction" rules may result in
an excise tax or other penalties and liabilities under ERISA and the U.S.
Internal Revenue Code for parties in interest, disqualified persons or the
fiduciaries of the Benefit Plan. In addition, Title I of ERISA also requires
fiduciaries of a Benefit Plan subject to ERISA to make investments that are
prudent, diversified and in accordance with the governing plan documents.
Transactions involving the Trust might be deemed to constitute prohibited
transactions under ERISA and the U.S. Internal Revenue Code with respect to a
Benefit Plan that purchased Series 2000-1 Notes if assets of the Trust were
deemed to be assets of the Benefit Plan. Under a regulation issued by the
United States Department of Labor (the "Regulation"), the assets of the Trust
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the U.S. Internal Revenue Code only if the Benefit Plan acquired an "equity
interest" in the Trust and none of the exceptions to plan assets contained in
the Regulation was applicable. An equity interest is defined under the
Regulation as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. Although there is little guidance on the subject, assuming the Series
2000-1 Notes constitute debt for local law purposes, the Transferor believes
that, at the time of their issuance, the Series 2000-1 Notes should not be
treated an equity interest in the Trust for purposes of the Regulation. This
determination is based in part upon the traditional debt features of the Series
2000-1 Notes, including the reasonable expectation of purchasers of Series 2000-
1 Notes that the Series 2000-1 Notes will be repaid when due, as well as the
absence of conversion rights, warrants and other substantial equity features.
The debt treatment of the Series 2000-1 Notes for ERISA purposes could change if
the Trust incurred losses.
However, without regard to whether the Series 2000-1 Notes are treated as
an equity interest for purposes of the Regulation, the acquisition or holding of
Series 2000-1 Notes by or on behalf of a Benefit Plan could be considered to
give rise to a prohibited transaction if the Trust, the Transferor, the
Administrator, the Servicer, the Indenture Trustee or the Owner Trustee is or
becomes a party in interest or a disqualified person with respect to the Benefit
Plan. One or more exemptions from the prohibited transaction rules could be
applicable to the purchase and holding of Series 2000-1 Notes by a Benefit Plan
depending on the type and circumstances of the plan fiduciary making the
decision to acquire Series 2000-1 Notes. Included among these exemptions are:
. Prohibited Transaction Class Exemption ("PTCE") 96-23, regarding
transactions effected by "in-house asset managers";
. PTCE 95-60, regarding investments by insurance company general accounts;
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. PTCE 91-38, regarding investments by bank collective investment
funds;
. PTCE 90-1, regarding investments by insurance company pooled separate
accounts; and
. PTCE 84-14, regarding transactions effected by "qualified
professional asset managers".
By acquiring a Series 2000-1 Note, you will be deemed to represent that either
(i) you are not acquiring the Series 2000-1 Notes with the assets of a Benefit
Plan; or (ii) the acquisition and holding of the Series 2000-1 Notes by you will
not give rise to a nonexempt prohibited transaction under Section 406(a) of
ERISA or Section 4975 of the U.S. Internal Revenue Code.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) are not subject to ERISA requirements, and church plans (as
defined in Section 3(33) of ERISA) may not be subject to ERISA requirements.
Governmental plans may be subject to comparable state law restrictions.
If you are a plan fiduciary and are considering the purchase of Series
2000-1 Notes, you should consult your legal advisors regarding whether the
assets of the Trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
Underwriting
Under the terms and subject to the conditions contained in the Underwriting
Agreement, the Transferor has agreed to sell to the underwriters (the
"Underwriters"), for whom Morgan Stanley & Co. Incorporated is acting as
representative, the following respective principal amounts of the Series 2000-1
Notes:
Principal Balance of
Series 2000-1 Notes
Underwriter ($)
--------------------------------- ----------------------
[INSERT]
[The Underwriting Agreement provides that the Underwriters are obligated to
purchase all of the Series 2000-1 Notes if any are purchased.]
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The Underwriters propose to offer the Series 2000-1 Notes initially to
selling group members at the public offering price less a concession not in
excess of [___]% of the initial principal balance of the Series 2000-1 Notes.
The Underwriters and selling group members may reallow a discount not in excess
of [___]% to other broker/dealers. After the initial public offering, the
public offering price and concessions and discounts to broker/dealers may be
changed by the representative of the Underwriters.
The Transferor estimates that the out-of-pocket expenses for this offering
will be approximately $[__________].
Morgan Stanley & Co. Incorporated has informed the Transferor and the
manager that the Underwriters do not expect discretionary sales by them to
exceed [5%] of the principal balance of the Series 2000-1 Notes.
The Transferor, VCI and the Trust have agreed to indemnify the Underwriters
against civil liabilities under the Securities Act of 1933, as amended, or
contribute to payments which the Underwriters may be required to make in that
respect.
The representative, on behalf of the Underwriters, may engage in over-
allotment, stabilizing transactions, syndicate covering transactions and penalty
bids in accordance with Regulation M under the Securities Exchange Act of 1934,
as amended.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum;
. Syndicate covering transactions involve purchases of the Series 2000-1
Notes in the open market after the distribution has been completed in
order to cover syndicate short positions;
. Penalty bids permit the Underwriters to reclaim a selling concession
from a syndicate member when the Series 2000-1 Notes originally sold by
a syndicate member are purchased in a syndicate covering transaction to
cover syndicate short positions.
Stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the Series 2000-1 Notes to be higher than it would
otherwise be in the absence of these transactions. These transactions, if
commenced, may be discontinued at any time.
In the ordinary course of its business, some of the Underwriters and some
of their affiliates have in the past and may in the future engage in commercial
and investment banking activities with the Transferor and its affiliates.
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Legal Opinions
The legality of the Notes and other material legal matters concerning the
Notes will be opined upon for the Trust, the Transferor, VCI and the
Underwriters by Mayer, Brown & Platt, special counsel to the Trust, the
Transferor and VCI. The material federal income tax matters will be opined upon
for the Trust, the Transferor and the Servicer by Mayer, Brown & Platt.
Where You Can Find More Information
The Transferor, as originator of the Trust, filed a registration statement
relating to the Series 2000-1 Notes with the SEC under the Securities Act of
1933. This prospectus is part of the registration statement, but the
registration statement includes additional information.
The Transferor will file with the SEC all required annual, monthly and
special SEC reports and other information about the Trust. The Transferor will
include in these reports all material information about any other Series issued
after Series 2000-1 Notes. The Transferor will file these reports under its own
name.
You may read and copy any reports, statements or other information we file
at the SEC's public reference room at 450 Fifth Street, Washington, D.C. 20549.
You can request copies of these documents, upon payment of a duplicating fee, by
writing to the SEC. Please call the SEC at (800) SEC-0330 for further
information on the operation of the public reference rooms. These SEC filings
are also available to the public on the SEC Internet site (http://www.sec.gov).
Incorporation by Reference
The SEC allows information filed with it to be "incorporated by reference"
into this prospectus, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus. Information that the
Transferor files with the SEC after the date of this prospectus will
automatically update the information in this prospectus. In all cases, you
should rely on the later information over different information included in this
prospectus.
The Transferor incorporates by reference any future annual, monthly and
special reports and proxy materials filed by or on behalf of the Trust with the
SEC until the offering of the Series 2000-1 Notes is terminated.
As a recipient of this prospectus, you may request a copy of any
document incorporated by reference into this prospectus, except exhibits to the
documents (unless the exhibits are specifically incorporated by reference), at
no cost, by writing or calling: VW Credit, Inc., 3800 Hamlin Road, Auburn
Hills, Michigan 48326, Attention: Corporate Secretary, telephone: (248) 340-
4581.
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Glossary
All references in this prospectus to any agreement should be understood to
be references to that agreement as it may be amended, amended and restated or
otherwise modified from time to time.
"Accounts" means revolving financing agreements entered into with VCI by
Dealers to finance their inventory of new and used automobiles and that are
included in the Eligible Portfolio.
"Accumulation Period" is defined under "The Series 2000-1 Notes--Trust
Distributions."
"Accumulation Period Length" is defined under "The Series 2000-1 Notes--
Principal."
"Additional Accounts" means revolving financing agreements entered into
with VCI by Dealers to finance their inventory of new and used automobiles that
are designated by the Transferor for inclusion in the Trust as Accounts after
the Closing Date.
"Addition Date" means, for an Additional Account, the date from and after
which the Additional Account is to be included as an Account under the Trust
Sale and Servicing Agreement.
"Additional Cut-Off Date" means, for an Additional Account, the date
specified in the notice of addition delivered in respect of the Addition Date.
"Additional Noteholder Collections" for any date means the sum of:
. the Additional Noteholder Non-Principal Collections for the date and
. the Additional Noteholder Principal Collections for the date;
However, that the Additional Noteholder Collections will be zero for any
Collection Period with respect to which the Series 2000-1 Available Subordinated
Amount is zero on the Determination Date immediately following the end of the
Collection Period.
