Document:

exv10w5

Exhibit 10.5

(Multicurrency—Cross Border)

ISDA®

International Swap Dealers Association, Inc.

MASTER AGREEMENT

dated as of May 9, 2008

HSBC Bank USA, N.A. and Volkswagen Auto Loan Enhanced Trust 2008-1

have entered and/or anticipate entering into one or more transactions (each a “Transaction”) that
are or will be governed by this Master Agreement, which includes the schedule (the “Schedule”), and
the documents and other confirming evidence (each a “Confirmation”) exchanged between the parties
confirming those Transactions.

Accordingly, the parties agree as follows:

1. Interpretation

(a) Definitions. The terms defined in Section 14 and in the Schedule will have the meanings
therein specified for the purpose of this Master Agreement.

(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and
the other provisions of this Master Agreement, the Schedule will prevail. In the event of any
inconsistency between the provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant Transaction.

(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master
Agreement and all Confirmations form a single agreement between the parties (collectively referred
to as this “Agreement”), and the parties would not otherwise enter into any Transactions.

2. Obligations

(a) General Conditions.

(i) Each party will make each payment or delivery specified in each Confirmation to be made
by it, subject to the other provisions of this Agreement.

(ii) Payments under this Agreement will be made on the due date for value on that date in
the place of the account specified in the relevant Confirmation or otherwise

Copyright©
1992 by International Swap Dealers Association, Inc.

 

 

pursuant to this Agreement, in freely transferable funds and in the manner customary for
payments in the required currency. Where settlement is by delivery (that is, other than by
payment), such delivery will be made for receipt on the due date in the manner customary for
the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere
in this Agreement.

(iii) Each obligation of each party under Section 2(a)(i) is subject to (1) the condition
precedent that no Event of Default or Potential Event of Default with respect to the other
party has occurred and is continuing, (2) the condition precedent that no Early Termination
Date in respect of the relevant Transaction has occurred or been effectively designated and
(3) each other applicable condition precedent specified in this Agreement.

(b) Change of Account. Either party may change its account for receiving a payment or delivery by
giving notice to the other party at least five Local Business Days prior to the scheduled date for
the payment or delivery to which such change applies unless such other party gives timely notice of
a reasonable objection to such change.

(c) Netting. If on any date amounts would otherwise be payable:

(i) in the same currency; and

(ii) in respect of the same Transaction,

by each party to the other, then, on such date, each party’s obligation to make payment of any such
amount will be automatically satisfied and discharged and, if the aggregate amount that would
otherwise have been payable by one party exceeds the aggregate amount that would otherwise have
been payable by the other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess of the larger
aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more Transactions that a net amount will be determined
in respect of all amounts payable on the same date in the same currency in respect of such
Transactions, regardless of whether such amounts are payable in respect of the same Transaction.
The election may be made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the election, together with
the starting date (in which case subparagraph (ii) above will not, or will cease to, apply to such
Transactions from such date). This election may be made separately for different groups of
Transactions and will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.

(d) Deduction or Withholding for Tax.

(i) Gross-Up. All payments under this Agreement will be made without any deduction or
withholding for or on account of any Tax unless such deduction or withholding is required by
any applicable law, as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or withhold, then that party
(“X”) will:

 

 

(1) promptly notify the other party (“Y”) of such requirement;

(2) pay to the relevant authorities the full amount required to be deducted or
withheld (including the full amount required to be deducted or withheld from any
additional amount paid by X to Y under this Section 2(d)) promptly upon the earlier
of determining that such deduction or withholding is required or receiving notice
that such amount has been assessed against Y;

(3) promptly forward to Y an official receipt (or a certified copy), or other
documentation reasonably acceptable to Y, evidencing such payment to such
authorities; and

(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to
which Y is otherwise entitled under this Agreement, such additional amount as is
necessary to ensure that the net amount actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount Y
would have received had no such deduction or withholding been required. However, X
will not be required to pay any additional amount to Y to the extent that it would
not be required to be paid but for:

(A) the failure by Y to comply with or perform any agreement contained in
Section 4(a)(i), 4(a)(iii) or 4(d); or

(B) the failure of a representation made by Y pursuant to Section 3(f) to be
accurate and true unless such failure would not have occurred but for (I)
any action taken by a taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with respect to a
party to this Agreement) or (II) a Change in Tax Law.

(ii) Liability. If:

(1) X is required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, to make any deduction or withholding in respect of
which X would not be required to pay an additional amount to Y under Section
2(d)(i)(4);

(2) X does not so deduct or withhold; and

(3) a liability resulting from such Tax is assessed directly against X,

then, except to the extent Y has satisfied or then satisfies the liability resulting from
such Tax, Y will promptly pay to X the amount of such liability (including any related
liability for interest, but including any related liability for penalties only if Y has
failed to comply with or perform any agreement contained in Section 4(a)(i), 4(a)(iii) or
4(d)).

(e) Default Interest; Other Amounts. Prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party that defaults in the

 

 

performance of any payment obligation will, to the extent permitted by law and subject to Section
6(c), be required to pay interest (before as well as after judgment) on the overdue amount to the
other party on demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of actual payment, at the
Default Rate. Such interest will be calculated on the basis of daily compounding and the actual
number of days elapsed. If, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other party on demand if and
to the extent provided for in the relevant Confirmation or elsewhere in this Agreement.

3. Representations

Each party represents to the other party (which representations will be deemed to be repeated by
each party on each date on which a Transaction is entered into and, in the case of the
representations in Section 3(f), at all times until the termination of this Agreement) that:

(a) Basic Representations.

(i) Status. It is duly organised and validly existing under the laws of the jurisdiction of
its organisation or incorporation and, if relevant under such laws, in good standing;

(ii) Powers. It has the power to execute this Agreement and any other documentation
relating to this Agreement to which it is a party, to deliver this Agreement and any other
documentation relating to this Agreement that it is required by this Agreement to deliver
and to perform its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all necessary action to
authorise such execution, delivery and performance;

(iii) No Violation or Conflict. Such execution, delivery and performance do not violate or
conflict with any law applicable to it, any provision of its constitutional documents, any
order or judgment of any court or other agency of government applicable to it or any of its
assets or any contractual restriction binding on or affecting it or any of its assets;

(iv) Consents. All governmental and other consents that are required to have been obtained
by it with respect to this Agreement or any Credit Support Document to which it is a party
have been obtained and are in full force and effect and all conditions of any such consents
have been complied with; and

(v) Obligations Binding. Its obligations under this Agreement and any Credit Support
Document to which it is a party constitute its legal, valid and binding obligations,
enforceable in accordance with their respective terms (subject to applicable bankruptcy,
reorganisation, insolvency, moratorium or similar laws affecting creditors’ rights generally
and subject, as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or at law)).

(b) Absence of Certain Events. No Event of Default or Potential Event of Default or, to its
knowledge, Termination Event with respect to it has occurred and is continuing and no such

 

 

event or circumstance would occur as a result of its entering into or performing its obligations
under this Agreement or any Credit Support Document to which it is a party.

(c) Absence of Litigation. There is not pending or, to its knowledge, threatened against it or any
of its Affiliates any action, suit or proceeding at law or in equity or before any court, tribunal,
governmental body, agency or official or any arbitrator that is likely to affect the legality,
validity or enforceability against it of this Agreement or any Credit Support Document to which it
is a party or its ability to perform its obligations under this Agreement or such Credit Support
Document.

(d) Accuracy of Specified Information. All applicable information that is furnished in writing by
or on behalf of it to the other party and is identified for the purpose of this Section 3(d) in the
Schedule is, as of the date of the information, true, accurate and complete in every material
respect.

(e) Payer Tax Representation. Each representation specified in the Schedule as being made by it for
the purpose of this Section 3(e) is accurate and true.

(f) Payee Tax Representations. Each representation specified in the Schedule as being made by it
for the purpose of this Section 3(f) is accurate and true.

4. Agreements

Each party agrees with the other that, so long as either party has or may have any obligation under
this Agreement or under any Credit Support Document to which it is a party:

(a) Furnish Specified Information. It will deliver to the other party or, in certain cases under
subparagraph (iii) below, to such government or taxing authority as the other party reasonably
directs:

(i) any forms, documents or certificates relating to taxation specified in the Schedule or
any Confirmation;

(ii) any other documents specified in the Schedule or any Confirmation; and

(iii) upon reasonable demand by such other party, any form or document that may be required
or reasonably requested in writing in order to allow such other party or its Credit Support
Provider to make a payment under this Agreement or any applicable Credit Support Document
without any deduction or withholding for or on account of any Tax or with such deduction or
withholding at a reduced rate (so long as the completion, execution or submission of such
form or document would not materially prejudice the legal or commercial position of the
party in receipt of such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and to be executed and to
be delivered with any reasonably required certification,

in each case by the date specified in the Schedule or such Confirmation or, if none is specified,
as soon as reasonably practicable.

 

 

(b) Maintain Authorisations. It will use all reasonable efforts to maintain in full force and
effect all consents of any governmental or other authority that are required to be obtained by it
with respect to this Agreement or any Credit Support Document to which it is a party and will use
all reasonable efforts to obtain any that may become necessary in the future.

(c) Comply with Laws. It will comply in all material respects with all applicable laws and orders
to which it may be subject if failure so to comply would materially impair its ability to perform
its obligations under this Agreement or any Credit Support Document to which it is a party.

(d) Tax Agreement. It will give notice of any failure of a representation made by it under Section
3(f) to be accurate and true promptly upon learning of such failure.

(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp Tax levied or imposed upon
it or in respect of its execution or performance of this Agreement by a jurisdiction in which it is
incorporated, organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is located (“Stamp
Tax Jurisdiction”) and will indemnify the other party against any Stamp Tax levied or imposed upon
the other party or in respect of the other party’s execution or performance of this Agreement by
any such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.

5. Events of Default and Termination Events

(a) Events of Default. The occurrence at any time with respect to a party or, if applicable, any
Credit Support Provider of such party or any Specified Entity of such party of any of the following
events constitutes an event of default (an “Event of Default”) with respect to such party:

(i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under
this Agreement or delivery under Section 2(a)(i) or 2(e) required to be made by it if such
failure is not remedied on or before the third Local Business Day after notice of such
failure is given to the party;

(ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or
obligation (other than an obligation to make any payment under this Agreement or delivery
under Section 2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the
party in accordance with this Agreement if such failure is not remedied on or before the
thirtieth day after notice of such failure is given to the party;

(iii) Credit Support Default.

