Obligation Volkswagon 3.875% ( XS1629774230 ) en EUR

Volkswagon

96.82 % ▼

Allemagne

XS1629774230 ( en EUR )

3.875% par an ( paiement annuel )

Perpétuelle

Prospectus brochure de l'obligation Volkswagen XS1629774230 en EUR 3.875%, échéance Perpétuelle

14/06/2025 ( Dans 39 jours )

Volkswagen est un constructeur automobile allemand, l'un des plus grands fabricants mondiaux de véhicules, produisant un large éventail de voitures, de SUV et de véhicules utilitaires, sous plusieurs marques dont Audi, Porsche, Skoda et SEAT.

L'Obligation émise par Volkswagon ( Allemagne ) , en EUR, avec le code ISIN XS1629774230, paye un coupon de 3.875% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le Perpétuelle

Volkswagen International Finance N.V.
(public limited liability corporation (naamloze vennootschap) under the laws of The Netherlands)
EUR 1,500,000,000 Undated Subordinated Notes subject to Interest Rate Reset with a First Call Date in 2022
Issue Price: 99.757%
EUR 2,000,000,000 Undated Subordinated Notes subject to Interest Rate Reset with a First Call Date in 2027
Issue Price: 100.00%
guaranteed on a subordinated basis by
VOLKSWAGEN AKTIENGESELLSCHAFT
(a stock corporation (Aktiengesellschaft) incorporated under the laws of the Federal Republic of Germany)

Volkswagen International Finance N.V. (the "Issuer" or "VIF") will issue EUR 1,500,000,000 in aggregate principal amount of
undated subordinated notes subject to interest rate reset with a first call date on December 14, 2022 (the "NC5.5 Notes") and
EUR 2,000,000,000 in aggregate principal amount of undated subordinated notes subject to interest rate reset with a first call date on
June 14, 2027 (the "NC10 Notes" and, together with the NC5.5 Notes, the "Notes") in a denomination of EUR 100,000 each on June
14, 2017 (the "Issue Date") at an issue price of 99.757% of their principal amount in respect of the NC5.5 Notes and 100.00% of their
principal amount in respect of the NC10 Notes (the "Offering"). The Notes are unconditionally and irrevocably guaranteed, on a
subordinated basis, by Volkswagen Aktiengesellschaft (the "Guarantor" or "Volkswagen AG" and together with its consolidated
subsidiaries, the "Volkswagen Group" or "Volkswagen").
The NC5.5 Notes shall bear interest on their principal amount (i) from and including June 14, 2017 (the "NC5.5 Interest
Commencement Date") to but excluding December 14, 2022 (the "NC5.5 First Call Date") at a rate of 2.700% per annum; (ii) from
and including the NC5.5 First Call Date to but excluding December 14, 2027 (the "First NC5.5 Step-up Date") at the relevant 5-year
swap rate for the relevant Reset Period (as defined herein) plus a margin of 254 basis points per annum (no step-up); (iii) from and
including the First NC5.5 Step-up Date to but excluding December 14, 2042 (the "Second NC5.5 Step-up Date") at the relevant 5-year
swap rate for the relevant Reset Period plus a margin of 279 basis points per annum (including a 25 basis points step-up); and (iv) from
and including the Second NC5.5 Step-up Date to but excluding the date on which the Issuer redeems the Notes in whole at the relevant
5-year swap rate for the relevant Reset Period plus a margin of 354 basis points per annum (including a further 75 basis points step-up).
During each such period interest is scheduled to be paid annually in arrear on December 14 of each year (each an "Interest Payment
Date"), commencing on December 14, 2017 (short first coupon).
The NC10 Notes shall bear interest on their principal amount (i) from and including June 14, 2017 (the "NC10 Interest
Commencement Date") to but excluding June 14, 2027 (the "NC10 First Call Date") at a rate of 3.875% per annum; (ii) from and
including the NC10 First Call Date to but excluding June 14, 2047 (the "Second NC10 Step-up Date") at the relevant 10-year swap
rate for the relevant Reset Period plus a margin of 337 basis points per annum (including a 25 basis points step-up); and (iii) from and
including the Second NC10 Step-up Date to but excluding the date on which the Issuer redeems the Notes in whole at the relevant 10-
year swap rate for the relevant Reset Period plus a margin of 412 basis points per annum (including a further 75 basis points step-up).
During each such period interest is scheduled to be paid annually in arrear on June 14 of each year (each an "Interest Payment Date"),
commencing on June 14, 2018.
The Issuer is entitled to defer payments of interest on any Interest Payment Date (as defined in the Terms and Conditions) ("Arrears of
Interest") and may pay such Arrears of Interest voluntarily at any time, but only has to pay such Arrears of Interest under certain
circumstances as laid out in the terms and conditions of the NC5.5 Notes (the "NC5.5 Note Terms and Conditions") or the terms and
conditions of the NC10 Notes (the "NC10 Note Terms and Conditions" and, together with the NC5.5 Note Terms and Conditions, the
"Terms and Conditions"), as applicable.
Each issue of the Notes is redeemable in whole but not in part at the option of the Issuer at their principal amount plus accrued and
unpaid interest and upon payment of any outstanding Arrears of Interest on the NC5.5 First Call Date for the NC5.5 Notes and on the
NC10 First Call Date for the NC10 Notes and on any respective Interest Payment Date thereafter. The Issuer may also redeem each
issue separately in whole but not in part at any time before the respective first call dates following a Rating Event, an Accounting Event,
a Tax Deductibility Event or a Gross-up Event at the Early Redemption Amount (each as defined in the applicable Terms and
Conditions). Additionally the Issuer may redeem each issue separately, in whole but not in part, if any of the Issuer, the Guarantor or
any of the Guarantor's subsidiaries has, severally or jointly, purchased or redeemed at least 80% of the originally issued aggregate
principal amount of the Notes of such issue.
Each of the Notes will initially be represented by a temporary global note, without interest coupons, which will be exchangeable in
whole or in part for a permanent global note without interest coupons, not earlier than 40 days after the Issue Date, upon certification as
to non-U.S. beneficial ownership. The Notes are issued in bearer form with a denomination of EUR 100,000 each.