"Additional Noteholder Non-Principal Collections" for any date means an
amount equal to the product of:
. the excess of:
(1) the Residual Interest Percentage for the related Collection
Period over
(2) the Excess Residual Percentage for the related Collection Period,
and
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. Series Allocable Non-Principal Collections for the date.
"Additional Noteholder Principal Collections" for any date means an amount
equal to the product of:
. the excess of:
(1) the Residual Interest Percentage for the related Collection
Period over
(2) the Excess Residual Percentage for the related Collection Period,
and
. Series Allocable Principal Collections for the date.
"Adjustment Payment" is defined under "The Transfer and Servicing
Agreements--Adjustment Payments and Rebate Payments."
"Administrative Agreement" means the Administrative Agreement, dated as of
the Closing Date, among the Owner Trustee, the Indenture Trustee and [VCI] as
Administrator.
"Administrator" means VCI, acting in its capacity as administrator under
the Administrator, or any successor to VCI in its capacity as administrator.
"Amortization Period" means, with respect to any Series, a period during
which Principal Collections and other specified amounts allocable to a Series
will be used on each Payment Date to make principal distributions to the holders
of the Notes of that Series.
"Assets Receivables Rate" means for any Interest Period an amount equal to
the product of:
. the quotient obtained by dividing (1) 360 by (2) the actual number of
days elapsed in the Interest Period,
and
. a percentage expressed as a fraction,
(1) the numerator of which is the sum of:
. Noteholder Non-Principal Collections for the Collection
Period immediately preceding the last day of the Interest
Period (which for this purpose only is based on interest
amounts billed to the Dealers which are due during the
Collection Period) less the Monthly Servicing Fee for the
immediately preceding Collection Period, to the extent not
waived by the Servicer, and
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. the Investment Proceeds to be applied on the Payment Date
related to the Interest Period
and
(2) the denominator of which is the sum of
. the product of (a) the Series 2000-1 Floating Allocation
Percentage, (b) the Series Allocation Percentage and (c) the
average Pool Balance (after giving effect to any Investor
Charge-Offs) for the immediately preceding Collection
Period,
. [the principal balance on deposit in the Excess Funding
Account on the first day of the Interest Period (after
giving effect to all deposits to and withdrawals therefrom
on the first day of the Interest Period)], and
.the principal balance on deposit in the Series 2000-1
Principal Funding Account on the first day of the Interest
Period (after giving effect to all deposits to and
withdrawals therefrom on the first day of the Interest
Period).
"Auction Vehicles" is defined under "The Dealer Floor Plan Financing
Business--General."
"Automatic Removal Date" means, in connection with the removal of any
Automatic Removed Account from the Trust, the date designated in a Removal
Notice for removal of any Automatic Removed Accounts and reassignment of
Receivables therein is to occur.
"Automatic Removed Account" is defined under "The Transfer and Servicing
Agreements--Removal of Accounts."
["Available Noteholder Principal Collections" for any Payment Date means
the sum of:
. the product of:
(a) the Series 2000-1 Floating Allocation Percentage, with respect to
the Revolving Period, or the Principal Allocation Percentage,
with respect to the Series 2000-1 Accumulation Period or any
Early Amortization Period, for the related Collection Period, and
(b) Series Allocable Principal Collections deposited into the
Collection Account for the related Collection Period,
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. the amount, if any, of Non-Principal Collections, Investment
Proceeds, funds in the Reserve Account, and Additional Noteholder
Collections allocated to cover the Noteholder Default Amount or to
reverse Series 2000-1 Noteholder Charge-Offs
. Series Allocable Miscellaneous Payments on deposit in the Collection
Account for the Payment Date, and
. Excess Principal Collections, if any, allocated from other Series to
the Series 2000-1 Notes to cover any Principal Shortfall for the
Payment Date.]
"Benefit Plan" means pension, profit-sharing or other employee benefit
plans, as well as individual retirement accounts, Keogh plans and other plans
covered by Section 4975 of the U.S. Internal Revenue Code.
"Carry-over Amount" means, for any Payment Date, the sum of:
. the excess of
(a) the amount of interest on the Series 2000-1 Notes that would have
accrued in respect of the related Interest Period had interest on
the Series 2000-1 Notes been calculated based on LIBOR, over
(b) the amount of interest on the Series 2000-1 Notes actually
accrued in respect of the related Interest Period based on the
Assets Receivables Rate, and
. the unpaid portion of any excess from prior Payment Dates, and
interest accrued thereon calculated on the basis of LIBOR.
"Cede" means Cede & Co., the nominee for DTC.
"Clearstream Luxembourg" means Clearstream Banking, societe anonyme.
"Clearstream Participants" means organizations participating in the
Clearstream Luxembourg system.
"Closing Date" means date on which the Series 2000-1 Notes are first issued
by the Trust.
"Collateral Security" means the security interests in the Vehicles,
specified parts inventory, equipment, fixtures, service accounts of the Dealers
and, in some cases, realty and/or personal guarantees securing the Receivables
of the Dealers.
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"Collections" means, collectively, all Non-Principal Collections and
Principal Collections.
"Collection Account" is defined under "The Series 2000-1 Notes--Collection
Account."
"Collection Period" means a calendar month.
"Controlled Deposit Amount" is defined under "The Series 2000-1 Notes--
Trust Distributions."
"Controlling Class" means, with respect to a Series of Notes:
. if there is only one class of Notes in that Series, all the Notes of
that Series, and
. if there is more than one class of Notes in that Series, the class or
classes with the highest rating.
"Cooperative" is defined under "The Series 2000-1 Notes--Book-entry
Registration."
"Dealer Default" is defined under "The Dealer Floor Plan Financing
Business--'Dealer Default' Status and VCI's Write-Off Policy."
"Dealer Overconcentration" on any Determination Date means, with respect to
any Dealer or group of affiliated Dealers, the excess of:
. the aggregate Principal Receivables due from the Dealer or group of
affiliated Dealers on the last day of the Collection Period
immediately preceding the Determination Date, over
. [__]% of the Pool Balance on the last day of the immediately
preceding Collection Period.
"Dealers" means retail automotive dealers franchised by VCI.
"Defaulted Amount" means, for any Collection Period, an amount (which will
not be less than zero) equal to:
(a) the Principal Receivables that became Defaulted Receivables during the
preceding Collection Period
over
(a) the sum of:
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(1) the full amount of any Defaulted Receivables subject to
reassignment to the Transferor or purchase by the Servicer for
the Collection Period unless specified events of bankruptcy,
insolvency or receivership have occurred for either of the
Transferor or the Servicer, in which event the Defaulted Amount
will not be reduced for those Defaulted Receivables
and
(2) the excess, if any, of the amount determined under clause (b)(1)
over the amount determined under clause (a).
"Defaulted Receivables" means, on any Determination Date:
. all Receivables which were charged off as uncollectible in respect of
the immediately preceding Collection Period in accordance with the
Servicer's customary and usual servicing procedures for servicing
Dealer floorplan receivables comparable to the Receivables which have
not been sold to third parties, and
. all Receivables which were Eligible Receivables when transferred to
the Trust on the Initial Closing Date or the related Additional Date
or on their respective Transfer Date, which arose in an Account which
became an Ineligible Account after the date of transfer of the
Receivables to the Trust and which remained outstanding for any six
consecutive Determination Dates (including the Determination Date on
which the determination is being made) after the Account became an
Ineligible Account.
"Deficiency Amount" is defined under "The Series 2000-1 Notes--Distribution
from the Collection Account for Series 2000-1 Notes; Reserve Account; Yield
Supplement Account--Non-Principal Collections."
"Definitive Notes" means Series 2000-1 Notes issued in fully registered,
certificated form.
"Deposit Date" means each day on which the Servicer deposits Collections in
the Collection Account, as described in "The Series 2000-1 Notes--Allocation of
Collections; Deposits in Collection Account."
"Depository" means DTC and any successor depository selected by the Trust.
"Designated Accounts" means, in connection with the removal of any Accounts
from the Trust, the Accounts to be so removed as designated in a Removal Notice.
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"Designated Balance" means, in connection with the removal of any
Designated Account from the Trust, the aggregate principal balance of the
Receivables in that Designated Account.
"Designated Receivable" means a Receivable in a Designated Account that is
to be removed from the Trust on the applicable Removal and Repurchase Date.
"Determination Date" means, with respect to any Payment Date, the second
business day preceding each Payment Date.
"Disqualified Receivables" is defined under "The Transfer and Servicing
Agreements--Representations and Warranties by the Transferor."
"DTC" means The Depository Trust Company.
"Early Amortization Event" is defined under "The Series 2000-1 Notes--Early
Amortization Events."
"Early Amortization Period" is defined under "The Series 2000-1 Notes--
Trust Distributions."