(1) Failure by the party or any Credit Support Provider of such party to comply with
or perform any agreement or obligation to be complied with or performed by it in
accordance with any Credit Support Document if such failure is continuing after any
applicable grace period has elapsed;

 

 

(2) the expiration or termination of such Credit Support Document or the failing or
ceasing of such Credit Support Document to be in full force and effect for the
purpose of this Agreement (in either case other than in accordance with its terms)
prior to the satisfaction of all obligations of such party under each Transaction to
which such Credit Support Document relates without the written consent of the other
party; or

(3) the party or such Credit Support Provider disaffirms, disclaims, repudiates or
rejects, in whole or in part, or challenges the validity of, such Credit Support
Document;

(iv) Misrepresentation. A representation (other than a representation under Section 3(e) or
(f)) made or repeated or deemed to have been made or repeated by the party or any Credit
Support Provider of such party in this Agreement or any Credit Support Document proves to
have been incorrect or misleading in any material respect when made or repeated or deemed to
have been made or repeated;

(v) Default under Specified Transaction. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party (1) defaults under a Specified
Transaction and, after giving effect to any applicable notice requirement or grace period,
there occurs a liquidation of, an acceleration of obligations under, or an early termination
of, that Specified Transaction, (2) defaults, after giving effect to any applicable notice
requirement or grace period, in making any payment or delivery due on the last payment,
delivery or exchange date of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local Business Days if there is no
applicable notice requirement or grace period) or (3) disaffirms, disclaims, repudiates or
rejects, in whole or in part, a Specified Transaction (or such action is taken by any person
or entity appointed or empowered to operate it or act on its behalf);

(vi) Cross Default. If “Cross Default” is specified in the Schedule as applying to the
party, the occurrence or existence of (1) a default, event of default or other similar
condition or event (however described) in respect of such party, any Credit Support Provider
of such party or any applicable Specified Entity of such party under one or more agreements
or instruments relating to Specified Indebtedness of any of them (individually or
collectively) in an aggregate amount of not less than the applicable Threshold Amount (as
specified in the Schedule) which has resulted in such Specified Indebtedness becoming, or
becoming capable at such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a default by such
party, such Credit Support Provider or such Specified Entity (individually or collectively)
in making one or more payments on the due date thereof in an aggregate amount of not less
than the applicable Threshold Amount under such agreements or instruments (after giving
effect to any applicable notice requirement or grace period);

(vii) Bankruptcy. The party, any Credit Support Provider of such party or any applicable
Specified Entity of such party:

 

 

(1) is dissolved (other than pursuant to a consolidation, amalgamation or merger);
(2) becomes insolvent or is unable to pay its debts or fails or admits in writing
its inability generally to pay its debts as they become due; (3) makes a general
assignment, arrangement or composition with or for the benefit of its creditors; (4)
institutes or has instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law
or other similar law affecting creditors’ rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition (A) results in a
judgment of insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation or (B) is not dismissed,
discharged, stayed or restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its winding-up, official
management or liquidation (other than pursuant to a consolidation, amalgamation or
merger); (6) seeks or becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian or other similar
official for it or for all or substantially all its assets; (7) has a secured party
take possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on or
against all or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed or restrained,
in each case within 30 days thereafter; (8) causes or is subject to any event with
respect to it which, under the applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in clauses (1) to (7) (inclusive); or (9)
takes any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or

(viii) Merger Without Assumption. The party or any Credit Support Provider of such party
consolidates or amalgamates with, or merges with or into, or transfers all or substantially
all its assets to, another entity and, at the time of such consolidation, amalgamation,
merger or transfer:

(1) the resulting, surviving or transferee entity fails to assume all the
obligations of such party or such Credit Support Provider under this Agreement or
any Credit Support Document to which it or its predecessor was a party by operation
of law or pursuant to an agreement reasonably satisfactory to the other party to
this Agreement; or

(2) the benefits of any Credit Support Document fail to extend (without the consent
of the other party) to the performance by such resulting, surviving or transferee
entity of its obligations under this Agreement.

(b) Termination Events. The occurrence at any time with respect to a party or, if applicable, any
Credit Support Provider of such party or any Specified Entity of such party of any event specified
below constitutes an Illegality if the event is specified in (i) below, a Tax Event if the event is
specified in (ii) below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event Upon Merger if the event is specified

 

 

pursuant to (iv) below or an Additional Termination Event if the event is specified pursuant to (v)
below:

(i) Illegality. Due to the adoption of, or any change in, any applicable law after the date
on which a Transaction is entered into, or due to the promulgation of, or any change in, the
interpretation by any court, tribunal or regulatory authority with competent jurisdiction of
any applicable law after such date, it becomes unlawful (other than as a result of a breach
by the party of Section 4(b)) for such party (which will be the Affected Party):

(1) to perform any absolute or contingent obligation to make a payment or delivery
or to receive a payment or delivery in respect of such Transaction or to comply with
any other material provision of this Agreement relating to such Transaction; or

(2) to perform, or for any Credit Support Provider of such party to perform, any
contingent or other obligation which the party (or such Credit Support Provider) has
under any Credit Support Document relating to such Transaction;

(ii) Tax Event. Due to (x) any action taken by a taxing authority, or brought in a court of
competent jurisdiction, on or after the date on which a Transaction is entered into
(regardless of whether such action is taken or brought with respect to a party to this
Agreement) or (y) a Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding Scheduled Payment
Date (1) be required to pay to the other party an additional amount in respect of an
Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect of such
Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A) or (B));

(iii) Tax Event Upon Merger. The party (the “Burdened Party”) on the next succeeding
Scheduled Payment Date will either (1) be required to pay an additional amount in respect of
an Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under Section
2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which the other party is
not required to pay an additional amount (other than by reason of Section 2(d)(i)(4)(A) or
(B)), in either case as a result of a party consolidating or amalgamating with, or merging
with or into, or transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event described in
Section 5(a)(viii);

(iv) Credit Event Upon Merger. If “Credit Event Upon Merger” is specified in the Schedule
as applying to the party, such party (“X”), any Credit Support Provider of X or any
applicable Specified Entity of X consolidates or amalgamates with, or merges with or into,
or transfers all or substantially all its assets, to, another entity and such action does
not constitute an event described in Section 5(a)(viii) but the creditworthiness of the

 

 

resulting, surviving or transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be, immediately prior to such
action (and, in such event, X or its successor or transferee, as appropriate, will be the
Affected Party); or

(v) Additional Termination Event. If any “Additional Termination Event” is specified in the
Schedule or any Confirmation as applying, the occurrence of such event (and, in such event,
the Affected Party or Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).

(c) Event of Default and Illegality. If an event or circumstance which would otherwise constitute
or give rise to an Event of Default also constitutes an Illegality, it will be treated as an
Illegality and will not constitute an Event of Default.

6. Early Termination

(a) Right to Terminate Following Event of Default. If at any time an Event of Default with respect
to a party (the “Defaulting Party”) has occurred and is then continuing, the other party (the
“Non-defaulting Party”) may, by not more than 20 days notice to the Defaulting Party specifying the
relevant Event of Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however, “Automatic Early
Termination” is specified in the Schedule as applying to a party, then an Early Termination Date in
respect of all outstanding Transactions will occur immediately upon the occurrence with respect to
such party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the institution of the
relevant proceeding or the presentation of the relevant petition upon the occurrence with respect
to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent analogous
thereto, (8).

(b) Right to Terminate Following Termination Event.

(i) Notice. If a Termination Event occurs, an Affected Party will, promptly upon becoming
aware of it, notify the other party, specifying the nature of that Termination Event and
each Affected Transaction and will also give such other information about that Termination
Event as the other party may reasonably require.

(ii) Transfer to Avoid Termination Event. If either an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there is only one Affected Party, or if a Tax Event Upon Merger
occurs and the Burdened Party is the Affected Party, the Affected Party will, as a condition
to its right to designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss, excluding immaterial,
incidental expenses) to transfer within 20 days after it gives notice under Section 6(b)(i)
all its rights and obligations under this Agreement in respect of the Affected Transactions
to another of its Offices or Affiliates so that such Termination Event ceases to exist.

 

 

If the Affected Party is not able to make such a transfer it will give notice to the other
party to that effect within such 20 day period, whereupon the other party may effect such a
transfer within 30 days after the notice is given under Section 6(b)(i).

Any such transfer by a party under this Section 6(b)(ii) will be subject to and conditional
upon the prior written consent of the other party, which consent will not be withheld if
such other party’s policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.

(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1) or a Tax Event occurs
and there are two Affected Parties, each party will use all reasonable efforts to reach
agreement within 30 days after notice thereof is given under Section 6(b)(i) on action to
avoid that Termination Event.

(iv) Right to Terminate. If:

(1) a transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as
the case may be, has not been effected with respect to all Affected Transactions
within 30 days after an Affected Party gives notice under Section 6(b)(i); or

(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an
Additional Termination Event occurs, or a Tax Event Upon Merger occurs and the
Burdened Party is not the Affected Party,

either party in the case of an Illegality, the Burdened Party in the case of a Tax Event Upon
Merger, any Affected Party in the case of a Tax Event or an Additional Termination Event if
there is more than one Affected Party, or the party which is not the Affected Party in the
case of a Credit Event Upon Merger or an Additional Termination Event if there is only one
Affected Party may, by not more than 20 days notice to the other party and provided that
the relevant Termination Event is then continuing, designate a day not earlier than the day
such notice is effective as an Early Termination Date in respect of all Affected
Transactions.

(c) Effect of Designation.

(i) If notice designating an Early Termination Date is given under Section 6(a) or (b), the
Early Termination Date will occur on the date so designated, whether or not the relevant
Event of Default or Termination Event is then continuing.

(ii) Upon the occurrence or effective designation of an Early Termination Date, no further
payments or deliveries under Section 2(a)(i) or 2(e) in respect of the Terminated
Transactions will be required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early Termination Date shall
be determined pursuant to Section 6(e).

(d) Calculations.

(i) Statement. On or as soon as reasonably practicable following the occurrence of an Early
Termination Date, each party will make the calculations on its part, if any,

 

 

contemplated by Section 6(e) and will provide to the other party a statement (1) showing, in
reasonable detail, such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant account to which
any amount payable to it is to be paid. In the absence of written confirmation from the
source of a quotation obtained in determining a Market Quotation, the records of the party
obtaining such quotation will be conclusive evidence of the existence and accuracy of such
quotation.

(ii) Payment Date. An amount calculated as being due in respect of any Early Termination
Date under Section 6(e) will be payable on the day that notice of the amount payable is
effective (in the case of an Early Termination Date which is designated or occurs as a
result of an Event of Default) and on the day which is two Local Business Days after the day
on which notice of the amount payable is effective (in the case of an Early Termination Date
which is designated as a result of a Termination Event). Such amount will be paid together
with (to the extent permitted under applicable law) interest thereon (before as well as
after judgment) in the Termination Currency, from (and including) the relevant Early
Termination Date to (but excluding) the date such amount is paid, at the Applicable Rate.
Such interest will be calculated on the basis of daily compounding and the actual number of
days elapsed.

(e) Payments on Early Termination. If an Early Termination Date occurs, the following provisions
shall apply based on the parties’ election in the Schedule of a payment measure, either “Market
Quotation” or “Loss”, and a payment method, either the “First Method” or the “Second Method”. If
the parties fail to designate a payment measure or payment method in the Schedule, it will be
deemed that “Market Quotation” or the “Second Method”, as the case may be, shall apply. The
amount, if any, payable in respect of an Early Termination Date and determined pursuant to this
Section will be subject to any Set-off.

(i) Events of Default. If the Early Termination Date results from an Event of Default:

(1) First Method and Market Quotation. If the First Method and Market Quotation
apply, the Defaulting Party will pay to the Non-defaulting Party the excess, if a
positive number, of (A) the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions and the Termination
Currency Equivalent of the Unpaid Amounts owing to the Non-defaulting Party over (B)
the Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party.

(2) First Method and Loss. If the First Method and Loss apply, the Defaulting Party
will pay to the Non-defaulting Party, if a positive number, the Non-defaulting
Party’s Loss in respect of this Agreement.

(3) Second Method and Market Quotation. If the Second Method and Market Quotation
apply, an amount will be payable equal to (A) the sum of the Settlement Amount
(determined by the Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid

 

 

Amounts owing to the Non-defaulting Party less (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party. If that amount is a
positive number, the Defaulting Party will pay it to the Non-defaulting Party; if it
is a negative number, the Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.

(4) Second Method and Loss. If the Second Method and Loss apply, an amount will be
payable equal to the Non-defaulting Party’s Loss in respect of this Agreement. If
that amount is a positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the Non-defaulting Party will pay
the absolute value of that amount to the Defaulting Party.