The Notes are rated BBB- by Standard & Poor's Ratings Services ("S&P") and Baa2 by Moody's Investors Service Ltd. ("Moody's"
and, together with S&P, the "Rating Agencies"). A rating is not a recommendation to buy, sell or hold securities and may be subject to
revision, suspension or withdrawal at any time by the assigning rating organization. As of the date of this Prospectus, each of the Rating
Agencies is a credit rating agency established in the European Union and registered under Regulation (EC) No 1060/2009 of the
European Parliament and of the Council of 16 September 2009 on credit rating agencies (as amended) (the "CRA Regulation"). In
general, European regulated investors are restricted from using a credit rating for regulatory purposes if such credit rating is not issued
by a rating agency established in the European Union and registered under the CRA Regulation. A list of credit rating agencies
registered under the CRA Regulation is available for viewing at the ESMA's website.
This prospectus (the "Prospectus") constitutes a prospectus within the meaning of Article 5.3 of Directive 2003/71/EC of the European
Parliament and of the Council of 4 November 2003 as amended from time to time (the "Prospectus Directive"). This Prospectus, any
supplement thereto and all documents incorporated by reference will be published in electronic form on the website of the Luxembourg
Stock Exchange (www.bourse.lu) and will be available free of charge at the specified office of the Issuer.
This Prospectus has been approved by the Commission de Surveillance du Secteur Financier of the Grand Duchy of Luxembourg (the
"CSSF") in its capacity as competent authority under the Luxembourg law relating to prospectuses for securities, as amended (Loi du 10
juillet 2005 relative aux prospectus pour valeurs mobilières the "Luxembourg Prospectus Law"). As provided in Article 7(7) of the
Luxembourg Prospectus Law, by approving this Prospectus, the CSSF does not give any undertaking as to the economical and financial
soundness of the operation or the quality or solvency of the Issuer. The Issuer will prepare and make available an appropriate
supplement to this Prospectus if at any time the Issuer will be required to prepare a prospectus supplement pursuant to Article 13 of the
Luxembourg Prospectus Law.

Prospective investors should be aware that an investment in the Notes involves a risk and that, if certain risks, in particular
those described under "Risk Factors" occur, the investors may lose all or a very substantial part of their investment.
This document does not constitute an offer to sell, or the solicitation of an offer to buy Notes in any jurisdiction where such offer or
solicitation is unlawful. The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended
(the "Securities Act"), and are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or
delivered within the United States or to U.S. persons. For a further description of certain restrictions on the offering and sale of the
Notes and on the distribution of this document, see "Selling Restrictions".
Application has been made to the Luxembourg Stock Exchange for the Notes to be listed on the Official List of the Luxembourg Stock
Exchange (the "Official List") and to be admitted to trading on the Luxembourg Stock Exchange's Regulated Market. The Luxembourg
Stock Exchange's Regulated Market is a regulated market for the purposes of Directive 2004/39/EC of the European Parliament and of
the Council of April 21, 2004 on Markets in Financial Instruments, as amended.
Joint Bookrunners
BofA Merrill Lynch
Crédit Agricole CIB
Goldman Sachs
HSBC MUFG
International
The date of this Prospectus is June 8, 2017