"Eligible Account" means each wholesale financing revolving line of credit
extended by VCI to a Dealer, which line of credit, as of the date of
determination thereof:
. is established by VCI in the ordinary course of business under a
Dealer financing agreement,
. is in favor of a Dealer which is an Eligible Dealer (which excludes
Dealers subject to voluntary or involuntary bankruptcy proceedings or
voluntary or involuntary liquidation),
. is in existence and maintained and serviced by VCI (or a Successor
Servicer), and
. in respect of which no amounts have been charged off as uncollectible
or are classified as past due or delinquent.
"Eligible Dealer" is a Dealer:
. which is located in the United States of America (including its
territories and possessions),
. which has not been identified by the Servicer as being the subject of
any voluntary or involuntary bankruptcy proceeding or in voluntary or
involuntary liquidation,
. in which VWOA or its affiliates do not have an equity investment, and
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. which has not been classified by the Servicer as being under Dealer
Default status.
"Eligible Deposit Account" means either:
. a segregated account with an Eligible Institution, or
. a segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United States
or any one of the states thereof including the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in the account, so
long as any of the securities of the depository institution has a
credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade.
"Eligible Institution" means:
. the corporate trust department of the Indenture Trustee, or
. a depository institution organized under the laws of the United
States or any one of the states thereof, or the District of Columbia
(or a domestic branch of a foreign bank), which at all times:
(a) has either:
(x) a long-term unsecured debt rating of Aa2 or better by
Moody's Investors Service, Inc. ("Moody's") and of AA or
better by Standard & Poor's Ratings Services ("Standard &
Poor's") or another rating acceptable to each Rating Agency
or
(y) a certificate of deposit rating of P-1 by Moody's or A-1 by
Standard & Poor's or another rating acceptable to each
Rating Agency
and
(a) is a member of the Federal Deposit Insurance Corporation.
"Eligible Investments" means any of the following, in each case with a
remaining term of no more than one year:
(a) direct obligations of, and obligations guaranteed as to full and
timely payment by, the United States or any agency or instrumentality
of the United States the obligations of which are backed by the full
faith and credit of the United States (other than the Government
National Mortgage Association);
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(b) direct obligations of, or obligations fully guaranteed by, the Federal
National Mortgage Association or any state then rated with the highest
available credit rating of the Rating Agencies for that kind of
obligations; the obligations must also be, at the time of investment,
otherwise acceptable to each Rating Agency;
(c) demand deposits, time deposits, certificates of deposit, bankers'
acceptances issued by, or federal funds sold by any depository
institution or trust company, including the Indenture Trustee,
incorporated under the laws of the United States or any state thereof
(or any domestic branch of a foreign bank) and subject to supervision
and examination by federal or state banking or depository institution
authorities, and whose deposits are fully insured by the Federal
Deposit Insurance Corporation, so long as at the time of the Trust's
investment or contractual commitment to invest therein the depository
institution or trust company has the Required Rating or the Indenture
Trustee shall have received a letter from each Rating Agency to the
effect that the investment would not result in the qualification,
downgrading or withdrawal of the ratings then assigned to the Rated
Securities;
(d) repurchase obligations held by the Indenture Trustee that are
acceptable to the Indenture Trustee for any security described in
clause (a) above or (f) below, or any other security issued or
guaranteed by any agency or instrumentality of the United States, in
either case entered into with a federal agency or depository
institution or trust company, including the Indenture Trustee, acting
as principal, whose obligations, if they had the same maturity as a
repurchase agreement, would be Eligible Investments under clause (b)
or (c) above;
(e) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
State so long as at the time of the investment either the long-term,
unsecured debt of the corporation has the highest available rating
from the Rating Agencies or the Indenture Trustee shall have received
a letter from each Rating Agency stating that the investment would not
result in the qualification, downgrading or withdrawal of the ratings
then assigned to any Rated Securities, or commercial paper or other
short-term debt having the Required Rating; however, the commercial
paper or other short-term debt may have a remaining term to maturity
of no longer than 30 days after the date of the investment;
(f) interests in any open-end or close-end management type investment
company or investment trust registered under the Investment Company
Act, whose portfolio is limited to the obligations of, or guaranteed
by, the United States and to agreements to repurchase those
obligations, which agreements, for principal and interest, are at
least 100% collateralized by those obligations marked to market on a
daily basis and the investment company or investment trust will take
delivery of
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those obligations either directly or through an independent custodian
designated in accordance with the Investment Company Act and
acceptable to each Rating Agency, as approved in writing by each
Rating Agency, as collateral for securities having ratings equivalent
to the ratings of the Rated Securities on the closing date;
(g) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation, as approved in writing by each Rating
Agency, as will not result in the qualification, downgrading or
withdrawal of the ratings then assigned to the Rated Securities by
each Rating Agency;
(h) investments in Eligible Investments maintained in "sweep accounts",
short-term asset management accounts and the like utilized for the
investment, on an overnight basis, of residual balances in investment
accounts maintained at the Indenture Trustee or any other depository
institution or trust company organized under the laws of the United
States or any state that is a member of the Federal Deposit Insurance
Corporation, the short-term debt of which has the highest available
credit rating of the Rating Agencies;
(i) guaranteed investment contracts entered into with any financial
institution having a final maturity of not more than one month from
the date of acquisition, the short-term debt securities of which
institution have the Required Rating;
(j) funds classified as money market funds or invested in money market
instruments consisting of: U.S. Treasury bills, other obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities; certificates of deposit; banker's acceptances; and
commercial paper (including variable master demand notes), except,
that the fund or the investment in the fund will be rated with the
highest available credit rating of Moody's and Standard & Poor's and
redemptions will be permitted on a daily or next business day basis;
and
(k) other investments acceptable to each Rating Agency, as approved in
writing by each Rating Agency, as will not result in the
qualification, downgrading or withdrawal of the ratings then assigned
to any Rated Securities by each Rating Agency.
However:
(v) no Eligible Investment may be purchased at a premium;
(with) any of the foregoing which constitutes a certificated security will
not be considered a Eligible Investment unless
(1) in the case of a certificated security that is in bearer form,
the Indenture Trustee acquires physical possession of the
certificated security, or a
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person, other than a securities intermediary, acquires
possession of the certificated security on behalf of the
Indenture Trustee; and
(2) in the case of a certificated security that is in registered
form,
(A) the Indenture Trustee acquires physical possession of the
certificated security, a person, other than a securities
intermediary, acquires possession of the certificated
security for the Indenture Trustee, or a securities
intermediary acting for the Indenture Trustee acquires
possession of the certificated security and the
certificated security has been specially indorsed to the
Indenture Trustee, and
(B) the certificated security is indorsed to the Indenture
Trustee or in blank by an effective Endorsement, or the
certificated security is registered in the name of the
Indenture Trustee;
(x) any of the foregoing that constitutes an uncertificated security will
not be considered an Eligible Investment unless
(1) the Indenture Trustee is registered by the issuer as the owner of
the Eligible Investment,
(2) a person, other than a securities intermediary, becomes the
registered owner of the uncertificated security on behalf of the
Indenture Trustee, or
(3) the issuer of the uncertificated security agrees that it will
comply with the instructions originated by the Indenture Trustee
without further consent by any registered owner of the
uncertificated security;
(y) any of the foregoing that constitutes a security entitlement will not
be considered an Eligible Investment unless the Indenture Trustee
becomes the entitlement holder thereof, or the securities intermediary
has agreed to comply with the entitlement orders originated by the
Indenture Trustee without further consent by the entitlement holder;
and
(z) any of the foregoing will not constitute an Eligible Investment unless
the Indenture Trustee has given value, and does not have notice of a
materially adverse claim.
For purposes of this definition, any reference to the highest available
credit rating of an obligation will mean the highest available credit rating for
the obligation (excluding any "+" signs associated with the rating), or any
lower credit rating (as approved in writing by each
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Rating Agency) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to any Rated Securities by any Rating
Agency.
"Eligible Portfolio" is defined under "The Accounts--General."