(ii) Termination Events. If the Early Termination Date results from a Termination Event:

(1) One Affected Party. If there is one Affected Party, the amount payable will be
determined in accordance with Section 6(e)(i)(3), if Market Quotation applies, or
Section 6(e)(i)(4), if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed to be references to
the Affected Party and the party which is not the Affected Party, respectively, and,
if Loss applies and fewer than all the Transactions are being terminated, Loss shall
be calculated in respect of all Terminated Transactions.

(2) Two Affected Parties. If there are two Affected Parties:

(A) if Market Quotation applies, each party will determine a Settlement
Amount in respect of the Terminated Transactions, and an amount will be
payable equal to (I) the sum of (a) one-half of the difference between the
Settlement Amount of the party with the higher Settlement Amount (“X”) and
the Settlement Amount of the party with the lower Settlement Amount (“Y”)
and (b) the Termination Currency Equivalent of the Unpaid Amounts owing to X
less (II) the Termination Currency Equivalent of the Unpaid Amounts owing to
Y; and

(B) if Loss applies, each party will determine its Loss in respect of this
Agreement (or, if fewer than all the Transactions are being terminated, in
respect of all Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party with the higher
Loss (“X”) and the Loss of the party with the lower Loss (“Y”).

If the amount payable is a positive number, Y will pay it to X; if it is a negative number, X will
pay the absolute value of that amount to Y.

(iii) Adjustment for Bankruptcy. In circumstances where an Early Termination Date occurs
because “Automatic Early Termination” applies in respect of a party, the amount determined
under this Section 6(e) will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the other under this
Agreement (and retained by such other party) during the period from the

 

 

relevant Early Termination Date to the date for payment determined under Section 6(d)(ii).

(iv) Pre-Estimate. The parties agree that if Market Quotation applies an amount recoverable
under this Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount
is payable for the loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.

7. Transfer

Subject to Section 6(b)(ii), neither this Agreement nor any interest or obligation in or under this
Agreement may be transferred (whether by way of security or otherwise) by either party without the
prior written consent of the other party, except that:

(a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation
with, or merger with or into, or transfer of all or substantially all its assets to, another entity
(but without prejudice to any other right or remedy under this Agreement); and

(b) a party may make such a transfer of all or any part of its interest in any amount payable to it
from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8. Contractual Currency

(a) Payment in the Contractual Currency. Each payment under this Agreement will be made in the
relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To
the extent permitted by applicable law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in any currency other than
the Contractual Currency, except to the extent such tender results in the actual receipt by the
party to which payment is owed, acting in a reasonable manner and in good faith in converting the
currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency
of all amounts payable in respect of this Agreement. If for any reason the amount in the
Contractual Currency so received falls short of the amount in the Contractual Currency payable in
respect of this Agreement, the party required to make the payment will, to the extent permitted by
applicable law, immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the Contractual
Currency so received exceeds the amount in the Contractual Currency payable in respect of this
Agreement, the party receiving the payment will refund promptly the amount of such excess.

(b) Judgments. To the extent permitted by applicable law, if any judgment or order expressed in a
currency other than the Contractual Currency is rendered (i) for the payment of any amount owing in
respect of this Agreement, (ii) for the payment of any amount relating to any early termination in
respect of this Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking recovery, after recovery in
full of the aggregate amount to which such party is entitled pursuant

 

 

to the judgment or order, will be entitled to receive immediately from the other party the amount
of any shortfall of the Contractual Currency received by such party as a consequence of sums paid
in such other currency and will refund promptly to the other party any excess of the Contractual
Currency received by such party as a consequence of sums paid in such other currency if such
shortfall or such excess arises or results from any variation between the rate of exchange at which
the Contractual Currency is converted into the currency of the judgment or order for the purposes
of such judgment or order and the rate of exchange at which such party is able, acting in a
reasonable manner and in good faith in converting the currency received into the Contractual
Currency, to purchase the Contractual Currency with the amount of the currency of the judgment or
order actually received by such party. The term “rate of exchange” includes, without limitation,
any premiums and costs of exchange payable in connection with the purchase of or conversion into
the Contractual Currency.

(c) Separate Indemnities. To the extent permitted by applicable law, these indemnities constitute
separate and independent obligations from the other obligations in this Agreement, will be
enforceable as separate and independent causes of action, will apply notwithstanding any indulgence
granted by the party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of this Agreement.

(d) Evidence of Loss. For the purpose of this Section 8, it will be sufficient for a party to
demonstrate that it would have suffered a loss had an actual exchange or purchase been made.

9. Miscellaneous

(a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the
parties with respect to its subject matter and supersedes all oral communication and prior writings
with respect thereto.

(b) Amendments. No amendment, modification or waiver in respect of this Agreement will be
effective unless in writing (including a writing evidenced by a facsimile transmission) and
executed by each of the parties or confirmed by an exchange of telexes or electronic messages on an
electronic messaging system.

(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations
of the parties under this Agreement will survive the termination of any Transaction.

(d) Remedies Cumulative. Except as provided in this Agreement, the rights, powers, remedies and
privileges provided in this Agreement are cumulative and not exclusive of any rights, powers,
remedies and privileges provided by law.

(e) Counterparts and Confirmations.

(i) This Agreement (and each amendment, modification and waiver in respect of it) may be
executed and delivered in counterparts (including by facsimile transmission), each of which
will be deemed an original.

 

 

(ii) The parties intend that they are legally bound by the terms of each Transaction from
the moment they agree to those terms (whether orally or otherwise). A Confirmation shall be
entered into as soon as practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of telexes or by an
exchange of electronic messages on an electronic messaging system, which in each case will
be sufficient for all purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that any such counterpart,
telex or electronic message constitutes a Confirmation.

(f) No Waiver of Rights. A failure or delay in exercising any right, power or privilege in respect
of this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of
any right, power or privilege will not be presumed to preclude any subsequent or further exercise,
of that right, power or privilege or the exercise of any other right, power or privilege.

(g) Headings. The headings used in this Agreement are for convenience of reference only and are
not to affect the construction of or to be taken into consideration in interpreting this Agreement.

10. Offices; Multibranch Parties

(a) If Section 10(a) is specified in the Schedule as applying, each party that enters into a
Transaction through an Office other than its head or home office represents to the other party
that, notwithstanding the place of booking office or jurisdiction of incorporation or organisation
of such party, the obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be repeated by such party
on each date on which a Transaction is entered into.

(b) Neither party may change the Office through which it makes and receives payments or deliveries
for the purpose of a Transaction without the prior written consent of the other party.

(c) If a party is specified as a Multibranch Party in the Schedule, such Multibranch Party may make
and receive payments or deliveries under any Transaction through any Office listed in the Schedule,
and the Office through which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.

11. Expenses

A Defaulting Party will, on demand, indemnify and hold harmless the other party for and against all
reasonable out-of-pocket expenses, including legal fees and Stamp Tax, incurred by such other party
by reason of the enforcement and protection of its rights under this Agreement or any Credit
Support Document to which the Defaulting Party is a party or by reason of the early termination of
any Transaction, including, but not limited to, costs of collection.

12. Notices

 

 

(a) Effectiveness. Any notice or other communication in respect of this Agreement may be given in
any manner set forth below (except that a notice or other communication under Section 5 or 6 may
not be given by facsimile transmission or electronic messaging system) to the address or number or
in accordance with the electronic messaging system details provided (see the Schedule) and will be
deemed effective as indicated:

(i) if in writing and delivered in person or by courier, on the date it is delivered;

(ii) if sent by telex, on the date the recipient’s answerback is received;

(iii) if sent by facsimile transmission, on the date that transmission is received by a
responsible employee of the recipient in legible form (it being agreed that the burden of
proving receipt will be on the sender and will not be met by a transmission report generated
by the sender’s facsimile machine);

(iv) if sent by certified or registered mail (airmail, if overseas) or the equivalent
(return receipt requested), on the date that mail is delivered or its delivery is attempted;
or

(v) if sent by electronic messaging system, on the date that electronic message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a
Local Business Day or that communication is delivered (or attempted) or received, as applicable,
after the close of business on a Local Business Day, in which case that communication shall be
deemed given and effective on the first following day that is a Local Business Day.

(b) Change of Addresses. Either party may by notice to the other change the address, telex or
facsimile number or electronic messaging system details at which notices or other communications
are to be given to it.

13. Governing Law and Jurisdiction

(a) Governing Law. This Agreement will be governed by and construed in accordance with the law
specified in the Schedule.

(b) Jurisdiction. With respect to any suit, action or proceedings relating to this Agreement
(“Proceedings”), each party irrevocably:

(i) submits to the jurisdiction of the English courts, if this Agreement is expressed to be
governed by English law, or to the non-exclusive jurisdiction of the courts of the State of
New York and the United States District Court located in the Borough of Manhattan in New
York City, if this Agreement is expressed to be governed by the laws of the State of New
York; and

(ii) waives any objection which it may have at any time to the laying of venue of any
Proceedings brought in any such court, waives any claim that such Proceedings have been
brought in an inconvenient forum and further waives the right to object, with respect to
such Proceedings, that such court does not have any jurisdiction over such party.

 

 

Nothing in this Agreement precludes either party from bringing Proceedings in any other
jurisdiction (outside, if this Agreement is expressed to be governed by English law, the
Contracting States, as defined in Section 1(3) of the Civil Jurisdiction and Judgments Act 1982 or
any modification, extension or re-enactment thereof for the time being in force) nor will the
bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in
any other jurisdiction.

(c) Service of Process. Each party irrevocably appoints the Process Agent (if any) specified
opposite its name in the Schedule to receive, for it and on its behalf, service of process in any
Proceedings. If for any reason any party’s Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given in the manner
provided for notices in Section 12. Nothing in this Agreement will affect the right of either
party to serve process in any other manner permitted by law.

(d) Waiver of Immunities. Each party irrevocably waives, to the fullest extent permitted by
applicable law, with respect to itself and its revenues and assets (irrespective of their use or
intended use), all immunity on the grounds of sovereignty or other similar grounds from (i) suit,
(ii) jurisdiction of any court, (iii) relief by way of injunction, order for specific performance
or for recovery of property, (iv) attachment of its assets (whether before or after judgment) and
(v) execution or enforcement of any judgment to which it or its revenues or assets might otherwise
be entitled in any Proceedings in the courts of any jurisdiction and irrevocably agrees, to the
extent permitted by applicable law, that it will not claim any such immunity in any Proceedings.

14. Definitions

As used in this Agreement:

“Additional Termination Event” has the meaning specified in Section 5(b).

“Affected Party” has the meaning specified in Section 5(b).

“Affected Transactions” means (a) with respect to any Termination Event consisting of an
Illegality, Tax Event or Tax Event Upon Merger, all Transactions affected by the occurrence of such
Termination Event and (b) with respect to any other Termination Event, all Transactions.

“Affiliate” means, subject to the Schedule, in relation to any person, any entity controlled,
directly or indirectly, by the person, any entity that controls, directly or indirectly, the person
or any entity directly or indirectly under common control with the person. For this purpose,
“control” of any entity or person means ownership of a majority of the voting power of the entity
or person.

“Applicable Rate” means:

(a) in respect of obligations payable or deliverable (or which would have been but for Section
2(a)(iii)) by a Defaulting Party, the Default Rate;

 

 

(b) in respect of an obligation to pay an amount under Section 6(e) of either party from and after
the date (determined in accordance with Section 6(d)(ii)) on which that amount is payable, the
Default Rate;

(c) in respect of all other obligations payable or deliverable (or which would have been but for
Section 2(a)(iii)) by a Non-defaulting Party, the Non-default Rate; and

(d) in all other cases, the Termination Rate.

“Burdened Party” has the meaning specified in Section 5(b).