The Issuer and the Guarantor accept responsibility for the information contained in this Prospectus and
relating to the Notes. To the best of the knowledge and belief of the Issuer and the Guarantor (having taken all
reasonable care to ensure that such is the case) the information contained in this Prospectus is in accordance
with the facts and does not omit anything likely to affect the import of such information.
This Prospectus is to be read in conjunction with any supplement hereto and with the documents incorporated
by reference as set forth in "General InformationDocuments Incorporated by Reference". This Prospectus
should be read and construed on the basis that the documents incorporated by reference form part of the
Prospectus.
This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than
the Notes and does not constitute an offer to sell or a solicitation of an offer to buy any Notes to any person in
any jurisdiction in which it is unlawful to make any such offer or solicitation to such person.
Crédit Agricole Corporate and Investment Bank, Goldman Sachs International, HSBC Bank plc, Merrill
Lynch International and MUFG Securities EMEA plc (together, the "Joint Bookrunners" or the
"Managers") expressly do not undertake to review the financial condition or affairs of the Issuer or the
Guarantor during the term of the Notes or to advise any investor in the Notes of any information coming to
their attention. No Manager accepts any liability or makes any representation or warranty, expressed or
implied, as to the accuracy or completeness of the information contained or incorporated by reference in this
Prospectus or any other information provided by the Issuer in connection with the Offering, and nothing in
this Prospectus is, or shall be relied upon as, a promise or representation by the Managers.
To the fullest extent permitted by law, the Managers accept no responsibility whatsoever for the contents of
this Prospectus or for any other statement, made or purported to be made by a Manager or on its behalf in
connection with the Issuer, the Guarantor, or the issue and offering of the Notes. Each Manager accordingly
disclaims all and any liability whether arising in tort or contract or otherwise which it might otherwise have in
respect of this Prospectus or any such statement.
Only persons authorized in this Prospectus are entitled to use the Prospectus in connection with the Offering.
The delivery of this Prospectus at any time after the date hereof shall not, under any circumstances, create any
implication that there has been no change in the affairs of the Issuer or the Guarantor since the date hereof or
that the information set out in this Prospectus is correct as at any time since its date. No person is or has been
authorized by the Issuer to give any information or to make any representation not contained in or not
consistent with this Prospectus or any other information supplied in connection with the Offering and, if given
or made, such information or representation must not be relied upon as having been authorized by the Issuer
or any of the Managers.
Neither this Prospectus nor any other information supplied in connection with the Offering (a) is intended to
provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by the
Issuer or any of the Managers that any recipient of this Prospectus or any other information supplied in
connection with the Offering should purchase any Notes. Each investor contemplating purchasing any Notes
should make its own independent investigation of the financial condition and affairs, and its own appraisal of
the creditworthiness, of the Issuer and the Guarantor.
This Prospectus has been prepared by the Issuer in connection with the Offering solely for the purpose of
enabling a prospective investor to consider the purchase of the Notes and to comply with the listing
requirements of the regulated market of the Luxembourg Stock Exchange. In making an investment decision
regarding the Notes, investors must rely on their own examination of the Issuer and the Guarantor and the
terms of the Offering, including the merits and risks involved. The Offering is being made solely on the basis
of this Prospectus.
Reproduction and distribution of this Prospectus or disclosure or use of the information contained herein for
any purpose other than considering an investment in the Notes is prohibited. The information contained in this
Prospectus has been provided by the Issuer. No representation or warranty, explicit or implied, is made by the
Managers as to the accuracy or completeness of the information set forth herein and nothing contained in this
Prospectus is, or shall be relied upon as a promise or representation, whether as to the past or the future.