"Eligible Receivable" is defined to mean each Receivable:
. which was originated or acquired by VCI or an affiliate in the
ordinary course of business,
. which arose under an Account that at the time was an Eligible
Account,
. which is owned by VCI at the time of sale by VCI to the Transferor,
. which represents the obligation of a Dealer to repay an advance made
to or on behalf of the Dealer to finance Vehicles,
. which, at the time of creation and at the time of transfer to the
Trust (except, on the Closing Date, for Receivables relating to
Vehicles that have already been sold), is secured by a perfected first
priority security interest in the Vehicles relating thereto,
. which was created in compliance in all respects with all requirements
of law applicable thereto and under a Dealer financing agreement which
complies in all respects with all requirements of law applicable to
any party thereto,
. for which all material consents and governmental authorizations
required to be obtained by VCI or the Transferor in connection with
the creation of the Receivable or the transfer thereof to the Trust or
the performance by VCI of the Dealer financing agreement under which
the Receivable was created, have been duly obtained,
. as to which at all times following the transfer of the Receivable to
the Trust, the Trust will have good and marketable title thereto free
and clear of all liens arising prior to the transfer or arising at any
time, other than liens permitted by the Trust Sale and Servicing
Agreement,
. which has been the subject of a valid transfer and assignment from
the Transferor to the Trust of all the Transferor's interest therein
(including any proceeds thereof),
. which will at all times be the legal and assignable payment
obligation of the Dealer relating thereto, enforceable against the
Dealer in accordance with its
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terms, except as enforceability may be limited by applicable
bankruptcy or other similar laws,
. which at the time of transfer to the Trust is not subject to any
right of rescission, setoff, or any other defense (including defenses
arising out of violations of usury laws) of the Dealer,
. as to which, at the time of transfer of the Receivable to the Trust,
VCI and the Transferor were not in breach of any of their respective
obligations relating to that Receivable required to be satisfied at
that time,
. as to which, at the time of transfer of the Receivable to the Trust,
neither VCI nor the Transferor has taken or failed to take any action
which would impair the rights of the Trust or the Noteholders
therein,
. which constitutes an "instrument", "account", "chattel paper" or a
"general intangible" as defined in Article 9 of the Uniform Commercial
Code as then in effect in the State of Michigan,
. which was transferred to the Trust with all applicable governmental
authorization, and.
. which is payable in U.S. dollars.
"Enhancement" means any letter of credit, surety bond, cash collateral
account, reserve account, yield supplement account, guaranteed rate agreement,
swap or other interest rate protection agreement, maturity liquidity facility,
tax protection agreement or other arrangement issued for a Series or class of
Notes.
"Enhancement Agreement" means any agreement under which an Enhancement
Provider agrees to provide Enhancement for any Series.
"Enhancement Provider" means the issuer or provider of any Enhancement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear Operator" is defined under "The Series 2000-1 Notes--Book-entry
Registration."
"Euroclear Participants" means organizations participating in the Euroclear
system.
"Events of Default" for the Series 2000-1 Notes will consist of:
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. any failure to pay interest on the Series 2000-1 Notes as and when
the same becomes due and payable, which failure continues unremedied
for five days;
. any failure to make any required payment of principal on the Series
2000-1 Notes, which failure continues unremedied for five days after
the giving of written notice of the failure
(a) to the Servicer by the Indenture Trustee, or
(b) to the Servicer and the Indenture Trustee by the holders of not
less than 25% of the aggregate outstanding principal amount of
the Series 2000-1 Notes;
. any failure to observe or perform in any material respect any other
covenants or agreements in the Indenture, which failure materially and
adversely affects the rights of the Series 2000-1 Noteholders, and
which failure in either case continues for 60 days after the giving of
written notice of the failure
(x) to the Trust and the Transferor (or the Servicer, as applicable)
by the Indenture Trustee, or
(y) to the Trust, the Transferor (or the Servicer, as applicable) and
the Indenture Trustee by the holders of not less than 25% of the
principal amount of the Series 2000-1 Notes;
. failure to pay the unpaid principal balance of the Series 2000-1
Notes by the final payment date for the Series 2000-1 Notes; [the
final payment date for the Series 2000-1 Notes is [_____________]];
and
. specified events of bankruptcy, insolvency or receivership relating
to the Trust.
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"Excess Funding Account" is defined under "The Series 2000-1 Notes--Excess
Funding Account."
"Excess Payments" means, with respect to any Payment Date, the payments
with respect of Non-Principal Collections made to Residual Interestholder on the
Payment Date as described
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in clauses (7) and (8) of "Distribution from the Collection Account for the
Series 2000-1 Notes; Reserve Account; Yield Supplement Account--Non-Principal
Collections."
"Excess Principal Collections" means for any Collection Period the amount
of Available Noteholder Principal Collections for each Series remaining after
all required payments of principal have been made for the related Payment Date
to the Principal Funding Account for the Series or to the Noteholders of that
Series or a class of that Series.
"Excess Reserve Account Required Amount" for any Payment Date means an
amount equal to the greater of:
. [[__]% of the initial principal balance of the Series 2000-1 Notes at
the end of the Series 2000-1 Revolving Period
and
. the excess of
(1) the Series 2000-1 Available Subordinated Amount on the most
recent Reset Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Payment
Date)
over
(2) the excess of
(x) the Series Allocation Percentage of the Pool Balance on the
most recent Reset Date
over
(y) the Series 2000-1 Invested Amount on the Payment Date (after
giving effect to changes therein on the Payment Date).]
However, the Excess Reserve Account Required Amount will not exceed the Series
2000-1 Available Subordinated Amount on the most recent Reset Date (after giving
effect to the allocations, distributions, withdrawals and deposits to be made on
the Payment Date).
"Excess Residual Percentage" for any Collection Period means a percentage
(which percentage will never be less than 0% nor more than 100%) equal to:
. 100% minus, when used with respect to Non-Principal Collections and
Defaulted Receivables at all times and Principal Collections during
any Series 2000-1 Revolving Period, the sum of:
(1) the Series 2000-1 Floating Allocation Percentage with respect to
the Collection Period, and
(2) the percentage equivalent of a fraction:
(A) the numerator of which is the Series 2000-1 Available
Subordinated Amount as of the Determination Date occurring
in the Collection Period (after giving effect to the
allocations, distributions, withdrawals and deposits to be
made on the Payment Date immediately following that
Determination Date), and
(B) the denominator of which is the product of:
(I) the Pool Balance as of the most recent Reset Date, and
(II) the Series Allocation Percentage for the Collection
Period in respect of which the Excess Residual
Percentage is being calculated
or
. 100% minus, when used with respect to Principal Collections during
the Series 2000-1 Accumulation Period and any Early Amortization
Period, the sum of:
(1) the Principal Allocation Percentage with respect to the
Collection Period, and
(2) the percentage equivalent of a fraction:
(A) the numerator of which is the Series 2000-1 Available
Subordinated Amount as of the Determination Date occurring
in the Collection Period (after giving effect to the
allocations, distributions, withdrawals and deposits to be
made on the Payment Date immediately following that
Determination Date), and
(B) the denominator of which is the product of:
(I) the Pool Balance as of the most recent Reset Date, and
(II) the Series Allocation Percentage for the Collection
Period in respect of which the Excess Residual
Percentage is being calculated.
"Expected Principal Payment Date"is defined under "The Series 2000-1 Notes-
-Trust Distributions."
"Floating Allocation Percentage" means, for any Series and for any date,
the amount specified in the related Series Supplement.
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"Fully Funded Date" means, for any Series of Notes, the date on which the
amount on deposit in the Principal Funding Account for that Series equals the
outstanding principal amount of the Notes of that Series.
"Incremental Subordinated Amount" means, on any Determination Date, the
product of:
. a fraction:
(a) the numerator of which is the sum of:
(1) the Series 2000-1 Invested Amount on the last Reset Date,
and
(2) the Series 2000-1 Available Subordinate Amount for the
Determination Date (calculated without adding the
Incremental Subordinate Amount for the Determination Date as
described in clause (c) of the definition of "Series 2000-1
Available Subordinate Amount"), and
(b) the denominator is the Pool Balance on the Reset Date,
and
. the excess, if any, of:
(x) the Overconcentration Amount and the aggregate amount of
Ineligible Receivables on the Determination Date, over
(y) the aggregate amount of Ineligible Receivables and Receivables in
Accounts containing Dealer Overconcentrations (to the extent of
the Dealer Overconcentrations) in each case that became Defaulted
Receivables during the preceding Collection Period (less any
amount that are subject to reassignment from the Trust, unless
specified events of bankruptcy, insolvency or receivership
relating to the Transferor or VCI have occurred).
"Indenture" is defined under "The Trust--Capitalization of the Trust."
"Indenture Trustee" is defined under "The Series 2000-1 Notes--The
Indenture Trustee."
"Indirect Participants" is defined under "The Series 2000-1 Notes--Book-
entry Registration."
"Ineligible Account" means an Account that is no longer an Eligible
Account.
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"Ineligible Receivables" means all Receivables that are not Eligible
Receivables that arise in Eligible Accounts.
"Initial Accounts" means the Accounts to be included in the Eligible
Portfolio on the Initial Cut-Off Date.
"Initial Cut-Off Date" means [________ __, 2000].
"Initial Invested Amount" means, for any Series and for any date, the
amount specified in the related Series Supplement. The Initial Invested Amount
for any Series may be increased or decreased from time to time as specified in
the related Series Supplement.
"Insolvency Laws" means the United States Bankruptcy Code and other similar
state laws.
"Interest Period" means, for any Payment Date, the period from and
including the preceding Payment Date to but excluding the Payment Date (or, in
the case of the first Payment Date, from and including the Closing Date to but
excluding the first Payment Date).
"Investment Event" is defined under "The Series 2000-1 Notes--Trust
Distributions."
"Investment Period" is defined under "The Series 2000-1 Notes--Trust
Distributions."
