Document:

exv10w7

Exhibit 10.7

SWAP TRANSACTION CONFIRMATION

	 	 	 
	Date:

	 	May 9, 2008
	 
	 	 
	To:

	 	Volkswagen Auto Loan Enhanced Trust 2008-1 (“Party B”)

c/o Deutsche Bank Trust Company Delaware, as Owner Trustee

1011 Centre Road, 2nd Floor

Wilmington, Delaware 19805

Attention: Elizabeth Ferry

Facsimile: (302) 636-3399

	 
	 	 
	From:

	 	HSBC Bank USA, N.A. (“Party A”)

452 5th Avenue

New York, New York 10018

Attention: Christian McGreevy

Telephone: (212) 525-8710

Facsimile: (212) 525-5517
	 
	 	 
	Ref. No.

	 	498740HN

Dear Sir or Madam:

The purpose of this letter (this “Confirmation”) is to confirm the terms and conditions of the
Transaction entered into between us on the Trade Date specified below (the “Transaction”). This
Confirmation constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified
below.

1. The definitions and provisions contained in (i) the 2006 ISDA Definitions (the “ISDA
Definitions”), as published by the International Swaps and Derivatives Association, Inc., and
(ii) the Sale and Servicing Agreement dated as of May 9, 2008 (the “Sale and Servicing Agreement”)
between Party B, as issuer, VW Credit, Inc., as servicer, Volkswagen Auto Lease/Loan Underwritten
Funding, LLC, as seller and Citibank, N.A., as indenture trustee, relating to the issuance by Party
B of certain debt obligations, are incorporated into this Confirmation. In the event of any
inconsistency between the ISDA Definitions and this Confirmation, this Confirmation will govern.
References herein to a “Transaction” shall be deemed to be references to a “Swap Transaction” for
purposes of the ISDA Definitions. Capitalized terms used but not defined herein have the meanings
ascribed to them in the Sale and Servicing Agreement.

This Confirmation supplements, forms a part of, and is subject to, the 1992 ISDA Master Agreement
dated as of May 9, 2008 as amended and supplemented from time to time (the “Agreement”) between you
and us. All provisions contained in the Agreement govern this Confirmation except as expressly
modified herein.

2. The terms of the particular Transaction to which the Confirmation relates are as follows:

VALET 2008-1 Confirmation

(Swap A — Trust Swap)

 

 

	 	 	 
	Transaction Type:

	 	Interest Rate Swap
	 
	 	 
	Notional Amount:

	 	For the Initial Calculation Period, the
Notional Amount shall be equal to USD
$214,450,000. For each subsequent
Calculation Period, the Notional Amount
shall be equal to the aggregate
outstanding principal amount of the
Class A-4-B Notes on the first day of
such Calculation Period. With respect
to any Payment Date, the aggregate
outstanding principal amount of the
Class A-4-B Notes will be determined
using the Servicer Certificate issued on
the Determination Date immediately
preceding the Payment Date (giving
effect to any reductions of the
outstanding principal amount of the
Class A-4-B Notes reflected in such
Servicer Certificate).
	 
	 	 
	Trade Date:

	 	May 1, 2008
	 
	 	 
	Effective Date:

	 	May 9, 2008
	 
	 	 
	Termination Date:

	 	The earlier of (i) October 20, 2014 and
(ii) the date on which the outstanding
principal amount of the Class A-4-B
Notes is reduced to zero, in each case
subject to adjustment in accordance with
the Business Day Convention.
	 
	 	 
	Initial Calculation Period:

	 	From and including the Effective Date to
but excluding May 20, 2008.
	 
	 	 
	Business Day Convention:

	 	Following
	 
	 	 
	Business Day:

	 	New York, Delaware and Michigan
	 
	 	 
	Fixed Amounts:
	 	 
	 
	 	 
	     Fixed Rate Payer:

	 	Party B
	 
	 	 
	     Period End Dates:

	 	Monthly on the 20th of each month,
commencing May 20, 2008, through and
including the Termination Date, in each
case with No Adjustment.
	 