- i -

The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospective
investor should consult its own lawyer, financial adviser or tax adviser for legal, financial or tax advice.
The Issuer, the Guarantor and the Managers do not represent that this Prospectus may be lawfully distributed,
or that the Notes may be lawfully offered, in compliance with any applicable registration or other
requirements in any jurisdiction, or pursuant to an exemption available thereunder, or assume any
responsibility for facilitating any such distribution or offering. In particular, subject to the following
paragraph, no action has been taken by the Issuer or the Managers which is intended to permit a public
offering of the Notes or the distribution of this Prospectus in any jurisdiction where action for that purpose is
required. Subject to the following paragraph, no Notes may be offered or sold, directly or indirectly, and
neither this Prospectus nor any advertisement or other offering material may be distributed or published in any
jurisdiction, except under circumstances that will result in compliance with any applicable laws and
regulations.
Persons into whose possession this Prospectus or any Notes may come must inform themselves about, and
observe, any such restrictions on the distribution of this Prospectus and the offering and sale of Notes. In
particular, there are restrictions on the distribution of this Prospectus and the offer or sale of Notes in the
United States and the European Economic Area -- see "Selling Restrictions".
This Prospectus contains certain forward-looking statements, in particular statements using the words
"believes", "anticipates", "intends", "expects" or other similar terms. This applies in particular to statements
under the captions "Description of the Issuer", "Description of the Guarantor" and elsewhere in this
Prospectus relating to, among other things, the future financial performance, potential synergies to be realized
in connection with potential acquisitions, plans and expectations regarding developments in the business of
the Issuer, the Guarantor and the Volkswagen Group. These forward-looking statements are subject to a
number of risks, uncertainties, assumptions and other factors that may cause the actual results, including the
financial position and profitability of the Issuer and the Guarantor, to be materially different from or worse
than those expressed or implied by these forward-looking statements. Neither the Issuer nor the Guarantor
assumes any obligation to update such forward-looking statements and to adapt them to future events or
developments.
Where information has been sourced from a third party, the Issuer and the Guarantor confirm that this
information has been accurately reproduced and that as far the Issuer is aware and is able to ascertain from
information published by that third party, no facts have been omitted which would render the reproduced
information inaccurate or misleading. Where such information has been included in this Prospectus, the source
is indicated.
Any websites referred to or included in the Prospectus are for information purposes only and do not form part
of the Prospectus.
The legally binding language of this Prospectus is English, except for the Terms and Conditions in respect of
which German is the legally binding language.
In this Prospectus, all references to "", "EUR" or "Euro" are to the currency introduced at the start of the
third stage of the European economic and monetary union, and as defined in Article 2 of Council Regulation
(EC) No. 974/98 of 3 May 1998 on the introduction of the Euro, as amended, all references to "U.S.$" or
"USD" are to United States dollars, and all references to "Can$" or "CAD" are to Canadian dollars.

- ii -

IN CONNECTION WITH THE ISSUE OF THE NOTES, MERRILL LYNCH INTERNATIONAL (THE
"STABILIZING MANAGER") (OR ANY PERSON ACTING ON BEHALF OF ANY STABILIZING
MANAGER) MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO
SUPPORTING THE MARKET PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH
MIGHT OTHERWISE PREVAIL. HOWEVER, STABILIZATION MAY NOT NECESSARILY OCCUR.
ANY STABILIZATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE
PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN,
MAY CEASE AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30
CALENDAR DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 CALENDAR DAYS AFTER
THE DATE OF THE ALLOTMENT OF THE NOTES. ANY STABILIZATION ACTION OR OVER-
ALLOTMENT MUST BE CONDUCTED BY THE STABILIZING MANAGER (OR ANY PERSON
ACTING ON BEHALF OF THE STABILIZING MANAGER) IN ACCORDANCE WITH ALL
APPLICABLE LAWS AND RULES.

- iii -

CONTENTS

1.
RISK FACTORS .......................................................................................................................................................... 1
2.
TERMS AND CONDITIONS OF THE NC5.5 NOTES ............................................................................................ 34
3.
TERMS AND CONDITIONS OF THE NC10 NOTES ............................................................................................. 58
4.
GUARANTEE OF THE NC5.5 NOTES ................................................................................................................... 82
5.
GUARANTEE OF THE NC10 NOTES .................................................................................................................... 88
6.
DESCRIPTION OF THE ISSUER ............................................................................................................................ 94
7.
DESCRIPTION OF THE GUARANTOR ................................................................................................................. 99
8.
TAXATION ............................................................................................................................................................. 132
9.
DESCRIPTION OF RULES REGARDING RESOLUTIONS OF NOTEHOLDERS ............................................ 141
10. OFFER, SALE AND SUBSCRIPTION OF THE NOTES ...................................................................................... 143
11. USE OF PROCEEDS ............................................................................................................................................... 144
12. SELLING RESTRICTIONS .................................................................................................................................... 145
13. GENERAL INFORMATION .................................................................................................................................. 147
14. STATEMENTS PURSUANT TO COMMISSION REGULATION (EC) NO 809/2004 OF 29 APRIL 2004 ....... R-1