“Change in Tax Law” means the enactment, promulgation, execution or ratification of, or any change
in or amendment to, any law (or in the application or official interpretation of any law) that
occurs on or after the date on which the relevant Transaction is entered into.

“consent” includes a consent, approval, action, authorisation, exemption, notice, filing,
registration or exchange control consent.

“Credit Event Upon Merger” has the meaning specified in Section 5(b).

“Credit Support Document” means any agreement or instrument that is specified as such in this
Agreement.

“Credit Support Provider” has the meaning specified in the Schedule.

“Default Rate” means a rate per annum equal to the cost (without proof or evidence of any actual
cost) to the relevant payee (as certified by it) if it were to fund or of funding the relevant
amount plus 1% per annum.

“Defaulting Party” has the meaning specified in Section 6(a).

“Early Termination Date” means the date determined in accordance with Section 6(a) or 6(b)(iv).

“Event of Default” has the meaning specified in Section 5(a) and, if applicable, in the Schedule.

“Illegality” has the meaning specified in Section 5(b).

“Indemnifiable Tax” means any Tax other than a Tax that would not be imposed in respect of a
payment under this Agreement but for a present or former connection between the jurisdiction of the
government or taxation authority imposing such Tax and the recipient of such payment or a person
related to such recipient (including, without limitation, a connection arising from such recipient
or related person being or having been a citizen or resident of such jurisdiction, or being or
having been organised, present or engaged in a trade or business in such jurisdiction, or having or
having had a permanent establishment or fixed place of business in such jurisdiction, but excluding
a connection arising solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this Agreement or a Credit
Support Document).

 

 

“law” includes any treaty, law, rule or regulation (as modified, in the case of tax matters, by the
practice of any relevant governmental revenue authority) and “lawful” and “unlawful” will be
construed accordingly.

“Local Business Day” means, subject to the Schedule, a day on which commercial banks are open for
business (including dealings in foreign exchange and foreign currency deposits) (a) in relation to
any obligation under Section 2(a)(i), in the place(s) specified in the relevant Confirmation or, if
not so specified, as otherwise agreed by the parties in writing or determined pursuant to
provisions contained, or incorporated by reference, in this Agreement, (b) in relation to any other
payment, in the place where the relevant account is located and, if different, in the principal
financial centre, if any, of the currency of such payment, (c) in relation to any notice or other
communication, including notice contemplated under Section 5(a)(i), in the city specified in the
address for notice provided by the recipient and, in the case of a notice contemplated by Section
2(b), in the place where the relevant new account is to be located and (d) in relation to Section
5(a)(v)(2), in the relevant locations for performance with respect to such Specified Transaction.

“Loss” means, with respect to this Agreement or one or more Terminated Transactions, as the case
may be, and a party, the Termination Currency Equivalent of an amount that party reasonably
determines in good faith to be its total losses and costs (or gain, in which case expressed as a
negative number) in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost of funding or, at
the election of such party but without duplication, loss or cost incurred as a result of its
terminating, liquidating, obtaining or reestablishing any hedge or related trading position (or any
gain resulting from any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each applicable condition
precedent) on or before the relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party’s legal fees and out-of-pocket expenses referred to under Section 11. A party will determine
its Loss as of the relevant Early Termination Date, or, if that is not reasonably practicable, as
of the earliest date thereafter as is reasonably practicable. A party may (but need not) determine
its Loss by reference to quotations of relevant rates or prices from one or more leading dealers in
the relevant markets.

“Market Quotation” means, with respect to one or more Terminated Transactions and a party making
the determination, an amount determined on the basis of quotations from Reference Market-makers.
Each quotation will be for an amount, if any, that would be paid to such party (expressed as a
negative number) or by such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document with respect to the
obligations of such party) and the quoting Reference Market-maker to enter into a transaction (the
“Replacement Transaction”) that would have the effect of preserving for such party the economic
equivalent of any payment or delivery (whether the underlying obligation was absolute or contingent
and assuming the satisfaction of each applicable condition precedent) by the parties under Section
2(a)(i) in respect of such Terminated Transaction or group of Terminated Transactions that would,
but for the occurrence of the relevant Early Termination Date, have been required after that date.
For this purpose, Unpaid Amounts in respect of the Terminated Transaction or group of Terminated
Transactions are to be

 

 

excluded but, without limitation, any payment or delivery that would, but for the relevant Early
Termination Date, have been required (assuming satisfaction of each applicable condition precedent)
after that Early Termination Date is to be included. The Replacement Transaction would be subject
to such documentation as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference Market-maker to provide
its quotation to the extent reasonably practicable as of the same day and time (without regard to
different time zones) on or as soon as reasonably practicable after the relevant Early Termination
Date. The day and time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if each party is so
obliged, after consultation with the other. If more than three quotations are provided, the Market
Quotation will be the arithmetic mean of the quotations, without regard to the quotations having
the highest and lowest values. If exactly three such quotations are provided, the Market Quotation
will be the quotation remaining after disregarding the highest and lowest quotations. For this
purpose, if more than one quotation has the same highest value or lowest value, then one of such
quotations shall be disregarded. If fewer than three quotations are provided, it will be deemed
that the Market Quotation in respect of such Terminated Transaction or group of Terminated
Transactions cannot be determined.

“Non-default Rate” means a rate per annum equal to the cost (without proof or evidence of any
actual cost) to the Non-defaulting Party (as certified by it) if it were to fund the relevant
amount.

“Non-defaulting Party” has the meaning specified in Section 6(a).

“Office” means a branch or office of a party, which may be such party’s head or home office.

“Potential Event of Default” means any event which, with the giving of notice or the lapse of time
or both, would constitute an Event of Default.

“Reference Market-makers” means four leading dealers in the relevant market selected by the party
determining a Market Quotation in good faith (a) from among dealers of the highest credit standing
which satisfy all the criteria that such party applies generally at the time in deciding whether to
offer or to make an extension of credit and (b) to the extent practicable, from among such dealers
having an office in the same city.

“Relevant Jurisdiction” means, with respect to a party, the jurisdictions (a) in which the party is
incorporated, organised, managed and controlled or considered to have its seat, (b) where an Office
through which the party is acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through which such payment is
made.

“Scheduled Payment Date” means a date on which a payment or delivery is to be made under Section
2(a)(i) with respect to a Transaction.

“Set-off” means set-off, offset, combination of accounts, right of retention or withholding or
similar right or requirement to which the payer of an amount under Section 6 is entitled or subject
(whether arising under this Agreement, another contract, applicable law or otherwise) that is
exercised by, or imposed on, such payer.

 

 

“Settlement Amount” means, with respect to a party and any Early Termination Date, the sum of:

(a) the Termination Currency Equivalent of the Market Quotations (whether positive or negative) for
each Terminated Transaction or group of Terminated Transactions for which a Market Quotation is
determined; and

(b) such party’s Loss (whether positive or negative and without reference to any Unpaid Amounts)
for each Terminated Transaction or group of Terminated Transactions for which a Market Quotation
cannot be determined or would not (in the reasonable belief of the party making the determination)
produce a commercially reasonable result.

“Specified Entity” has the meaning specified in the Schedule.

“Specified Indebtedness” means, subject to the Schedule, any obligation (whether present or future,
contingent or otherwise, as principal or surety or otherwise) in respect of borrowed money.

“Specified Transaction” means, subject to the Schedule, (a) any transaction (including an agreement
with respect thereto) now existing or hereafter entered into between one party to this Agreement
(or any Credit Support Provider of such party or any applicable Specified Entity of such party) and
the other party to this Agreement (or any Credit Support Provider of such other party or any
applicable Specified Entity of such other party) which is a rate swap transaction, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including any option with
respect to any of these transactions), (b) any combination of these transactions and (c) any other
transaction identified as a Specified Transaction in this Agreement or the relevant confirmation.

“Stamp Tax” means any stamp, registration, documentation or similar tax.

“Tax” means any present or future tax, levy, impost, duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto) that is imposed by any government or other
taxing authority in respect of any payment under this Agreement other than a stamp, registration,
documentation or similar tax.

“Tax Event” has the meaning specified in Section 5(b).

“Tax Event Upon Merger” has the meaning specified in Section 5(b).

“Terminated Transactions” means with respect to any Early Termination Date (a) if resulting from a
Termination Event, all Affected Transactions and (b) if resulting from an Event of Default, all
Transactions (in either case) in effect immediately before the effectiveness of the notice
designating that Early Termination Date (or, if “Automatic Early Termination” applies, immediately
before that Early Termination Date).

 

 

“Termination Currency” has the meaning specified in the Schedule.

“Termination Currency Equivalent” means, in respect of any amount denominated in the Termination
Currency, such Termination Currency amount and, in respect of any amount denominated in a currency
other than the Termination Currency (the “Other Currency”), the amount in the Termination Currency
determined by the party making the relevant determination as being required to purchase such amount
of such Other Currency as at the relevant Early Termination Date, or, if the relevant Market
Quotation or Loss (as the case may be), is determined as of a later date, that later date, with the
Termination Currency at the rate equal to the spot exchange rate of the foreign exchange agent
(selected as provided below) for the purchase of such Other Currency with the Termination Currency
at or about 11:00 a.m. (in the city in which such foreign exchange agent is located) on such date
as would be customary for the determination of such a rate for the purchase of such Other Currency
for value on the relevant Early Termination Date or that later date. The foreign exchange agent
will, if only one party is obliged to make a determination under Section 6(e), be selected in good
faith by that party and otherwise will be agreed by the parties.

“Termination Event” means an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to
be applicable, a Credit Event Upon Merger or an Additional Termination Event.

“Termination Rate” means a rate per annum equal to the arithmetic mean of the cost (without proof
or evidence of any actual cost) to each party (as certified by such party) if it were to fund or of
funding such amounts.

“Unpaid Amounts” owing to any party means, with respect to an Early Termination Date, the aggregate
of (a) in respect of all Terminated Transactions, the amounts that became payable (or that would
have become payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or prior to
such Early Termination Date and which remain unpaid as at such Early Termination Date and (b) in
respect of each Terminated Transaction, for each obligation under Section 2(a)(i) which was (or
would have been but for Section 2(a)(iii)) required to be settled by delivery to such party on or
prior to such Early Termination Date and which has not been so settled as at such Early Termination
Date, an amount equal to the fair market value of that which was (or would have been) required to
be delivered as of the originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such amounts, from (and
including) the date such amounts or obligations were or would have been required to have been paid
or performed to (but excluding) such Early Termination Date, at the Applicable Rate. Such amounts
of interest will be calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above shall be
reasonably determined by the party obliged to make the determination under Section 6(e) or, if each
party is so obliged, it shall be the average of the Termination Currency Equivalents of the fair
market values reasonably determined by both parties.

 

 

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below
with effect from the date specified on the first page of this document.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	VOLKSWAGEN AUTO LOAN

ENHANCED TRUST 2008-1	 	 
	 
	 	 	 	 	 	 	 	 
	HSBC BANK USA, N.A.	 	By: Deutsche Bank Trust Company

Delaware, not in its individual

capacity but solely as owner trustee	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	(Name of Party)
	 	(Name of Party)
	 	 
	 
	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Pierre N. McDonnaugh
 

Pierre N. McDonnaugh, JD, LLM
	 	By:

Name:
	 	/s/ Michele HY Voon
 

Michele HY Voon
	 	 
	Title:

	 	Vice President
	 	Title:
	 	Attorney-in-Fact	 	 
	Date:
	 	May 9, 2008	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Susan Barstock	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Susan Barstock	 	 
	 

	 	 	 	Title:
	 	Attorney-in-Fact	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Date:	 	May 9, 2008exv10w6

Exhibit 10.6

ISDA

International Swap Dealers Association, Inc.