	 	 
	     Payment Dates:

	 	Monthly on the 20th of each
month, commencing May 20, 2008, through
and including the Termination Date, in
each case subject to adjustment in
accordance with the Business Day
Convention.
	 
	 	 
	     Fixed Rate:

	 	5.184% 
	 
	 	 
	     Fixed Rate Day Count
	 	 
	     Fraction:

	 	30/360 

 

 

	 	 	 
	Floating Amounts:
	 	 
	 
	 	 
	     Floating Rate Payer:

	 	Party A
	 
	 	 
	     Period End Dates:

	 	Monthly on the 20th of each month,
commencing May 20, 2008, through and
including the Termination Date, subject
to adjustment in accordance with the
Business Day Convention.
	 
	 	 
	     Payment Dates:

	 	Monthly on the 20th of each
month, commencing May 20, 2008, through
and including the Termination Date, in
each case subject to adjustment in
accordance with the Business Day
Convention.
	 
	 	 
	     Floating Rate Option:

	 	USD-LIBOR-BBA
	 
	 	 
	     Designated Maturity:

	 	1 Month 
	 
	 	 
	     Spread:

	 	1.70% 
	 
	 	 
	     Floating Rate Day

     Count Fraction:

	 	Actual/360
	 
	 	 
	     Reset Dates:

	 	The first day of each Calculation Period.

3. The additional provisions of this Confirmation are as follows:

	 	 	 
	Calculation Agent:

	 	As specified in the Agreement
	 
	 	 
	Payments to Party A:

	 	HSBC Bank USA, N.A.

ABA : 021-001-088

Swift: MRMDUS33

Account Number: 000049298
	 
	 	 
	Payments to Party B:

	 	Volkswagen Auto Loan Enhanced Trust 2008-1

Collection Account, AC # 107456

Deposits to the Collection Account shall be made via
fed wire in accordance with the instructions
below:

 

 

	 	 	 
	 

	 	Citibank, N.A.

ABA: 021-000-089

Account: 3617-2242

Ref: VW 2008-1 Collection Account 107456

[signature page follows]

 

 

Unless otherwise provided in the Agreement, this Confirmation is governed by the laws of the State
of New York.

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing a
copy of this Confirmation and returning it to us.

Very truly yours,

HSBC BANK USA, N.A.

	 	 	 	 	 
	By: 

Name:

	 	/s/ Charleen Collins, /s/ Dennis J. Nevins
 

Charleen Collins, Dennis J. Nevins
	 	 
	Title:

	 	Vice President, ID #15564, Officer, ID #15157	 	 
	 
	 	 	 	 
	Accepted and confirmed as of the date first above written:	 	 
	 
	 	 	 	 
	VOLKSWAGEN AUTO LOAN ENHANCED TRUST 2008-1	 	 
	By: Deutsche Bank Trust Company Delaware	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Michele HY Voon
 

Michele HY Voon
	 	 
	Title:

	 	Attorney-in-Fact	 	 
	 
	 	 	 	 
	By: 

Name:

	 	/s/ Susan Barstock
 

Susan Barstock
	 	 
	Title:

	 	Attorney-in-Fact	 	 

VALET 2008-1 Confirmation

(Swap A — Trust Swap)exv10w8

Exhibit 10.8

International Swaps and Derivatives Association, Inc.

CREDIT SUPPORT ANNEX

to the Schedule to the

ISDA MASTER AGREEMENT

dated as of May 9, 2008

between

HSBC Bank USA, N.A. (“Party A”)

and

Volkswagen Auto Loan Enhanced Trust 2008-1 (“Party B”)

This Annex supplements, forms part of, and is subject to, the ISDA Master Agreement referred to
above (this “Agreement”), is part of its Schedule and is a Credit Support Document under this
Agreement with respect to Party A.