1. RISK
FACTORS
Prospective investors should carefully review the following risk factors in conjunction with the other
information contained in this Prospectus before making an investment in the Notes. If these risks materialize,
individually or together with other circumstances, they may have a material adverse effect on Volkswagen's
business, results of operations and financial condition. The Issuer and the Guarantor believe that the factors
described below represent the principal risks inherent in investing in the Notes, but the Issuer and the
Guarantor may be unable to fulfill their respective obligations under the Notes and the Guarantee for reasons
other than those described below. Additional risks not currently known to the Issuer or the Guarantor or that
they currently believe are immaterial may also adversely affect Volkswagen's business, results of operations
and financial condition. Should any of these risks materialize, the trading price of the Notes could decline, the
Issuer and the Guarantor may not be able to fulfill their respective obligations under the Notes and the
Guarantee, and investors could lose all or a part of their investment. The order in which the individual risks
are presented does not provide an indication of the likelihood of their occurrence nor of the severity or
significance of the individual risks.
Each prospective purchaser of Notes must determine, based on its own independent review and such
professional advice as it deems appropriate under the circumstances, that its acquisition of the Notes is fully
consistent with its financial needs, objectives and condition, complies and is fully consistent with all
investment policies, guidelines and restrictions applicable to it and is a fit, proper and suitable investment for
it, notwithstanding the clear and substantial risks inherent in investing in or holding the Notes. A prospective
purchaser may not rely on the Issuer, the Guarantor, the Managers or any of their respective affiliates in
connection with its determination as to the legality of its acquisition of the Notes or as to the other matters
referred to above.

1.1
Risk Factors regarding Volkswagen Aktiengesellschaft and Volkswagen Group
1.1.1
Government authorities in a number of jurisdictions worldwide are conducting investigations of
Volkswagen regarding findings of irregularities relating to exhaust emissions from diesel engines in
certain Volkswagen Group vehicles. The results of these and any further investigations may have a
material adverse effect on Volkswagen's business, financial position, results of operations,
reputation, the price of its securities, including the Notes, and its ability to make payments under its
securities.
On September 18, 2015, the U.S. Environmental Protection Agency (the "EPA") publicly announced in a
"Notice of Violation" of the U.S. Clean Air Act that irregularities in the level of nitrogen oxide ("NOx")
emissions had been discovered in emissions tests of certain vehicles with Volkswagen Group 2.0 liter TDI
diesel engines. The EPA alleged that Volkswagen had installed undisclosed engine management software in
certain four-cylinder diesel engines used in certain model year 2009 to 2015 vehicles to circumvent NOx
emissions testing regulations in the United States in order to comply with certification requirements. The
environmental regulatory authority of California, the California Air Resources Board ("CARB"), announced
its own enforcement investigation related to this issue as well. Following these announcements by the EPA
and CARB, authorities in various jurisdictions worldwide commenced their own investigations.
On September 22, 2015, in its ad hoc release pursuant to section 15 of the German Securities Trading Act
(Wertpapierhandelsgesetz), Volkswagen announced that discrepancies in the level of NOx emissions figures
achieved in testing and in actual road use had been identified in around 11 million Volkswagen Group
vehicles worldwide with certain types of 1.2 liter, 1.6 liter and 2.0 liter TDI diesel engines, the latter also
including those vehicles with 2.0 liter TDI diesel engines sold in the United States. This predominantly
concerns type EA 189 engines and includes vehicles from the VW Passenger Cars, VW Commercial Vehicles,
SEAT, SKODA and Audi brands. The software being used in these engines enabled a test bench situation to
be recognized by the vehicle and enabled the engine control system to optimize NOx emission levels during
the test cycle.
On November 2, 2015, the EPA issued an additional "Notice of Violation" of the U.S. Clean Air Act
announcing that it had determined that engine management software installed in certain vehicles with
Volkswagen Group's six-cylinder 3.0 liter TDI diesel engines contained "auxiliary emission control devices"
("AECDs") that had not been disclosed adequately in the U.S. approval process. Also on November 2, 2015,