SCHEDULE

to the

Master Agreement

dated as of May 9, 2008

between HSBC Bank USA, N.A. and Volkswagen Auto Loan Enhanced Trust 2008-1

(“Party A”)                                          (“Party B”)

Part
1. Termination Provisions.

	(a)	 	“Specified Entity” means in relation to Party A and Party B for the purpose of Sections
5(a)(v), (vi), (vii) and Section 5(b)(iv): Not applicable.
	 
	(b)	 	“Specified Transaction” will have the meaning specified in Section 14 of this Agreement.
	 
	(c)	 	The “Failure to Pay or Deliver” provisions of Section 5(a)(i) shall apply to Party A and
Party B.
	 
	(d)	 	The “Breach of Agreement” provision of Section 5(a)(ii) will apply to Party A and will not
apply to Party B.
	 
	(e)	 	The “Credit Support Default” provision of Section 5(a)(iii) will apply to Party A and Party
B; provided that with respect to Party B, Credit Support Default applies solely with respect
to the return of Posted Collateral pursuant to Paragraph 3(b) of the Credit Support Annex.
	 
	 	 	Notwithstanding anything to the contrary in Sections 5(a)(i) or 5(a)(iii)(1), any failure by
Party A to comply with or perform any obligation to be complied with or performed by
Party A under the Credit Support Annex shall not constitute an Event of Default under
Sections 5(a)(i) or 5(a)(iii) unless (i) the Moody’s Second Rating Trigger Requirements
apply and 30 or more Local Business Days have elapsed since the last time the Moody’s
Second Rating Trigger Requirements did not apply or (ii) an S&P Required Ratings
Downgrade has occurred and been continuing for 10 or more Local Business Days.
	 
	(f)	 	The “Misrepresentation” provision of Section 5(a)(iv) will apply to Party A and will not
apply to Party B.
	 
	(g)	 	The “Default Under Specified Transactions” provision of Section 5(a)(v) will not apply to
Party A and will not apply to Party B.

 

 

	(h)	 	The “Cross Default” provisions of Section 5(a)(vi) will apply to Party A and will not apply
to Party B.
	 
	 	 	“Specified Indebtedness” will have the meaning specified in Section 14, provided that
Specified Indebtedness shall not include deposits received in the course of a party’s
ordinary banking business.
	 
	 	 	“Threshold Amount” means, with respect to Party A (or its Credit Support Provider), 3% of
its total shareholders equity.
	 
	(i)	 	The “Bankruptcy” provision of Section 5(a)(vii) will apply to Party A and Party B; provided
that with respect to Party B the provisions of Section 5(a)(vii) clauses (2), (7) and (9) will
not be applicable as an Event of Default; clause (3) will not apply to Party B to the extent
it refers to any assignment, arrangement or composition that is effected by or pursuant to the
Indenture; clause (4) will not apply to Party B to the extent that it refers to proceedings or
petitions instituted or presented by Party A or any of its Affiliates; clause (6) will not
apply to Party B to the extent that it refers to (i) any appointment that is contemplated or
effected by the Indenture (as defined herein) or (ii) any appointment that Party B has not
become subject to); clause (8) will not apply to Party B to the extent that it applies to
Section 5(a)(vii)(2), (4), (6), and (7) (except to the extent that such provisions are not
disapplied with respect to Party B).
	 
	(j)	 	The “Merger without Assumption” provisions of Section 5(a)(viii) will apply to Party A and
will not apply to Party B.
	 
	(k)	 	The “Illegality” provisions of Section 5(b)(i) will apply to Party A and Party B.
	 
	(l)	 	The “Tax Event” provisions of Section 5(b)(ii) will apply to Party A and Party B.
	 
	(m)	 	The “Tax Event Upon Merger” provisions of Section 5(b)(iii) will apply to Party A and Party B
as Burdened Party; provided that Party A shall not be entitled to designate an Early
Termination Date by reason of a Tax Event Upon Merger in respect of which it is the Affected
Party. Section 6(b)(ii) will apply, provided that the words “or if a Tax Event Upon Merger
occurs and the Burdened Party is the Affected Party” shall be deleted.
	 
	(n)	 	The “Credit Event Upon Merger” provisions of Section 5(b)(iv) will not apply to Party A and
will not apply to Party B.
	 
	(o)	 	The “Automatic Early Termination” provision of Section 6(a) of this Agreement will not apply
to Party A and will not apply to Party B.
	 
	(p)	 	Payments on Early Termination. For the purpose of Section 6(e) of this Agreement:
	 
	 	 	Market Quotation will apply and the Second Method will apply; provided, however, with
respect to an early termination in which Party A is the Defaulting Party or sole Affected
Party in respect of an Additional Termination Event or Tax Event Upon Merger,
notwithstanding Section 6 of this Agreement, the following amendment to this Agreement set
forth in paragraphs (i) to (vi) below shall apply:

(i) The definition of “Market Quotation” shall be deleted in its entirety and replaced
with the following:

2

 

“Market Quotation” means, with respect to one or more Terminated Transactions, a Firm
Offer which is (1) made by a Reference Market-maker that is an Eligible Replacement, (2)
for an amount that would be paid to Party B (expressed as a negative number) or by Party B
(expressed as a positive number) in consideration of an agreement between Party B and such
Reference Market-maker to enter into a transaction (the “Replacement Transaction”) that
would have the effect of preserving for such party the economic equivalent of any payment
or delivery (whether the underlying obligation was absolute or contingent and assuming the
satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i)
in respect of such Terminated Transactions or group of Terminated Transactions that would,
but for the occurrence of the relevant Early Termination Date, have been required after
that Date, (3) made on the basis that Unpaid Amounts in respect of the Terminated
Transaction or group of Transactions are to be excluded but, without limitation, any
payment or delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after that Early
Termination Date is to be included and (4) made in respect of a Replacement Transaction
with commercial terms substantially the same as those of this Agreement (save for the
exclusion of provisions relating to Transactions that are not Terminated Transactions).”

(ii) The definition of “Settlement Amount” shall be deleted in its entirety and replaced
with the following:

“Settlement Amount” means, with respect to any Early Termination Date, an amount
(as determined by Party B) equal to:

(a) if, on or prior to such Early Termination Date, a Market Quotation for the
relevant Terminated Transaction or group of Terminated Transactions is accepted by
Party B so as to become legally binding, the Termination Currency Equivalent of the
amount (whether positive or negative) of such Market Quotation;

(b) if, on such Early Termination Date, no Market Quotation for the relevant
Terminated Transaction or group of Terminated Transactions is accepted by Party B so
as to become legally binding and one or more Market Quotations have been
communicated to Party B and remain capable of becoming legally binding upon
acceptance by Party B, the Termination Currency Equivalent of the amount (whether
positive or negative) of the lowest of such Market Quotations;

(c) if, on such Early Termination Date, no Market Quotation for the relevant
Terminated Transaction or group of Terminated Transactions is accepted by Party B so
as to become legally binding and no Market Quotations have been communicated to
Party B and remain capable of becoming legally binding upon acceptance by Party B,
Party B’s Loss (whether positive or negative and without reference to Unpaid
Amounts) for the relevant Terminated Transaction or group of Terminated
Transactions; and

(d) at any time on or before such Early Termination Date at which two or more Market
Quotations have been communicated to Party B and remain capable of becoming legally
binding upon acceptance by Party B, Party B shall be entitled to accept only the
lowest of such Market Quotations (for the avoidance of doubt, (i) a Market Quotation
expressed as a negative number is lower than a Market Quotation expressed as a
positive number and (ii) the lower of two Market Quotations expressed as negative numbers is
the one with the largest absolute value).”

3

 

(iii) For the purpose of sub-paragraph (4) of the definition of Market Quotation, Party B
shall determine in its sole discretion, acting in a commercially reasonable manner,
whether a Firm Offer is made in respect of a Replacement Transaction with commercial terms
substantially the same as those of this Agreement (save for the exclusion of provisions
relating to Transactions that are not Terminated Transactions).

(iv) Party B undertakes to use its reasonable efforts to obtain at least one Market
Quotation before the Early Termination Date.

(v) If Party B requests Party A in writing to obtain Market Quotations, Party A shall use
its reasonable efforts to do so before the Early Termination Date.

(vi) If the Settlement Amount is a negative number, Section 6(e)(i)(3) of this Agreement
shall be deleted in its entirety and replaced with the following:

“Second Method and Market Quotation”. If Second Method and Market Quotation apply,
(1) Party B shall pay to Party A an amount equal to the absolute value of the Settlement
Amount in respect of the Terminated Transactions, (2) Party B shall pay to Party A the
Termination Currency Equivalent of the Unpaid Amounts owing to Party A and (3) Party A
shall pay to Party B the Termination Currency Equivalent of the Unpaid Amounts owing to
Party B, provided that, (i) the amounts payable under (2) and (3) shall be subject to
netting in accordance with Section 2(c) of this Agreement and (ii) notwithstanding any
other provision of this Agreement, any amount payable by Party A under (3) shall not be
netted-off against any amount payable by Party B under (1).”

	(q)	 	“Termination Currency” means U.S. Dollars.

	(r)	 	Additional Termination Event will apply. Each of the following events shall constitute an
Additional Termination Event hereunder:

(i) Liquidation of Trust Estate. The following shall constitute an Additional Termination
Event in which Party B shall be the sole Affected Party: Any commencement of the
liquidation of the Trust Estate occurs following an event of default under the Indenture.

(ii) Amendment to Indenture or Sale and Servicing Agreement. The following shall
constitute an Additional Termination Event in which Party B shall be the sole Affected
Party: an amendment and/or supplement is made to the Indenture or the Sale and Servicing
Agreement without the consent of Party A if such amendment and/or supplement would
materially and adversely affect Party A’s interests hereunder or under the Transaction and
such consent is required under the Indenture or the Sale and Servicing Agreement.

(iii) Regulation AB Financial Disclosure. The following shall constitute an Additional
Termination Event in which Party A shall be the sole Affected Party: The failure of
Party A to materially comply with or materially perform any agreement or undertaking to be
complied with or performed by Party A under Part 5(t) of this Schedule.

(iv) S&P Downgrade of Party A. The failure by Party A to post Eligible Collateral in
accordance with the terms of the Credit Support Annex or to obtain a guarantee in
accordance with Part 5(p) of this Schedule or to transfer its rights and obligations
hereunder to an Eligible

4

 

Replacement in accordance with Part 5(p) of this Schedule shall
constitute an Additional Termination Event for which Party A shall be the sole Affected
Party.

(v) Moody’s First Rating Trigger. The following shall constitute an Additional
Termination Event in which Party A is the sole Affected Party: Party A has failed to
comply with or perform any obligation to be complied with or performed by Party A in
accordance with the Credit Support Annex and either (x) the Moody’s Second Rating Trigger
Requirements do not apply or (y) less than 30 Local Business Days have elapsed since the
last time the Moody’s Second Rating Trigger Requirements did not apply.

(vi) Moody’s Second Rating Trigger. The following shall constitute an Additional
Termination Event in which Party A is the sole Affected Party: (x) The Moody’s Second
Rating Trigger Requirements apply and 30 or more Local Business Days have elapsed since
the last time the Moody’s Second Rating Trigger Requirements did not apply and (y) (A) at
least one Eligible Replacement has made a Firm Offer (which remains capable of becoming
legally binding upon acceptance) to be the transferee of a transfer to be made in
accordance with Part 5(e) below and/or (B) at least one entity with the Moody’s First
Trigger Required Ratings and/or the Moody’s Second Trigger Required Ratings has made a
Firm Offer (which remains capable of becoming legally binding upon acceptance by the
offeree) to provide an Eligible Guarantee in respect of all of Party A’s present and
future obligations under this Agreement.