"Investment Proceeds" for any Payment Date means an amount equal to the sum
of investment earnings deposited into the Collection Account on the related
Determination Date with respect to:
. funds held in the Reserve Account and Yield Supplement Account;
. the Series Allocation Percentage of funds held in the Collection
Account; and
. funds held in the Series 2000-1 Principal Funding Account.
"Investor Charge-Offs" means unreimbursed receivable charge-offs.
"IRS" means the Internal Revenue Service.
["LIBOR" with respect to any Interest Period will be established by the
Indenture Trustee and will equal the offered rate for United States dollar
deposits for one month that appears on Telerate Page 3750 as of 11:00 A.M.,
London time, on the second LIBOR Business Day prior to the first day of the
Interest Period (a "LIBOR Determination Date").
"Telerate Page 3750" means the display page so designated on the Dow
Jones Telerate Service (or any other page as may replace that page on that
service, or any other
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service as may be nominated as the information vendor, for the purpose of
displaying London interbank offered rates of major banks). If the London
interbank offered rate appears on Telerate Page 3750, LIBOR will be that
rate.
"LIBOR Business Day" means a day on which banking institutions in New
York, New York and London, England are not required or authorized by law to
be closed.
If on any LIBOR Determination Date the offered rate does not appear on
Telerate Page 3750:
. the Indenture Trustee will request each of the reference banks
(which will be major banks that are engaged in transactions in
the London interbank market selected by the Indenture Trustee) to
provide the Indenture Trustee with its offered quotation for
United States dollar deposits for one month to prime banks in the
London interbank market as of 11:00 A.M., London time, on the
LIBOR Determination Date.
. If at least two reference banks provide the Indenture Trustee
with offered quotations, LIBOR on the LIBOR Determination Date
will be the arithmetic mean, rounded upwards, if necessary, to
the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward, of all the quotations
provided by the reference banks.
. If on the LIBOR Determination Date fewer than two of the
reference banks provide the Indenture Trustee with offered
quotations, LIBOR on the LIBOR Determination Date will be the
arithmetic mean, rounded upwards, if necessary, to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward, of the offered per annum rates
that one or more leading banks in New York City selected by the
Indenture Trustee are quoting as of 11:00 A.M., New York City
time, on the LIBOR Determination Date to leading European banks
for United States dollar deposits for one month.
. However, that if the New York City banks selected by the
Indenture Trustee are not quoting as described above, LIBOR for
the LIBOR Determination Date will be LIBOR applicable to the
Interest Period immediately preceding the Interest Period for
which LIBOR is being determined.]
"Miscellaneous Payments" for any Collection Period means the sum of:
. Adjustment Payments and Transfer Deposit Amounts on deposit in
the Collection Account on the related Payment Date,
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. Unallocated Principal Collections on the related Payment Date
available to be treated as Miscellaneous Payments as described
under "The Series 2000-1 Notes--Excess Principal Collections."
"Monthly Dilution Amount" means an amount equal to the weighted average
Series Allocation Percentage of any Adjustment Payment required to be deposited
into the Collection Account under the Trust Sale and Servicing Agreement with
respect to the related Collection Period that has not been so deposited as of
the related Determination Date.
"Monthly Payment Rate" means, with respect to any Collection Period, a
fraction,
. the numerator of which is the amount of Principal Collections for the
Collection Period, and
. the denominator of which is the daily average Pool Balance for the
Collection Period.
"Monthly Servicing Fee" means, with respect to a Series of Notes for any
Payment Date, an amount generally equal to one-twelfth of the product of:
. the "Servicing Fee Rate" set forth in the Series Supplement for the
Series of Notes;
. the Pool Balance as of the last day of the preceding Collection
Period; and
. the Series Allocation Percentage for the Series for the immediately
preceding Collection Period.
"New Vehicles" is defined under "The Dealer Floor Plan Financing Business--
General."
"Non-Principal Collections" means all collections of interest, including
amounts recovered on Defaulted Receivables, insurance proceeds and Rebate
Payments, under the Receivables.
"Non-Principal Receivable" with respect to any Account are all amounts
billed to the Dealer in respect of interest and all other non-principal charges,
including service fees and handling fees.
"Non-Vehicle Collateral Security" means any parts inventory, equipment,
fixtures and service accounts of the Dealers securing Receivables.
"Noteholder Charge-Off Reversal Amount" is defined under "The Series 2000-1
Notes--Distribution from the Collection Account for Series 2000-1 Notes; Reserve
Account; Yield Supplement Account--Non-Principal Collections."
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"Noteholder Default Amount" means, with respect to any Payment Date, an
amount equal to the product of:
. the Series Allocable Defaulted Amount for the related Collection
Period, and
. the Series 2000-1 Floating Allocation Percentage for the related
Collection Period.
"Noteholder Monthly Servicing Fee" means on any Payment Date an amount
equal to:
. one-twelfth of the product of:
(a) the Servicing Fee Rate, and
. (b) the Series 2000-1 Invested Amount as of the last day of the
Collection Period second preceding that Payment Date.
"Noteholder Non-Principal Collections" for any Payment Date means the
portion of Series Allocable Non-Principal Collections for the related Collection
Period allocated to the Series 2000-1 Noteholders as described under " --
Allocation Percentages".
"Noteholders" means the holders of the Notes of all Series of Notes
outstanding, and "Noteholder" means the holder of any Note.
"Notes" means the asset backed notes of all Series outstanding, and "Note"
means any asset backed note of any Series outstanding.
"Note Rate" means, for any Interest Period, an amount equal to the lesser
of:
. LIBOR plus ____%, and
. the Assets Receivables Rate for the related Payment Date.
"OID" is defined in "Material Federal Income Tax Consequences--Consequences
to the Holders of the Series 2000-1 Notes--Interest and Original Issue
Discount."
"Overconcentration Amount" on any Determination Date means the aggregate
Principal Receivables in the Trust on the Determination Date that are Dealer
Overconcentrations.
"Owner Trustee" means [_______________], acting in its capacity as owner
trustee of the Volkswagen Credit Auto Master Owner Trust.
"Participants" is defined under "The Series 2000-1 Notes--Book-entry
Registration."
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"Payment Date" means the 20/th/ day of each month, or if, with respect to
any month in which the 20/th/ day is not a business day, the next succeeding
business day.
"Pool Balance" means, as of the time of determination thereof, the
aggregate amount of Principal Receivables in the Trust at the time of
determination.
"Prime Rate" is defined under "The Dealer Floor Plan Financing Business--
Revenue Experience."
"Principal Allocation Percentage" means for any Collection Period, the
percentage equivalent (which will never exceed 100%) of a fraction:
. the numerator of which is the Series 2000-1 Invested Amount as of the
last day of the Series 2000-1 Revolving Period, if the last day of the
Series 2000-1 Revolving Period has occurred, or, if last day of the
Series 2000-1 Revolving Period has not occurred, as of the most recent
Reset Date, and
. the denominator of which is the product of:
(x) the Pool Balance as of the last day of the Series 2000-1
Revolving Period, and
(y) the Series Allocation Percentage with respect to Collection
Period for which the Principal Allocation Percentage is being
calculated.
However, with respect to that portion of any Collection Period that falls
after the date on which any Early Amortization Event occurs (except if the
resulting Early Amortization Period has been terminated and the Series 2000-1
Revolving Period recommenced as provided in the Series 2000-1 Supplement), the
Principal Allocation Percentage will be reset using the Pool Balance as of the
close of business on the date on which the Early Amortization Event shall have
occurred, and Principal Collections will be allocated for the portion of the
Collection Period falling after the date on which the Early Amortization Event
occurs using the reset Principal Allocation Percentage.
"Principal Collections" means all collections of principal under the
Receivables.
"Principal Commencement Date" means, if the principal of any Series of
Notes is scheduled to be paid in installments, the specified date on which the
first installment of principal is scheduled to be paid.
"Principal Funding Account" is defined under "The Series 2000-1 Notes--
Trust Distributions."
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"Principal Funding Account Balance" means the amount on deposit in the
Series 2000-1 Principal Funding Account at any time.
"Principal Receivables" means, with respect to an Account, amounts shown on
the Servicer's records as Receivables (other than amounts which represent Non-
Principal Receivables) payable by the related Dealer.
"Principal Shortfalls" means, for any Payment Date and any Series, any
principal distributions to Noteholders of that Series which are either scheduled
or permitted and which have not been covered out of Principal Collections and
other specified amounts allocated to that Series.
"PTCE" is defined under "ERISA Considerations."
"Qualified stated interest" is defined in "Material Federal Income Tax
Consequences--Consequences to the Holders of the Series 2000-1 Notes--Interest
and Original Issue Discount."
"Rated Securities" means each class of securities that has been rated by a
Rating Agency at the request of the Transferor.
"Rating Agency" or "Rating Agencies" means any nationally recognized rating
agency or agencies designated by the Transferor in a Series Supplement or
otherwise then rating the Notes of that Series.