- 1 -

and additionally on November 25, 2015, CARB published allegations that legal requirements for NOx
emissions were circumvented through the use of engine management software under test conditions.
Approximately 113,000 3.0 liter TDI diesel engines in vehicles from model years 2009 to 2016 of the Audi,
VW Passenger Cars and Porsche brands are affected in the United States and Canada. Audi has confirmed that
at least three AECDs were inadequately disclosed in the course of the U.S. approval process.
On January 4, 2016, the U.S. Department of Justice (the "DoJ"), on behalf of the EPA, initiated a civil lawsuit
in connection with the diesel issue related to the 2.0 liter and 3.0 liter TDI vehicles against Volkswagen AG,
AUDI AG and certain other Volkswagen Group companies, seeking statutory penalties under the U.S. Clean
Air Act, as well as certain equitable relief.
On January 12, 2016, CARB announced that it intended to seek civil fines for alleged violations by
Volkswagen of the California Health and Safety Code and various CARB regulations. The State of California,
by and through CARB and the California Attorney General, ultimately filed a lawsuit on June 27, 2016.
Following the publication of the EPA's "Notices of Violation" of the U.S. Clean Air Act, Volkswagen AG and
other Volkswagen Group companies have been the subject of intense public and governmental scrutiny,
ongoing investigations (civil and criminal) and civil litigation worldwide.
In the United States and Canada, Volkswagen AG and other Volkswagen Group companies have received
subpoenas and inquiries from state attorneys general and other governmental authorities and are responding to
such investigations and inquiries. The DoJ also opened a criminal investigation into whether various U.S.
federal criminal offenses were committed. These investigations resulted and may further result in additional
assessments of monetary penalties and other consequences. The timing of the release of new information on
the investigations and the maximum amount of penalties that may be imposed cannot be reliably determined at
present. New information on these topics may arise at any time, including after the offer, sale and delivery of
the Notes.
In June and December 2016 and January 2017, Volkswagen announced that Volkswagen AG, AUDI AG,
Volkswagen Group of America, Inc. and certain affiliates reached settlement agreements in the United States
with (i) the DoJ on behalf of the EPA, CARB and the California Attorney General, (ii) the U.S. Federal Trade
Commission ("FTC"), and (iii) private plaintiffs represented by a Plaintiffs' Steering Committee (the "PSC")
in a multi-district litigation in California. The settlement agreements resolve certain civil claims in relation to
affected diesel vehicles in the United States: approximately 475,000 vehicles with four-cylinder 2.0 liter TDI
diesel engines from the Volkswagen Passenger Cars and Audi brands and around 83,000 vehicles with six-
cylinder 3.0 liter TDI diesel engines from the Volkswagen Passenger Cars, Audi and Porsche brands. In
October 2016, the court finally approved the settlement agreements in connection with the four-cylinder 2.0
liter TDI diesel engines. A number of class members have filed appeals to a U.S. appellate court from the
order approving the settlement agreements in connection with the four-cylinder 2.0 liter TDI diesel engines.
On February 14, 2017, the court granted preliminary approval of the settlement agreements in relation to the
six-cylinder 3.0 liter TDI diesel engines, which were lodged with the court on January 31, 2017. On May 17,
2017, the court finally approved the settlement agreements in connection with the six-cylinder 3.0 liter TDI
diesel engines.
The settlement agreements with respect to the four-cylinder 2.0 liter TDI diesel engine vehicles provide
affected customers with the option of a buyback or, for leased vehicles, early lease termination, or a free
emissions modification of the vehicles, provided that EPA and CARB approve the proposed modification. To
date, the EPA/CARB have approved the modification for Generation 3 (model year 2015) vehicles and
Generation 2 (model year 2012-2014) automatic transmission diesel Passat vehicles. The settlement
agreements with respect to the six-cylinder 3.0 liter TDI diesel engine vehicles provide for: (i) a buyback or,
for leased vehicles, early lease termination program, or a free emissions modification provided that EPA and
CARB approve the modification, for Generation 1 (model years 2009-2012) six-cylinder 3.0 liter TDI diesel
engine vehicles, and (ii) a free emissions recall and modification program (pending EPA and CARB approval)
for Generation 2 (model years 2013-2016) six-cylinder 3.0 liter TDI diesel engine vehicles. If modifications
are not approved for Generation 2 six-cylinder 3.0 liter TDI diesel engine vehicles, the settlement agreements
require Volkswagen to offer a buyback or, for leased vehicles, early lease termination for those vehicles.
Volkswagen will also make additional cash payments to affected current owners or lessees as well as certain
former owners or lessees.