     (A) The “Moody’s First Rating Trigger Requirements” shall apply so long as no
Relevant Entity has the Moody’s First Trigger Required Ratings.

An entity shall have the “Moody’s First Trigger Required Ratings” (x) where such entity is
the subject of a Moody’s Short-term Rating, if such rating is “Prime-1” and its long-term,
unsecured and unsubordinated debt obligations are rated “A2” or above by Moody’s and (y)
where such entity is not the subject of a Moody’s Short-term Rating, if its long-term,
unsecured and unsubordinated debt obligations are rated “A1” or above by Moody’s.

     (B) So long as the Moody’s First Rating Trigger Requirements apply, Party A will at
its own cost use commercially reasonable efforts to, as soon as reasonably practicable,
(x) procure an Eligible Guarantee in respect of all of Party A’s present and future
obligations under this Agreement to be provided by a guarantor with the Moody’s First
Trigger Required Ratings, (y) transfer to Party B the amount of Eligible Collateral
required under the Credit Support Annex or (z) transfer this Agreement in accordance with
Part 5(e) below.

     (C) The “Moody’s Second Rating Trigger Requirements” shall apply so long as no
Relevant Entity has the Moody’s Second Trigger Required Ratings.

An entity shall have the “Moody’s Second Trigger Required Ratings” (x) where such entity
is the subject of a Moody’s Short-term Rating, if such rating is “Prime-2” or above and
its long-term, unsecured and unsubordinated debt obligations are rated “A3” or above by
Moody’s and (y) where such entity is not the subject of a Moody’s Short-term Rating, if
its long-term, unsecured and unsubordinated debt obligations are rated “A3” or above by
Moody’s.

     (D) So long as the Moody’s Second Rating Trigger Requirements apply, Party A will at
its own cost use commercially reasonable efforts to, as soon as reasonably practicable,
either (x) procure an Eligible Guarantee in respect of all of Party A’s present and future
obligations under this Agreement to be provided by a guarantor with the Moody’s First
Trigger Required

5

 

Ratings and/or the Moody’s Second Trigger Required Ratings or (y)
transfer this Agreement in accordance with Part 5(e) below, and in both the case of (x)
and (y), transfer to Party B the amount of Eligible Collateral required under the Credit
Support Annex.

In the event of an Early Termination Date in respect of a S&P Approved Rating Downgrade,
an S&P Required Ratings Downgrade, a Moody’s First Rating Trigger or a Moody’s Second
Rating Trigger and the entering into by Party B of alternative swap arrangements, Party A
shall pay all reasonable out-of-pocket expenses, including legal fees and stamp taxes,
relating to the entering into of such alternative swap arrangements.

Part
2. Tax Representations.

	(a)	 	Payer Representations. For the purpose of Section 3(e) of this Agreement, Party A will make
the following representation and Party B will make the following representation:
	 
	 	 	It is not required by any applicable law, as modified by the practice of any relevant
governmental revenue authority, of any Relevant Jurisdiction to make any deduction or
withholding for or on account of any Tax from any payment (other than interest under
Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making this representation, it may rely on (i) the accuracy of
any representations made by the other party pursuant to Section 3(f) of this Agreement,
(ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this
Agreement and the accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of
the agreement of the other party contained in Section 4(d) of this Agreement, provided
that it shall not be a breach of this representation where reliance is placed on clause
(ii) and the other party does not deliver a form or document under Section 4(a)(iii) of
this Agreement by reason of material prejudice to its legal or commercial position.
	 
	(b)	 	Payee Representations. For the purpose of Section 3(f) of this Agreement, Party A and
Party B will make the representations in (i) and (ii) below.

	 	(i)	 	Party A represents that it is a national bank organized under the laws of
the United States.
	 
	 	(ii)	 	Party B represents that it is a Delaware statutory trust organized or formed
under the laws of the State of Delaware.

Part
3. Agreement to Deliver Documents.

For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees to deliver the
following documents, as applicable:

	(a)	 	Tax forms, documents or certificates to be delivered are:

	 	 	Party A and Party B shall promptly deliver to the other party (or as directed) any form or
document accurately completed and in a manner reasonably satisfactory to the other party
that may be required or reasonably requested in order to allow the other party to make a
payment under a Transaction without any deduction or withholding for or on account of any
Tax or with

6

 

	 	 	such deduction or withholding at a reduced rate, promptly upon reasonable
demand by the other party.
	 
	(b)	 	Other documents to be delivered are:

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Covered by
	 	 	 	 	 	 	Section 3(d)
	Party required to	 	Form/Document/	 	Date by which to be	 	Representation of this
	deliver document	 	Certificate	 	delivered	 	Agreement*
	Party A and Party B

	 	Evidence of the
authority of the
signatories of this
Agreement including
specimen signatures
of such
signatories.
	 	Upon execution of
this Agreement.
	 	Yes
	 
	 	 	 	 	 	 
	Party A

	 	An opinion of
counsel addressed
to Party B in form
and substance
reasonably
acceptable to
Party B.
	 	Upon execution of
this Agreement.
	 	No
	 
	 	 	 	 	 	 
	Party B

	 	An opinion of
Party B’s counsel
addressed to
Party A in form and
substance
reasonably
acceptable to
Party A.
	 	Upon execution of
this Agreement.
	 	No
	 
	 	 	 	 	 	 
	Party B

	 	A duly executed
certificate of the
secretary or
assistant secretary
of the Owner
Trustee of Party B
certifying the name
and true signature
of each person
authorized to
execute this
Agreement and enter
into Transactions
for Party B.
	 	Upon execution of
this Agreement.
	 	Yes
	 
	 	 	 	 	 	 
	Party B

	 	Copy of executed
Sale and Servicing
Agreement.
	 	Upon execution of
such Agreement.
	 	Yes
	 
	 	 	 	 	 	 
	Party A

	 	Financial data
relating to
Party A, as
required pursuant
to Part 5(t) of
this Schedule.
	 	As required
pursuant to
Part 5(t) of this
Schedule.
	 	Yes

7

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Covered by
	 	 	 	 	 	 	Section 3(d)
	Party required to	 	Form/Document/	 	Date by which to be	 	Representation of this
	deliver document	 	Certificate	 	delivered	 	Agreement*
	Party A

	 	Executed
Indemnification and
Disclosure
Agreement, among
Party A, VW Credit,
Inc. and Volkswagen
Auto Lease/Loan
Underwritten
Funding, LLC,
relating to
Party A’s furnished
information for use
in the Prospectus
and other matters.
	 	Upon or prior to
execution of this
Agreement
	 	Yes

 

			
	*	 	For purposes of Section 3(d) of this Agreement, the following shall be added immediately prior
to the period at the end thereof: “; provided, however, that in the case of
financial statements delivered by either party, the only representation being made by either party
is that such financial statements give a fair view of the state of affairs of the relevant entity
to which they relate as at the date of such financial statements.”

8

 

Part
4. Miscellaneous.

	(a)	 	Addresses for Notices. For the purpose of Section 12(a) of this Agreement:
	 
	 	 	Address for notices or communications to Party A:

	 	 	 	 	 
	 

	 	Address:
	 	452 5th Avenue
	 

	 	 	 	New York, New York 10018
	 
	 	 	 	 
	 

	 	Attention:
	 	Christian McGreevy
	 

	 	Facsimile No.:
	 	(212) 525-5517
	 

	 	Telephone No.:
	 	(212) 525-8710
	 
	 	 	 	 
	 	 	Address for notices or communications to Party B:
	 
	 	 	 	 
	 

	 	Address:
	 	c/o Deutsche Bank Trust Company Delaware
	 

	 	 	 	1011 Centre Road, 2nd Floor
	 

	 	 	 	Wilmington, Delaware 19805
	 
	 	 	 	 
	 

	 	Attention:
	 	Elizabeth Ferry
	 

	 	 	 	Facsimile No.: (302) 636-3399
	 
	 	 	 	 
	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	Address:
	 	VW Credit, Inc.
	 

	 	 	 	2200 Ferdinand Porsche Drive
	 

	 	 	 	Herndon, Virginia 20171
	 

	 	 	 	Attention: Treasurer
	 

	 	 	 	Facsimile No: (248) 754-5360
	 

	 	 	 	Telephone No: (703) 364-7000
	 
	 	 	 	 
	 	 	With a copy to the Indenture Trustee at:
	 
	 	 	 	 
	 

	 	Address:
	 	388 Greenwich Street, 14th Floor
	 

	 	 	 	New York, New York 10013
	 

	 	 	 	Facsimile No.: (212) 816-5527

	(b)	 	Process Agent. For the purpose of Section 13(c) of this Agreement:
	 
	 	 	     Party A appoints as its Process Agent: Not applicable
	 
	 	 	Party B appoints as its Process Agent: Not applicable
	 
	(c)	 	Offices. The provisions of Section 10(a) of this Agreement will apply to this Agreement.
	 
	(d)	 	Multibranch Party. For the purpose of Section 10(c) of this Agreement:

	 	 	Party A is not a Multibranch Party.

9

 

	 	 	Party B is not a Multibranch Party.
	 
	(e)	 	Calculation Agent. The Calculation Agent is Party A, unless otherwise specified in a
Confirmation in relation to the relevant Transaction; provided, however, if an Event of
Default has occurred with respect to Party A, Party B shall be the Calculation Agent.
	 
	(f)	 	Credit Support Document. Details of any Credit Support Document:

	 	 	 
	With respect to Party A:

	 	The Credit Support Annex and any Eligible Guarantee in
support of Party A’s obligations under this Agreement
	 
	 	 
	With respect to Party B:

	 	The Credit Support Annex solely with respect to
Party B’s obligations under paragraph 3(b) of the Credit Support Annex

	(g)	 	Credit Support Provider. Credit Support Provider means in relation to:

	 	 	 
	Party A:

	 	The guarantor under any Eligible Guarantee in support of Party A’s
obligations under this Agreement.
	 
	 	 
	Party B:

	 	Not applicable.

	(h)	 	Governing Law. This Agreement will be governed by and construed in accordance with the laws
of the State of New York (without reference to choice of laws doctrine except Section 5-1401
and Section 5-1402 of the New York General Obligation Law).

	(i)	 	Netting of Payments. The limitation set forth in Section 2(c)(ii) of this Agreement will
apply and therefore the netting in Section 2(c) of this Agreement will be limited to the same
Transaction.

	(j)	 	“Affiliate” will have the meaning specified in Section 14 of this Agreement, except that with
respect to Section 3(c), Party A and Party B will be deemed to have no Affiliates.

(k) No Gross Up by Party B.

(i) Section 2(d)(i)(4) is hereby deleted and replaced by the following:

     ”(4) (A) If Party A is the party so required to deduct or withhold, then Party A
shall make such additional payment as is necessary to ensure that the net amount actually
received by Party B (free and clear of all Taxes, whether assessed against it or Party B)
will equal the full amount Party B would have received had no such deduction or
withholding been required; and

     (B) if Party B is the party so required to deduct or withhold, then Party B shall
make the relevant payment subject to such deduction or withholding and Party B will not be
required to gross up.

For the avoidance of doubt, the fact that any payment is made by Party B subject to the
provisions of (B) above shall at no time affect the obligations of Party A under (A)
above.”

10

 

(ii) Indemnifiable Tax. Notwithstanding the definition of “Indemnifiable Tax” in
Section 14 of this Agreement, all Taxes in relation to payments by Party A shall be
Indemnifiable Taxes and in relation to payments by Party B, no Tax shall be an
Indemnifiable Tax.

Part
5. Other Provisions.