"Rebate Payment" is defined under "The Transfer and Servicing Agreements--
Adjustment Payments and Rebate Payments."
"Receivables" the wholesale receivables arising under the Accounts.
"Receivables Purchase Agreement" means the Receivables Purchase Agreement,
dated as of the Closing Date, between VCI and the Transferor, under which the
Transferor will purchase Receivables from VCI.
"Record Date" is defined under "The Series 2000-1 Notes--Distributions to
the Series 2000-1 Noteholders."
"Regulation" is defined under "ERISA Considerations."
"Related Document" means, the Indenture, the Series Supplements, the
Transfer and Servicing Agreements or the Trust Sale and Servicing Agreement.
Collectively, these documents will be the "Related Documents."
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"Removal Commencement Date" means, in connection with the removal of any
Accounts from the Trust, the Determination Date specified in a Removal Notice on
which the removal will commence.
"Removal and Repurchase Date" means, in connection with the removal of any
Designated Accounts from the Trust, the Determination Date on which the removal
of the Designated Accounts and the purchase of the Designated Receivables will
occur.
"Removal Date" means, in connection with the removal of any Designated
Account from the Trust, the Determination Date on which the Designated Balance
in the Designated Account is reduced to zero.
"Removal Notice" means a written notice specifying the Removal Commencement
Date on which removal of one or more Accounts from the Trust will commence and
the Designated Accounts to be removed from the Trust.
"Removed Account" is defined under "The Transfer and Servicing Agreements--
Removal of Accounts."
"Representation Date" means:
. for each Initial Account, the Initial Cut-Off Date and Closing Date,
. for each Additional Account, the applicable Additional Cut-Off Date
and Addition Date,
. for each Receivable in an Initial Account, the Cut-Off Date and the
Transfer Date for the Receivable, and
. for each Receivable in an Additional Account, the applicable Transfer
Date.
"Repurchased Receivable" is defined under "The Transfer and Servicing
Agreements--Removal of Accounts."
"Repurchased Receivables Repurchase Price" means in connection with the
repurchase of any Designated Receivables from the Trust on the Removal and
Repurchase Date, funds in an amount equal to the aggregate outstanding balance
of the Designated Receivables on Removal and Repurchase Date.
"Required Draw Amount" is defined under "The Series 2000-1 Notes--
Distribution from the Collection Account for Series 2000-1 Notes; Reserve
Account; Yield Supplement Account--Non-Principal Collections."
"Required Participation Amount" means for any date an amount equal to the
sum of:
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. the sum of the amounts for each Series obtained by multiplying the
Required Participation Percentage for the Series by the Initial
Invested Amount for the Series at the time of determination of
Required Participation Amount, and
. the Trust Available Subordinated Amount on the immediately preceding
Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Payment Date
following that Determination Date).
"Required Participation Percentage" means, with respect to a particular
Series, the percentage provided in the related Series Supplement, and, in the
case of Series 2000-1, 100%.
"Required Rating" means a rating on commercial paper or other short term
unsecured debt obligations of Prime-1 by Moody's so long as Moody's is a Rating
Agency and A-1 by Standard & Poor's so long as Standard & Poor's is a Rating
Agency; and any requirement that deposits or debt obligations have the "Required
Rating" will mean that the deposits or debt obligations have the foregoing
required ratings from Moody's and Standard & Poor's.
"Required Subordinated Amount" means, as of any date of determination, the
sum of:
. the product of:
(1) the Subordinated Percentage, and
(2) the Series 2000-1 Invested Amount as of the opening of business
on the date of determination,
. the Incremental Subordinated Amount.
The Required Subordinated Amount will initially be $________.
"Reserve Account" is defined under "The Series 2000-1 Notes--Distribution
from the Collection Account for Series 2000-1 Notes; Reserve Account; Yield
Supplement Account--Reserve Account."
"Reserve Account Deposit Amount" means the amount, if any, by which the
Reserve Account Required Amount exceeds the amount on deposit in the Reserve
Account.
"Reserve Account Required Amount" means for any Payment Date:
. with respect to an Early Amortization Period, an amount equal to the
Excess Reserve Account Required Amount, and
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. for any other Payment Date, an amount equal to [___]% of the
outstanding principal balance of the Series 2000-1 Notes on that
Payment Date (after giving effect to any change in the outstanding
principal balance on that Payment Date).
"Reset Date" means the last day of a Collection Period.
"Residual Interest" means the uncertificated residual beneficial ownership
interest in the Trust.
"Residual Interestholder" means the Transferor in its capacity as the
holder of the Residual Interest in the Trust.
"Residual Interest Percentage" means 100%, minus:
. the Series 2000-1 Floating Allocation Percentage, when used with
respect to Non-Principal Collections and Defaulted Receivables at all
times and Principal Collections during any Revolving Period, and
. the Principal Allocation Percentage, when used with respect to
Principal Collections during the Series 2000-1 Accumulation Period and
any Early Amortization Period.
"Residual Participation Amount" means, at any time of determination, an
amount equal to the excess, if any of:
. the Pool Balance at the time of determination, over
. the aggregate invested amounts of all Series then outstanding
determined as specified in the applicable Series Supplement.
"Revolving Period" is defined under "The Series 2000-1 Notes--Trust
Distributions."
"SEC" means the Securities and Exchange Commission.
"Series" is defined under "The Trust--Capitalization of the Trust."
"Series Adjusted Invested Amount" means, for a Series for any Collection
Period, an amount equal to the sum of:
. the Initial Invested Amount of that Series on the Determination Date
occurring in the Collection Period (after giving effect to any changes
therein to be made on the following Payment Date under the applicable
Series Supplement) after subtracting therefrom the excess, if any, of:
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(a) the cumulative amount as of all Investor Charge-Offs for the
Series for all Payment Dates preceding the Determination Date
occurring in the Collection Period, over
(b) the cumulative amount of all Investor Charge-Offs for the Series
that have been previously reversed under the applicable Series
Supplement for all Payment Dates preceding the Determination Date
occurring in the Collection Period,
and
. the Available Subordinated Amount, if any, for that Series on the
Determination Date occurring in the Collection Period (after giving
effect to the allocations, distributions, withdrawals and deposits to
be made on the Payment Date following that Determination Date under
the applicable Series Supplement).
"Series Allocable Defaulted Amount" means, for any Series for any
Collection Period, the product of:
. the Series Allocation Percentage for that Series, and
. the Defaulted Amount,
respectively, for the Collection Period.
"Series Allocable Miscellaneous Payments" means, for any Series for any
Collection Period, the product of:
. the Series Allocation Percentage for that Series, and
. the Miscellaneous Payments,
respectively, for the Collection Period.
"Series Allocable Non-Principal Collections" means, for any Series for any
Collection Period, the product of:
. the Series Allocation Percentage for that Series, and
. the amount of Non-Principal Collections,
respectively, for the Collection Period.
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"Series Allocable Principal Collections" means, for any Series for any
Collection Period, the product of:
. the Series Allocation Percentage for that Series, and
. the amount of Principal Collections,
respectively, for the Collection Period.
"Series Allocation Percentage" means, for a Series for any Collection
Period, the percentage equivalent of a fraction:
. the numerator of which is the Series Adjusted Invested Amount for the
Series as of the Reset Date for the immediately preceding Collection
Period, and
. the denominator of which is the Trust Adjusted Invested Amount as of
the Reset Date for the immediately preceding Collection Period.
"Series Supplement" is defined under "The Trust--Capitalization of the
Trust."
"Series 2000-1 Accumulation Period" means the Accumulation Period for the
Series 2000-1 Notes.
"Series 2000-1 Accumulation Period Commencement Date" is defined under "The
Series 2000-1 Notes--Principal."
"Series 2000-1 Available Subordinated Amount" means, for the first
Determination Date, the Required Subordinated Amount and, on any subsequent
Determination Date, an amount equal to:
(a) the lesser of
(1) the Series 2000-1 Available Subordinated Amount for the preceding
Determination Date, minus the Required Draw Amount with respect
to any Payment Date for the preceding Determination Date, minus
funds from the Reserve Fund applied to cover any portion of the
Noteholder Default Amount [and Monthly Dilution Amount], plus,
the amount of Noteholder Non-Principal Collections and Investment
Proceeds distributed to the Regular Interestholder on the
preceding Payment Date as Excess Payments, and
(2) the Subordinated Percentage of the Series 2000-1 Invested Amount;
minus
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(b) in the case of clause (a)(1) the Incremental Subordinated Amount for
the preceding Determination Date; plus
(c) the Incremental Subordinated Amount for the Determination Date; plus
(d) the Subordinated Percentage of funds that have been withdrawn from the
Excess Funding Account on the succeeding Payment Date and paid to the
Residual Interestholder or allocated to one or more Series.