- 2 -

In addition, Volkswagen agreed to support environmental programs. Under the settlement agreements in
connection with the four-cylinder 2.0 liter TDI diesel engines, Volkswagen will pay U.S.$2.7 billion over
three years. Volkswagen will also invest in total U.S.$2.0 billion over ten years in zero emissions vehicle
infrastructure as well as corresponding access and awareness initiatives in the United States. In addition, the
six-cylinder 3.0 liter TDI diesel engine vehicle settlement calls for an additional U.S.$25 million payment to
CARB to support the availability of zero emissions vehicles in California and Audi will make an additional
one-time payment in the amount of U.S.$225 million into an environmental trust, managed by a trustee
appointed by the court, to offset excess NOx emissions.
In January 2017, Volkswagen AG agreed with the United States government to resolve federal criminal
liability relating to the diesel issue. The Volkswagen Group also agreed with the United States government to
resolve civil penalties and injunctive relief under the Clean Air Act and other civil claims relating to the diesel
issue. The coordinated resolutions involve four settlements, including a plea agreement between Volkswagen
AG and the DoJ. The plea agreement is accompanied by a published Statement of Facts that lays out relevant
facts and has been acknowledged by Volkswagen AG. As part of its plea agreement, Volkswagen AG pleaded
guilty on March 10, 2017 to three felony counts under United States law: conspiracy to commit fraud,
obstruction of justice and using false statements to import cars into the United States. The court accepted
Volkswagen AG's guilty plea to all three charges and sentenced the company to three years' probation on
April 21, 2017. The plea agreement provides, inter alia, for payment of a criminal fine of U.S.$2.8 billion
following sentencing and the appointment of an independent monitor for a period of three years. The
independent monitor, who was appointed in April 2017, will assess and oversee the compliance with the terms
of the resolutions. This includes overseeing the implementation of measures to further strengthen compliance,
reporting and monitoring systems, including an enhanced ethics program. Volkswagen AG, AUDI AG and
other Volkswagen Group companies have further agreed to pay a combined civil penalty of U.S.$1.45 billion
(plus any accrued interest) to resolve U.S. federal environmental and customs-related claims in the United
States. Furthermore, Volkswagen AG and Volkswagen Group of America, Inc. have agreed to pay a separate
civil penalty of U.S.$50 million (plus any accrued interest) to the Civil Division of the DoJ to settle potential
claims asserted under the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"). On
April 13, 2017, the court entered an order approving the settlement of these civil penalty claims. By their
terms, the aforementioned settlement agreements resolve only certain liability issues under United States law
and are not intended to address any liability issues, where such exist, under the laws or regulations of any
jurisdiction outside the United States. Volkswagen continues to cooperate in full with investigations by the
DoJ into the conduct of various individuals.
Volkswagen also reached separate settlement agreements with the attorneys general of 44 U.S. states, the
District of Columbia and Puerto Rico, to resolve their existing or potential consumer protection and unfair
trade practices claims in connection with both 2.0 liter TDI and 3.0 liter TDI vehicles in the United States
for a settlement amount of U.S.$603 million. In addition, Volkswagen reached separate settlement agreements
with the attorneys general of 10 U.S. states to resolve their existing or potential state environmental law
claims in connection with both 2.0 liter TDI and 3.0 liter TDI vehicles in the United States for a settlement
amount of U.S.$157 million. Six states still have pending consumer protection and unfair trade practices
claims against Volkswagen, and 13 states have pending claims under state environmental laws. With respect
to certain consumer and environmental actions that had been removed to the federal multidistrict litigation in
California, on May 23, 2017, the court granted the motions of twelve state attorneys general (Alabama,
Illinois, Maryland, Minnesota, Missouri, Montana, New Hampshire, New Mexico, Ohio, Oklahoma,
Tennessee, and Vermont) to remand their lawsuits to their respective state courts. Moreover, investigations by
various U.S. regulatory and government authorities, including in areas relating to securities, financing and tax,
are ongoing.
On September 30, 2016, Volkswagen announced that it had finalized an agreement to resolve the claims of
Volkswagen-branded franchise dealers in the United States relating to the affected vehicles and other matters
asserted concerning the value of the franchise. The settlement agreement includes a cash payment of up to
U.S.$1.208 billion and additional benefits to resolve alleged past, current, and future claims of losses in
franchise value. The court approved the settlement agreement in January 2017. On April 12, 2017, the court
granted the dealer class counsel U.S.$3.1 million in attorneys' fees and costs.
In Canada, the NOx emissions limits for vehicles are the same as in the United States. Civil consumer claims
and regulatory investigations have been initiated for vehicles with 2.0 liter and 3.0 liter diesel engines. In