(a) ISDA Definitions

The definitions and provisions contained in the 2006 ISDA Definitions (the “2006
Definitions”) as published by the International Swaps and Derivatives Association, Inc.
are incorporated by reference into this Agreement. The Agreement and each Transaction
will be governed by the 2006 Definitions as they may be officially amended and
supplemented from time to time by ISDA.

For the sake of clarity, unless otherwise specified in this Agreement, the following
documents shall govern in the order in which they are listed in the event of any
inconsistency between any of the documents:

	 	(i)	 	the Confirmation;
	 
	 	(ii)	 	the Schedule;
	 
	 	(iii)	 	the 2006 Definitions; and
	 
	 	(iv)	 	the printed form of ISDA Master Agreement.

	(b)	 	Relationship Between Parties

Each party will be deemed to represent to the other party on the date on which it enters
into a Transaction that (absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary for the Transaction):

(i) Non-Reliance. It is acting for its own account, and it has made its own independent
decisions to enter into that Transaction and as to whether that Transaction is appropriate
or proper for it based upon its own judgement and upon advice from such advisors as it has
deemed necessary. It is not relying on any communication (written or oral) of the other
party as investment advice or as a recommendation to enter into that Transaction; it being
understood that information and explanations related to the terms and conditions of a
Transaction shall not be considered investment advice or a recommendation to enter into
that Transaction. It has not received from the other party any assurance or guarantee as
to the expected results of that Transaction.

(ii) Assessment and Understanding. It is capable of assessing the merits of and
understanding (on its own behalf or through independent professional advice), and
understands and accepts, the terms, conditions and risks of that Transaction. It is also
capable of assuming, and assumes, the risks of that Transaction.

(iii) Status of Parties. Each party is acting as principal and not as agent and the other
party is not acting as a fiduciary for or as an advisor to it in respect of that
Transaction.

(iv) Eligible Contract Participant. It is an “eligible contract participant” as defined
in Section 1a(12) of the U.S. Commodity Exchange Act, 7 U.S.C. Section 1a(12).

11

 

(v) FDIC Requirements. If it is a bank subject to the requirements of 12 U.S.C. §
1823(e), the necessary action to authorize referred to in the representation in Section
3(a)(ii) includes all authorizations required under the Federal Deposit Insurance Act as
amended, including amendments effected by the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, and under any agreement, writ, decree, or order entered into with
such party’s supervisory authorities. At all times during the term of this Agreement,
such party will continuously include and maintain as part of its official written books
and records this Agreement, this Schedule and all other exhibits, supplements, and
attachments hereto and documents incorporated by reference herein, all Confirmations, and
evidence of all necessary authorizations.

(vi) ERISA. Party A continuously represents that it is not (i) an employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), subject to Title 1 of ERISA or a “plan” that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended (collectively, a “Plan”), (ii) a person or
entity acting on behalf of a Plan or (iii) a person or entity the assets of which
constitute “plan assets” under ERISA. Party A will provide notice to the other party in
the event that it is aware that it is in breach of any aspect of this representation or is
aware that with the passing of time, giving of notice or expiry of any applicable grace
period, it will breach this representation.

	(c)	 	Waiver of Jury Trial. Each party hereby irrevocably waives any and all rights to trial by
jury with respect to any legal proceeding arising out of or relating to this Agreement or any
Transaction contemplated hereby.

	(d)	 	Severability. Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions of the Agreement or
affecting the validity or enforceability of such provision in any other jurisdiction unless
such severance shall substantially impair the benefits of the remaining portions of this
Agreement or changes the reciprocal obligations of the parties. The parties hereto shall
endeavour in good faith negotiations to replace the prohibited or unenforceable provision with
a valid provision, the economic effect of which comes as close as possible to that of the
prohibited or unenforceable provision.

	(e)	 	Transfers. Notwithstanding the provisions of Section 7:

(i) No transfer by Party A of this Agreement or any interest or obligation in or of
Party A under this Agreement shall be effective unless:

	 	(A)	 	Party B consents to such transferee;
	 
	 	(B)	 	The Rating Agency Condition shall have been satisfied; provided
that, with respect to S&P, the Rating Agency Condition need not be satisfied if
such transfer has identical terms and the assignee has Rated Debt and no
adverse tax
consequences to Party B have occurred; provided, further, that the Rating
Agencies will be notified of such transfer;
	 
	 	(C)	 	Party A shall have given Party B, the Servicer and the
Indenture Trustee prior written notice of the proposed transfer; and

12

 

	 	(D)	 	such transfer otherwise complies with the terms of the
Indenture and the other Transaction Documents.

(ii) Except to the extent contemplated by the Indenture, neither this Agreement nor any
interest in or under this Agreement may be transferred by Party B to any other entity save
with Party A’s prior written consent (such consent not to be unreasonably withheld or
delayed).

(iii) Paragraphs (i) and (ii) above are subject to the following exceptions:

	 	(A)	 	a party may make such a transfer of this Agreement without
prior notice to any party pursuant to a consolidation or amalgamation with, or
merger with or into, or transfer of all or substantially all its assets to,
another entity (but without prejudice to any other right or remedy under this
Agreement); or
	 
	 	(B)	 	a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e) without prior notice
to any party.

(iv) If an Eligible Replacement has made a Firm Offer (which remains an offer that will
become legally binding upon acceptance by Party B) to be the transferee pursuant to a
Permitted Transfer, Party B shall, at Party A’s written request and at Party A’s expense,
take any reasonable steps required to be taken by Party B to effect such transfer.

	(f)	 	Permitted Security Interest. For purposes of Section 7 of this Agreement, Party A hereby
consents to the Permitted Security Interest.
	 
	 	 	“Permitted Security Interest” means the pledge and assignment by Party B of the Swap
Collateral to the Indenture Trustee pursuant to the Indenture, and the granting to the
Indenture Trustee of a security interest in the Swap Collateral pursuant to the Indenture.
	 
	 	 	“Swap Collateral” means all right, title and interest of Party B in this Agreement, each
Transaction hereunder, and all present and future amounts payable by Party A to Party B
under or in connection with this Agreement or any Transaction governed by this Agreement,
including, without limitation, any transfer or termination of any such Transaction.
	 
	 	 	“Indenture Trustee” means Citibank, N.A. or any successor, acting as Indenture Trustee
pursuant to the Indenture.
	 
	(g)	 	Absence of Certain Events. Section 3(b) of this Agreement is hereby amended by inserting the
parenthetical “(with respect to Party A only)” immediately after the phrase “No Event of
Default or”.
	 
	(h)	 	Events of Default. Section 5(a)(i) of this Agreement is hereby amended by the addition of
the following at the end thereof:
“, it being understood that amounts payable by Party B are not due except to the extent
set forth in Section 4.4(a) of the Sale and Servicing Agreement.”
	 
	(i)	 	No Set-Off. Party A and Party B hereby waive any and all right of set-off with respect to
any amounts due under this Agreement or any Transaction, provided that nothing herein shall be

13

 

	 	 	construed to waive or otherwise limit the netting provisions contained in Section 2(c) of this
Agreement or Paragraph 8 of the Credit Support Annex.
	 
	(j)	 	Indenture. Party B hereby acknowledges that Party A is a secured party under the Indenture
with respect to this Agreement, and Party B agrees for the benefit of Party A that it will not
amend the Indenture in a manner which materially and adversely affects the rights or
obligations of Party A under the Indenture unless Party A shall have consented in writing to
such action; provided, however, that such consent shall not be unreasonably withheld or
delayed.
	 
	(k)	 	No Recourse. The liability of Party B to Party A hereunder is limited in recourse solely to
the amounts payable to Party A from the Available Funds, Advances made on such Payment Date
and the Reserve Account Draw Amount in accordance with the priority of payments set forth in
Section 4.4(a) of the Sale and Servicing Agreement. This section shall survive the
termination of this Agreement.
	 
	(l)	 	No Petition. Party A hereby covenants and agrees that prior to the date which is one year
(or, if longer, the applicable preference period) and one day after payment in full of all
obligations of each Bankruptcy Remote Party in respect of all securities issued by any
Bankruptcy Remote Party (i) it shall not authorize any Bankruptcy Remote Party to commence a
voluntary winding-up or other voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to such Bankruptcy Remote Party or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in effect in any jurisdiction
or seeking the appointment of an administrator, a trustee, receiver, liquidator, custodian or
other similar official with respect to such Bankruptcy Remote Party or any substantial part of
its property or to consent to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced against such Bankruptcy
Remote Party, or to make a general assignment for the benefit of any party hereto or any other
creditor of such Bankruptcy Remote Party, and (ii) it shall not commence or join with any
other Person in commencing any proceeding against such Bankruptcy Remote Party under any
bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in
effect in any jurisdiction. This section shall survive the termination of this Agreement.
	 
	 	 	As used above, “Bankruptcy Remote Party” means Volkswagen Auto Lease/Loan Underwritten
Funding, LLC and Party B.
	 
	(m)	 	Confirmation. Each party acknowledges and agrees that the Confirmation executed as of the
date hereof and with Transaction Reference Number 498740HN shall be the only Transaction
governed by this Agreement (it being understood that, in the event such Confirmation shall be
amended (in any respect), such amendment shall not constitute (for purposes of this paragraph)
a separate Transaction or a separate Confirmation. Party A and Party B shall not enter into
any additional Confirmation or Transaction hereunder.
	 
	(n)	 	Potential Events of Default. Section 2(a)(iii) is amended by the deletion of the words “or
Potential Event of Default”.

14

 

	(o)	 	Limitation of Liability. Notwithstanding anything contained herein to the contrary, in
executing this Agreement (including the Schedule, Credit Support Annex and each Confirmation)
on behalf of Party B, Deutsche Bank Trust Company Delaware (the “Owner Trustee”) and the
Indenture Trustee are acting solely in its capacity as owner trustee of Party B and indenture
trustee, respectively, and not in its individual capacity, and in no event shall either one of
them, in their individual capacity, have any liability for the representations, warranties,
covenants, agreements or other obligations of Party B hereunder, for which recourse shall be
had solely to the assets of Party B, except to the extent of its fraud, breach of trust or
willful misconduct.
	 
	(p)	 	S&P Downgrade of Party A. In the event that the Relevant Entity’s short-term unsecured and
unsubordinated debt rating is downgraded below “A-1” by S&P (or if its short-term rating is
not available by S&P, in the event that its long-term unsecured and unsubordinated debt rating
is downgraded below “A+” by S&P) and such Relevant Entity is a Financial Institution (a “S&P
Approved Ratings Downgrade”), Party A shall within two (2) Local Business Days following the
date of such S&P Approved Ratings Downgrade, give Party B, the Servicer and the Indenture
Trustee written notice of the occurrence of such S&P Approved Ratings Downgrade, and within 10
Business Days after a S&P Approved Ratings Downgrade, either (i) transfer (at its own cost)
Party A’s rights and obligations hereunder to an Eligible Replacement in accordance with
Part 5(e) of this Schedule, (ii) post Eligible Collateral in accordance with the Credit
Support Annex or (iii) obtain (at Party A’s expense) an Eligible Guarantee or other similar
assurance in respect of Party A’s obligations under this Agreement that satisfies the Rating
Agency Condition.
	 