However, once the Series 2000-1 Accumulation Period or any Early
Amortization Period that is not cured as described in this prospectus shall have
commenced, the Series 2000-1 Available Subordinated Amount will be calculated
based on the Invested Amount on the last day of the Series 2000-1 Revolving
Period.
"Series 2000-1 Controlled Accumulation Amount" means an amount equal to:
. the aggregate outstanding principal balance of the Series 2000-1
Notes as of the Payment Date immediately preceding the first day of
the Series 2000-1 Accumulation Period (after giving effect to any
changes therein on that Payment Date),
divided by
. the Accumulation Period Length.
"Series 2000-1 Controlled Deposit Amount" for a Payment Date means the
excess, if any, of:
. the product of:
(a) the Series 2000-1 Controlled Accumulation Amount, and
(b) the number of Payment Dates from and including the first Payment
Date with respect to the Series 2000-1 Accumulation Period
through and including the Payment Date for which the Series 2000-
1 Controlled Deposit Amount is being determined (but not in
excess of the Accumulation Period Length),
over,
. the amount on deposit in the Series 2000-1 Principal Funding Account
before giving effect to any withdrawals from or deposits to the Series
2000-1 Principal Funding Account on the Payment Date for which the
Series 2000-1 Controlled Deposit Amount is being determined.
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"Series 2000-1 Expected Principal Payment Date" means the [____________]
Payment Date.
"Series 2000-1 Floating Allocation Percentage" means for any Collection
Period, the percentage equivalent (which will never exceed 100%) of a fraction:
. the numerator of which is the Series 2000-1 Invested Amount as of the
most recent Reset Date, and
. the denominator of which is the product of:
(x) the Pool Balance as of that Reset Date, and
(y) the Series Allocation Percentage for the Collection Period for
which the Series 2000-1 Floating Allocation Percentage is being
calculated.
However, with respect to the first Collection Period, the Series 2000-1
Floating Allocation Percentage means the percentage equivalent of a fraction:
. the numerator of which is the Series 2000-1 Initial Invested Amount,
and
. the denominator of which is the product of the Pool Balance on the
Initial Cut-Off Date and the Series Allocation Percentage with respect
to the Initial Cut-Off Date.
"Series 2000-1 Initial Invested Amount" means
. the portion of the Series 2000-1 Invested Amount which is invested in
Principal Receivables on the Closing Date, which is expected to equal
approximately $[____________] (based on information as of [__________
__], 2000), plus
. the amount of any withdrawals from the Excess Funding Account in
connection with the purchase of an additional interest in Principal
Receivables of the Trust since the Closing Date, minus
. the amount of any additions to the Excess Funding Account in
connection with a reduction in the Principal Receivables in the Trust
since the Closing Date.
"Series 2000-1 Invested Amount" means for any date an amount equal to
. the Series 2000-1 Initial Invested Amount, minus
. the amount, without duplication, of principal payments (except
principal payments made from the Excess Funding Account and any
transfers from the Excess Funding Account to the Series 2000-1
Principal Funding Account) made to Series
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<PAGE>
2000-1 Noteholders or deposited to the Series 2000-1 Principal Funding
Account in respect of the Series 2000-1 Notes prior to the date of
determination of the Series 2000-1 Invested Amount since the Closing
Date, minus
. the excess, if any, of:
(a) the aggregate amount of Series 2000-1 Noteholder Charge-Offs for
all Payment Dates preceding the date of determination of the
Series 2000-1 Invested Amount, over
(b) the aggregate amount of any reversals of Series 2000-1 Noteholder
Charge-Offs for all Payment Dates preceding the date of
determination of the Series 2000-1 Invested Amount.
"Series 2000-1 Monthly Interest" for any Payment Date means the amount of
interest accrued in respect of the Series 2000-1 Notes as described above for
the Payment Date.
"Series 2000-1 Monthly Principal" with respect to any Payment Date relating
to the Series 2000-1 Accumulation Period or any Early Amortization Period will
equal Available Noteholder Principal Collections for the Payment Date, except
that for each Payment Date with respect to the Series 2000-1 Accumulation
Period, Series 2000-1 Monthly Principal may not exceed the Series 2000-1
Controlled Deposit Amount; and except that Series 2000-1 Monthly Principal will
not exceed the Series 2000-1 Invested Amount.
"Series 2000-1 Noteholder" means a holder of a Series 2000-1 Note.
"Series 2000-1 Noteholder Charge-Off" is defined under "The Series 2000-1
Notes--Series 2000-1 Noteholder Charge-Off."
"Series 2000-1 Principal Funding Account" is defined under "The Series
2000-1 Notes--Series 2000-1 Principal Funding Account."
"Series 2000-1 Revolving Period" means the period:
. beginning at the close of business on the Closing Date,
. and terminating on the earlier of:
(a) the close of business on the day immediately preceding the Series
2000-1 Accumulation Period Commencement Date, and
(b) the close of business on the day an Early Amortization Period
commences.
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<PAGE>
However, the Series 2000-1 Revolving Period may recommence upon the
termination of an Early Amortization Period under the circumstances described in
this prospectus. See "--Early Amortization Events".
"Series 2000-1 Stated Maturity Date" means the [_________] Payment Date.
"Series 2000-1 Supplement" is defined under "The Series 2000-1 Notes--
General."
"Service Transfer" is defined under "The Transfer and Servicing Agreements-
-Servicing Default."
A "Servicing Default" refers to any of the following events:
(1) failure by the Servicer to make any payment, transfer or deposit, or
to give instructions to the Owner Trustee or the Indenture Trustee to
make any payment, transfer or deposit or as to any action to be taken
under any Enhancement Agreement, on the date the Servicer is required
to do so under the Trust Sale and Servicing Agreement, which is not
cured within a five business day grace period;
(2) failure on the part of the Servicer duly to observe or perform any
other covenants or agreements of the Servicer in the Trust Sale and
Servicing Agreement which failure has a materially adverse effect on
the Noteholders of any outstanding Series and which continues
unremedied for a period of 30 days after the date written notice of
the failure shall have been given to the Servicer by the Indenture
Trustee, or the Servicer delegates its duties under the Trust Sale and
Servicing Agreement, except as specifically permitted thereunder;
(3) any representation, warranty or certification made by the Servicer in
the Trust Sale and Servicing Agreement or in any certificate delivered
under the Trust Sale and Servicing Agreement proves to have been
incorrect when made, has a materially adverse effect on the rights of
the Noteholders of any outstanding Series, and which materially
adverse effect continues for a period of 60 days after written notice
thereof shall have been given to the Servicer by the Indenture Trustee
or Owner Trustee; or
(4) the occurrence of specified events of bankruptcy, insolvency or
receivership for the Servicer.
However, a delay in or failure of performance referred to under clause (1)
above for a period of ten business days or referred to under clauses (2) or (3)
for a period of 60 business days, will not constitute a Servicing Default if the
delay or failure could not have been prevented by the execution of reasonable
diligence by the Servicer and was caused by an act of God, war, vandalism,
sabotage, accidents, fires, floods, strikes, labor disputes, mechanical
breakdown, shortages or delays in obtaining parts or suitable equipment,
material, labor or transportation,
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<PAGE>
acts of subcontractors, interruption of utility services, acts of any unit of
governmental agency, or other similar or dissimilar occurrence. Upon the
occurrence of any of the events described in the prior sentence, the Servicer
will not be relieved from using its best efforts to perform its obligations in a
timely manner in accordance with the terms of the Trust Sale and Servicing
Agreement, and the Servicer will provide the Indenture Trustee, the Owner
Trustee, any Enhancement Provider, the Transferor and the Noteholders prompt
notice of the failure or delay by it, together with a description of its efforts
to so perform its obligations.
"Servicing Fee" means the Servicer's compensation for its servicing
activities and reimbursement for its expenses under the Transfer and Servicing
Agreements, will be a monthly servicing fee equal to the sum of the Monthly
Servicing Fees.
"Special Tax Counsel" means Mayer, Brown & Platt in its capacity as special
tax counsel to the Transferor and the Trust.
"Subordinated Percentage" means the percentage equivalent of a fraction:
. the numerator of which is [____]%, and
. the denominator of which will be the excess of
(a) 100%, over
(b) [____]%.
"Successor Servicer" means a successor Servicer appointed by the Indenture
Trustee following a Servicing Default and the delivery by the Indenture Trustee
of a Termination Notice.
"Termination Notice" means, a written notice from the Indenture Trustee,
delivered following the occurrence of a Servicing Default, that the Servicer
will be terminated.
"Transferor" means Volkswagen Dealer Finance, LLC, a Delaware limited
liability company.
"Transfer and Servicing Agreements" means, collectively, the Receivables
Purchase Agreement, the Trust and Servicing Agreement, the Trust Agreement and
the Administrative Agreement.
"Transfer Date" means, for a Receivable arising after the Cut-Off Date, the
date on which the Receivable is originated, unless the Receivable arose in an
Additional Account prior to the applicable Addition Date, in which case
"Transfer Date" means the Addition Date.