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December 2016, Volkswagen AG and other Canadian and U.S. Volkswagen Group companies reached a class
action settlement in Canada with consumers relating to 2.0 liter diesel vehicles. The settlement provides for
cash payments of up to CAD 564 million to eligible owners and lessees, and many of these affected customers
will also have the option of a free emissions modification of their vehicle if approved by regulators, or a
buyback or trade-in or for leased vehicles early lease termination. The class settlement was approved by
the courts on April 21, 2017. Concurrently with the announcement of the class settlement in December 2016,
Volkswagen Group Canada agreed with the Commissioner of Competition in Canada to a civil resolution of
its regulatory inquiry into consumer protection issues as to 2.0 liter diesel vehicles. This resolution was
reached on the basis of the class settlement and payment of a CAD 15 million civil administrative monetary
penalty. Civil consumer claims and the Commissioner of Competition's investigation with respect to 3.0 liter
diesel vehicles remain pending. Also, criminal enforcement related investigations by the federal
environmental regulator and quasi-criminal enforcement related investigations by a provincial environmental
regulator are ongoing in Canada in relation to 2.0 liter and 3.0 liter diesel vehicles.
The public prosecutor's office in Braunschweig, Germany, is investigating the core issue of the criminal
investigations. The public prosecutor's office in Braunschweig also initiated investigations against one current
and two former Volkswagen AG Management Board members regarding their possible involvement in
potential market manipulation in connection with the release of information concerning the diesel issue. The
Stuttgart public prosecutor's office also confirmed that it is investigating, among others, the CEO of
Volkswagen AG in his capacity as member of the management board of Porsche SE, regarding his possible
involvement in potential market manipulation in connection with this same issue. Furthermore, the public
prosecutor's office in Munich opened a criminal investigation in connection with the alleged anomalies in the
NOx emissions of certain Audi vehicles with diesel engines in the United States and Europe.
Volkswagen is working intensively to eliminate the emissions level deviations through technical
improvements and is cooperating with the relevant agencies. A final decision has not been made regarding all
necessary technical remedies for the affected vehicles. In particular, Volkswagen continues discussions with
the EPA and the CARB concerning technical solutions for the U.S. (and, by extension, Canadian) market.
These discussions could require Volkswagen to repurchase vehicles sold in the United States, Canada and
elsewhere if no technical solution is approved for those vehicles.
In addition to ongoing extensive investigations by governmental authorities in various jurisdictions worldwide
(the most significant being in Europe, the United States and South Korea), further investigations could be
launched in the future and existing investigations could be expanded. Ongoing and future investigations may
result in further legal actions being taken against Volkswagen or some of its employees. These actions could
include substantial criminal and civil fines, as well as penalties, sanctions, injunctions against future conduct,
the loss of vehicle type certifications, sales stops and business licenses or other restrictions. In addition to
monetary and other penalties, Volkswagen may be required to modify further its controls processes and
compliance programs.
The diesel issue has also led to the commencement of significant third-party litigation against Volkswagen
worldwide. This includes lawsuits by affected customers and dealers seeking substantial damages. Private and
institutional investors from Germany and other jurisdictions are pursuing claims for damages against
Volkswagen AG. The claims allege damages incurred by Volkswagen AG allegedly omitting or delaying the
immediate publication of price sensitive insider information relating to the diesel issue, wrongful financial
reporting, as well as in some cases tort and prospectus liability claims. The claims relate to Volkswagen AG's
shares, American Depositary Receipts and other securities, including bonds, issued by Volkswagen Group
companies, as well as third-party securities linked to Volkswagen.
Further regulatory proceedings, product-related and investor claims could be raised in the future in various
jurisdictions worldwide. This could include regulatory proceedings and/or customer claims for damages if the
technical solutions implemented by Volkswagen in order to rectify the diesel issue are not implemented in a
timely or effective manner or have a negative effect on the performance, fuel consumption or resale value of
the affected vehicles. Moreover, further investor claims, including those raised by holders of other
Volkswagen Group bonds, may be brought. In addition, there could be pending or threatened claims against
the Volkswagen Group of which Volkswagen's management is not yet aware. Further regulatory proceedings
or proceedings or claims involving or affecting the Volkswagen Group or the Volkswagen Group's
management could result in additional costs or otherwise adversely affect the Volkswagen Group and the

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