	 	 	If an S&P Required Rating Downgrade (as defined below) shall occur and be continuing with
respect to a Relevant Entity, Party A shall within two (2) Business Days of such S&P
Required Ratings Downgrade give written notice to Party B, the Servicer and the Indenture
Trustee of the occurrence of such downgrade, and within 10 Business Days of the first
occurrence of such S&P Required Ratings Downgrade and each Business Day following such
occurrence (i) comply with the terms of the Credit Support Annex and (ii) within 60 days of
the date of the S&P Required Ratings Downgrade, in addition to posting collateral pursuant
to the Credit Support Annex (x) transfer (at its own cost) Party A’s rights and obligations
hereunder to an Eligible Replacement in accordance with Part 5(e) of this Schedule or (y)
obtain (at Party A’s expense) an Eligible Guarantee or other similar assurance in respect of
Party A’s obligations under this Agreement that satisfies the Rating Agency Condition. For
the purpose hereof, a “S&P Required Ratings Downgrade” shall occur with respect to a
Relevant Entity (x) if such entity is a Financial Institution, its the short-term senior
unsecured deposit rating is withdrawn by S&P or cease to be at least “A-2” (or if its
short-term rating is not available by S&P, in the event that its long-term unsecured and
unsubordinated debt rating is withdrawn or cease to be at least “BBB+” by S&P) or (y) if
such entity is not a Financial Institution, at any time its short-term senior unsecured
deposit rating is withdrawn or downgraded below “A-1” (or if its short-term rating is not
available by S&P, in the event that its long-term unsecured and unsubordinated debt rating
is withdrawn or ceases to be at least “A+” by S&P).
	 
	(q)	 	[Reserved]
	 
	(r)	 	Definitions.
	 
	 	 	Reference is made to that certain Sale and Servicing Agreement dated as of May 9, 2008 (the
“Sale and Servicing Agreement”) among Party B as the Issuer, Volkswagen Auto Lease/Loan
Underwritten Funding, LLC, VW Credit, Inc. and Citibank, N.A., as Indenture Trustee.

15

 

	 	 	Capitalized terms used but not defined in this Agreement or this Schedule will have the
meanings ascribed to them in the Sale and Servicing Agreement.
	 
	(ii)	 	As used herein:
	 
	 	 	“Credit Support Annex” means the 1994 ISDA Credit Support Annex between Party A and
Party B dated as of the date hereof.
	 
	 	 	“Depositor” means Volkswagen Auto Lease/Loan Underwritten Funding, LLC.
	 
	 	 	“Eligible Collateral” has the meaning set forth in the Credit Support Annex.
	 
	 	 	“Eligible Guarantee” means an unconditional and irrevocable guarantee that is provided by
a guarantor that has Rated Debt with respect to S&P and with the Moody’s First Trigger
Required Ratings as principal debtor rather than surety and is directly enforceable by
Party B, the form and substance of which guarantee are subject to the Rating Agency
Condition, where either (A) a law firm has given a legal opinion confirming that none of
the guarantor’s payments to Party B under such guarantee will be subject to withholding
for tax or (B) such guarantee provides that, in the event that any of such guarantor’s
payments to Party B are subject to withholding for tax, such guarantor is required to pay
such additional amount as is necessary to ensure that the net amount actually received by
Party B (free and clear of any withholding tax) will equal the full amount Party B would
have received had no such withholding been required.
	 
	 	 	“Eligible Replacement” means an entity (A)(i) with the Moody’s First Trigger Required
Ratings and that has Rated Debt with respect to S&P that is the subject of a legal opinion
given by a law firm confirming that none of its payments to Party B will be subject to
withholding for tax or (ii) whose present and future obligations owing to Party B are
guaranteed pursuant to an Eligible Guarantee provided by a guarantor that has Rated Debt
with respect to S&P and with the Moody’s First Trigger Required Ratings and (B) could
become a party to this Agreement (or party to an agreement in form and substance
satisfactory to Party B, the Servicer and the Indenture Trustee) in accordance with Part
5(e) of this Schedule and pursuant to documentation which would not be less favorable to
Party B than this Agreement.
	 
	 	 	“Financial Institution” means a bank, broker/dealer, insurance company, structured
investment company or derivative product company.
	 
	 	 	“Firm Offer” means an offer which, when made, was capable of becoming legally binding upon
acceptance.
	 
	 	 	“Free Writing Prospectus” means any free writing prospectus prepared in connection with
the public offering of the Notes.
	 
	 	 	“Moody’s” means Moody’s Investors Service, Inc. or its successor.
	 
	 	 	“Moody’s Short-term Rating” means a rating assigned by Moody’s under its short-term rating
scale in respect of an entity’s short-term, unsecured and unsubordinated debt obligations.
	 
	 	 	“Notes” mean the asset-backed notes issued by Party B under the Indenture.

16

 

	 	 	“Preliminary Prospectus Supplement” means any preliminary prospectus supplement prepared
in connection with the public offering and sale of the Notes.
	 
	 	 	“Prospectus Supplement” means any prospectus supplement prepared in connection with the
public offering and sale of the Notes.
	 
	 	 	“Rated Debt” means, with respect to an entity, in the case of S&P, (i) S&P assigns a
short-term debt rating equal to or higher than “A-1” to such entity or (ii) S&P assigns a
long-term debt rating equal to or higher than “A+” to such entity (if the entity only has
a long-term debt rating).
	 
	 	 	“Rating Agencies” means S&P and Moody’s.
	 
	 	 	“Rating Agency Condition” means, with respect to any event or circumstance and each
Rating Agency, either (a) written confirmation by such Rating Agency that the occurrence
of such event or circumstance will not cause it to downgrade, qualify or withdraw its
rating assigned to any of the Notes or (b) in the case of Moody’s only, that such Rating
Agency shall have been given notice of such event or circumstance at least ten days prior
to the occurrence of such event or circumstance (or, if ten days’ advance notice is
impracticable, as much advance notice as is practicable) and such Rating Agency shall not
have issued any written notice that the occurrence of such event or circumstance will
cause it to downgrade, qualify or withdraw its rating assigned to the Notes.
Notwithstanding the foregoing clause (b), Moody’s has no duty to review any
notice given with respect to any event, and it is understood that Moody’s may not
actually review notices received by it prior to or after the expiration of the ten (10)
day period described in clause(b) above. Further, each Rating Agency retains the
right to downgrade, qualify or withdraw its rating assigned to all or any of the Notes at
any time in its sole judgment even if the Rating Agency Condition with respect to an
event had been previously satisfied pursuant to clause (a) or clause (b)
above.
	 
	 	 	“Relevant Entities” means Party A and any guarantor under an Eligible Guarantee in
respect of all of Party A’s present and future obligations under this Agreement.
	 
	 	 	“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies Inc. or its
successor.
	 
	 	 	“Servicer” means VW Credit, Inc. or its successor.
	 
	(s)	 	Amendments. Section 9(b) of this Agreement is hereby amended by inserting the following at
the end thereof:
	 
	 	 	it being a further condition to any such amendment or modification that the Rating Agency
Condition shall have been satisfied.
	 
	(t)	 	Regulation AB Financial Disclosure.
	 
	 	 	Subject to the last two paragraphs of this clause (t), so long as Party B, the Depositor
or any of such parties’ Affiliates (collectively, “Volkswagen”) shall file reports in
respect of the Notes with the Securities and Exchange Commission (the “SEC”) pursuant to
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), Party A agrees to Deliver within ten (10) calendar days of receipt of a written
request therefor by Party B or the

17

 

	 	 	Depositor, such information relating to Party A as may
be necessary to enable Volkswagen to comply with any SEC disclosure requirements,
including without limitation information concerning Party A required by Item 1115 of
Regulation AB and Forms 8-K, 10-D and 10-K and any information to be provided pursuant to
or in accordance with any SEC comments to any of the foregoing; it being understood that
Volkswagen shall not be required to voluntarily suspend its reporting obligation with
respect to the Notes at any time. To the extent necessary to comply with Regulation AB,
Party A shall obtain any necessary auditor’s consents required under the Exchange Act or
the Securities Act related to any financial statements of Party A required to be
incorporated by reference into any Free Writing Prospectus, Preliminary Prospectus
Supplement or Prospectus Supplement or report filed by Volkswagen with the SEC and
promptly to forward to the Depositor any such auditor consents obtained. The information
provided, or authorized to be incorporated by reference, by Party A pursuant to this Part
5(t) is referred to as the “Additional Information.”
	 	 	For the purpose of this Part 5(t):
	 
	 	 	“Deliver” includes actual delivery or transmission of information in an EDGAR-compatible
format or, in the case of any financial information required to be delivered pursuant to
Item 1115 of Regulation AB and Forms 8-K, 10-D and 10-K, making such financial information
available in an EDGAR-compatible format for incorporation by reference to the extent
permitted by Regulation AB, together with actual delivery of all necessary auditor’s
consents.
	 
	 	 	“EDGAR” means the SEC’s Electronic Data Gathering, Analysis and Retrieval system.
	 
	 	 	“Regulation AB” means Subpart 229.1100 — Asset Backed Securities (Regulation AB),
17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to
such clarification and interpretation as have been provided by the SEC in the adopting
release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506,
1,531 (Jan. 7, 2005)) or by the staff of the SEC, or as may be provided by the SEC or its
staff from time to time.
	 
	 	 	If at any time during a period that reports are being filed with respect to Party B and
the Notes in accordance with the Exchange Act and the rules and regulations of the SEC, as
reasonably calculated by the Depositor, the “significance percentage” of this Agreement
for any class of the Notes is 8% or more, Party A shall within five (5) Local Business
Days following receipt of request therefor demonstrate to the satisfaction of the
Depositor that it is able to provide the Additional Information required under Item
1115(b)(1) of Regulation AB for Party A. If Party A is unable to satisfy the Depositor as
to its ability to provide such information, Party A shall within five (5) Local Business
Days following receipt of request therefor, at the sole expense of Party A, without any
expense or liability to the Depositor or Party B, either (i) post Eligible Collateral, in
form, substance and amount satisfactory to the Depositor, or (ii) cause an
Eligible Replacement (which satisfies the Rating Agency Condition and any other
requirements of this Agreement, including the requirement to deliver the indemnification
and contribution agreement referred to in Part 3(b)) to replace Party A as party to this
Agreement that has agreed to Deliver any information, report, certification or
accountants’ consent when and as required under this Part 5(t) hereof. 

18

 

	 	 	If at any time during a period that reports are being filed with respect to Party B and
the Notes in accordance with the Exchange Act and the rules and regulations of the SEC, as
reasonably calculated by the Depositor, the “significance percentage” of this Agreement
for any class of the Notes is 18% or more, Party A shall within five (5) Local Business
Days following receipt of request therefor demonstrate to the satisfaction of the
Depositor that it is able to provide the Additional Information required under Item
1115(b)(2) of Regulation AB for Party A. If Party A is unable to satisfy the Depositor as
to its ability to provide such information, Party A shall within five (5) Local Business
Days following receipt of request therefor, at the sole expense of Party A, without any
expense or liability to the Depositor or Party B, cause an Eligible Replacement (which
satisfies the Rating Agency Condition and any other requirements of this Agreement,
including the requirement to deliver the indemnification and contribution agreement
referred to in Part 3(b)) to replace Party A as party to this Agreement that has agreed to
Deliver any information, report, certification or accountants’ consent when and as
required under this Part 5(t) hereof.

[signature page follows]

19

 

	 	 	 	 	 	 	 
	 	 	VOLKSWAGEN AUTO LOAN ENHANCED 
TRUST 2008-1	 	 
	 
	 	 	 	 	 	 
	 	 	By: Deutsche Bank Trust Company Delaware, not in 
its individual capacity but solely as owner trustee
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Michele HY Voon
 

Michele HY Voon
	 	 
	 

	 	Title:
	 	Attorney-in-Fact	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Susan Barstock
 

Susan Barstock
	 	 
	 

	 	Title:
	 	Attorney-in-Fact	 	 
	 
	 	 	 	 	 	 
	 	 	HSBC BANK USA, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Pierre N. McDonnaugh
 

Pierre N. McDonnaugh, JD, LLM
	 	 
	 

	 	Title:
	 	Vice President	 	 

20

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