"Transfer Deposit Amount" is defined under "The Transfer and Servicing
Agreements--Representations and Warranties by the Transferor."
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<PAGE>
"Trust" is defined under "The Trust--General."
"Trust Adjusted Invested Amount" means, for any day, the sum of the Series
Adjusted Invested Amounts for all outstanding Series.
"Trust Agreement" means the Trust Agreement, between the Transferor and
[______________________], as Owner Trustee, dated on or before the Closing Date.
"Trust Available Subordinated Amount" means the aggregate Available
Subordinated Amounts for all outstanding Series.
"Trust Sale and Servicing Agreement" means the Trust Sale and Servicing
Agreement, dated as of the Closing Date, among the Transferor, the Trust and VCI
as Servicer.
"Unallocated Principal Collections" is defined under "The Series 2000-1
Notes--Excess Principal Collections."
"Underwriters" is defined under "Underwriting."
"Underwriting Agreement" means the Underwriting Agreement among the
Transferor, the Trust and Morgan Stanley & Co. Incorporated.
"Used Vehicles" is defined under "The Dealer Floor Plan Financing Business-
-General."
"U.S. Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"U.S. Wholesale Portfolio" is defined under "The Dealer Floor Plan
Financing Business--General."
"VCI" means VW Credit, Inc., a Delaware corporation.
"VCI's Other Loans" is defined under "The Transfer and Servicing
Agreements--Intercreditor Agreements."
"Vehicles" means the motor vehicles securing the Receivables.
"VWAG" means Volkswagen AG, a German resident company.
"VWAG Group" means VWAG and its subsidiaries.
"VWOA" means Volkswagen of America, Inc., a New Jersey corporation and
indirect wholly-owned subsidiary of VWAG.
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<PAGE>
"Yield Supplement Account Deposit Amount" means the amount, if any, by
which the Yield Supplement Account Required Amount exceeds the amount on deposit
on the Yield Supplement Account.
"Yield Supplement Account Required Amount" means for any Payment Date ___%
of the outstanding principal balance of the Series 2000-1 Notes for the Payment
Date (after giving effect to any change therein on the Payment Date).
144
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the securities being registered, other than
underwriting discounts and commissions.
Securities and Exchange Commission registration fee $264
Accounting fees and expenses *
Legal fees and expenses *
Trustee's fees and expenses *
Printing and engraving *
Blue sky fees and expenses (including counsel) *
Rating Agency Fees *
Miscellaneous$ *
----
Total$ *
----
_____________________
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
VWOA is incorporated under New Jersey law. Section 14A:3-5 of the New
Jersey Business Corporation Act provides that a New Jersey corporation may
indemnify a corporate agent against his expenses and liabilities in connection
with any proceeding involving the corporate agent by reason of his being or
having been such a corporate agent, other than a proceeding by or in the right
of a corporation, if such a corporate agent acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal proceeding, such corporate agent
had no reasonable cause to believe his conduct was unlawful. A New Jersey
corporation may indemnify a corporate agent against his expenses in connection
with any proceeding by or in the right of the corporation under the same
conditions except that no indemnification shall be provided without judicial
approval if the corporate agent shall have been adjudged to be liable to the
corporation.
Article V, Section 6 of the Certificate of Incorporation of VWOA provides
that VWOA shall indemnify any officer or director of VWOA, or any other officer
or director of another corporation in which VWOA owns shares of capital stock or
of which VWOA is a creditor ("Other Director"), when such Other Director may
have served at VWOA's request; provided that the officer or director has not
been adjudged, either by a final determination on the merits in an action, suit
or proceeding or by a majority of a committee composed of directors not involved
in the matter, to have been derelict in the performance of his duties as officer
or director as charged in the action, suit or proceeding. Article IX, Section 1
of
II-1
<PAGE>
the By-Laws of VWOA provides that VWOA shall indemnify any officer or director
of VWOA, or any Other Director, when such Other Director may have served at
VWOA's request, whose actions were taken in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal proceeding, such officer or
director shall have had no reasonable cause to believe his conduct was unlawful.
VCI is incorporated under Delaware law. Section 145 of the Delaware General
Corporation Law provides that a Delaware corporation may indemnify any persons,
including officers and directors, who are, or are threatened to be made, parties
to any threatened, pending or completed legal, action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation), by reason of the fact that such person
was an officer or director of such corporation, or is or was servicing at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding; provided such officer or director acted in good faith and in a
manner reasonably believed to be in or not opposed to the corporation's best
interest and, for criminal proceedings, had no reasonable cause to believe that
his conduct was illegal. A Delaware corporation may indemnify officers or
directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in defense
of any action referred to above, the corporation must indemnify him against the
expenses which such officer or director actually and reasonably incurred.
Section 20(a) of the Limited Liability Company Agreement of the Transferor
provides that, subject to certain exceptions, a director shall not be personally
liable to the company or any other person who has an interest in or claim
against the company for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such director in good faith on behalf of the
company and in a manner reasonably believed to be within the scope of the
authority conferred on such director by the Limited Liability Company Agreement.
Section 20(b) of the Limited Liability Company Agreement of the Transferor
provides that the Transferor shall indemnify any officer or director to the
fullest extent permitted by applicable law.
VCI has entered into an agreement with each officer and director of the
Transferor providing that VCI will indemnify such officer or director to the
fullest extent permitted by applicable law against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement reasonably
incurred by such person in connection with any action, suit or proceeding to
which such person becomes or is threatened to become a party by reason of
serving as such an officer or director.
In addition to the foregoing, VCI and the Transferor have entered into an
Underwriting Agreement with the Underwriters whereby VCI and the Transferor
agree to jointly and severally indemnify and hold harmless each Underwriter
against any civil liabilities under the Securities Act of 1933, as amended,
insofar as civil liabilities are based upon the inclusion of any untrue
statement of material facts or the omission of material facts contained in the
Registration Statement, Prospectus or any amendment thereto.
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<PAGE>
ITEM 16. EXHIBITS.
(a) Exhibits:
The exhibits to this Registration Statement are listed in the Exhibit Index
below.
(b) Financial Statements Schedules: Not applicable with respect to the
Registrant.
ITEM 17. UNDERTAKINGS.
The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(l) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time that it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and reasonably believes that by the time of
sale of the securities registered hereunder, said securities will be rated
"investment grade" as required for asset-backed securities offered on Form S-3.
The Registrant has duly caused this amendment to the registration statement be
signed on its behalf by the undersigned, hereunto duly authorized in the City of
Auburn Hills, State of Michigan, on June [19], 2000.
VOLKSWAGEN DEALER FINANCE, LLC
As originator of the Trust described
herein and registrant
By: /s/ Allen Strang
-----------------
Name: Allen Strang
Title: President and Secretary
By: *
------------------------------------
Name: Frank Witter
Title: Treasurer
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<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to this registration statement has been signed on June [19], 2000 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURES CAPACITY
---------- --------
<S> <C>
/s/ Allen Strang President and Secretary and Director
------------------------ (Principal Executive Officer)
Allen Strang
* Vice President and Director
------------------------
Wolfgang Rasper
* Treasurer and Director
------------------------ (Principal Financial Officer)
Frank Witter
* Assistant Treasurer
------------------------
Thomas A. Smith
* Assistant Treasurer
------------------------
Timothy Flaherty
* Assistant Treasurer
------------------------ (Principal Accounting Officer)
Dennis Tack
</TABLE>
* /s/ Allen Strang
-----------------------
By: Allen Strang, as Attorney-in-Fact
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
---------- -----------
*1.1 Form of Underwriting Agreement for Series 2000-1 Notes.
*3.1 Certificate of Formation and Limited Liability Company Agreement of
Volkswagen Dealer Finance, LLC.
*4.1 Form of Indenture between the Trust and the Indenture Trustee.
*4.2 Form of Series Supplement (included in Exhibit 4.1 hereto).
5.1 Opinion of Mayer, Brown & Platt with respect to legality.
8.1 Opinion of Mayer, Brown & Platt with respect to tax matters.
+24.1 Power of Attorney (included in Part II of the initial filing of the
Registration Statement).
*25.1 Form of T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of the Indenture Trustee.
*99.1 Form of Trust Sale and Servicing Agreement among VW Credit, Inc.,
Volkswagen Dealer Finance, LLC and Volkswagen Credit Auto Master
Owner Trust.
*99.2 Form of Receivables Purchase Agreement between VW Credit, Inc. and
Volkswagen Dealer Finance, LLC.
*99.3 Form of Administration Agreement among Volkswagen Credit Auto
Master Owner Trust, VW Credit, Inc. and the Indenture Trustee.
*99.4 Form of Trust Agreement between Volkswagen Dealer Finance, LLC and
the Owner Trustee.
99.5 Form of Master Security Agreement and Promissory Note
Previously filed.
*To be filed by amendment.
II-6