Accordingly, the parties agree as follows:

Paragraphs 1 — 12. Incorporation

Paragraphs 1 through 12 inclusive of the ISDA Credit Support Annex (Bilateral Form)
(ISDA Agreements Subject to New York Law Only) published in 1994 by the
International Swaps and Derivatives Association, Inc. are incorporated herein by
reference and made a part hereof:

Paragraph 13. Elections and Variables

	(a)	 	Security Interest for “Obligations”. The term “Obligations” as used in this Annex includes
no additional obligations of Secured Party and, for purposes of the definition of Obligations
in Paragraph 12, includes no additional obligations of Pledgor.
	 
	(b)	 	Credit Support Obligations.

(i) Delivery Amount, Return Amount and Credit Support Amount.

(A) “Delivery Amount” will apply except that the words “upon a demand made by the Secured
Party on or promptly following a Valuation Date” shall be deleted and replaced by the words
“on each Valuation Date” and the sentence beginning “Unless otherwise specified in Paragraph
13” shall be deleted in its entirety and replaced with the following:

 

 

	 	 	“The “Delivery Amount” applicable to the Pledgor for any Valuation Date will equal
the greatest of:

	 	(1)	 	the amount by which the Moody’s Credit Support Amount exceeds
the Value (determined using the applicable Moody’s Valuation Percentages) as of
that Valuation Date of the Posted Credit Support held by the Secured Party; and
	 
	 	(2)	 	the amount by which the S&P Credit Support Amount exceeds the
S&P Value as of that Valuation Date of the Posted Credit Support held by the
Secured Party; and
	 
	 	 	 	if, on any Valuation Date, the Delivery Amount equals or exceeds the
Pledgor’s Minimum Transfer Amount, the Pledgor will transfer to the Secured
Party sufficient Eligible Credit Support to ensure that, immediately
following such transfer, the Delivery Amount shall be zero.

(B) Paragraph 3(b) (Return Amount) shall apply, except that the sentence beginning “Unless
otherwise specified in Paragraph 13” shall be deleted in its entirety and replaced by the
following:

	 	 	 	“The “Return Amount” applicable to the Secured Party for any Valuation Date
will equal the least of:
	 
	 	(1)	 	the amount by which the Value (determined using the Moody’s
Valuation Percentages) as of that Valuation Date of the Posted Credit Support
held by the Secured Party exceeds the Moody’s Credit Support Amount for such
Valuation Date; and
	 
	 	(2)	 	the amount by which (a) the S&P Value as of that Valuation Date
of the Posted Credit Support held by the Secured Party exceeds the S&P Credit
Support Amount for such Valuation Date.
	 
	 	 	 	In no event shall the Secured Party be required to transfer any Posted Credit
Support under Paragraph 3(b) if, immediately following such transfer, the
Delivery Amount would be greater than zero.

(C) “Credit Support Amount” (x) means the S&P Credit Support Amount or the Moody’s Credit
Support Amount, as applicable, in each case as calculated on a daily basis by the Valuation
Agent.

2

 

	 	(ii)	 	Eligible Collateral. The following items will qualify as “Eligible Collateral”:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Valuation Percentage:*
	 	 	 	 	 	 	 	 	 	 	 	 	S&P	 	S&P Required
	 	 	 	 	Moody’s First	 	Moody’s Second	 	Approved Ratings	 	Ratings
	 	 	 	 	Trigger Event	 	Trigger Event	 	Downgrade	 	Downgrade
	(A)

	 	Cash: US Dollars in
depository account form.
	 	 	100	%	 	 	100	%	 	 	100	%	 	 	80	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(B)

	 	U.S. Treasury Securities:
negotiable debt
obligations issued by the
U.S. Treasury Department
(“Treasuries”) having a
remaining maturity of up
to and not more than 1
year.
	 	 	100	%	 	 	100	%	 	 	98.9	%	 	 	79.1	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(C)

	 	Treasuries having a
remaining maturity of
greater than 1 year but
not more than 10 years.
	 	 	100	%	 	99% (1-2yr)

98% (2-3yr)

97%(3-5yr)

96% (5-7yr)

94% (7-10yr)
	 	98.04% (1-5yr)

92.59% (5-10yr)	 	78.43% (1-5yr)

74.07% (5-10yr)

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(D)

	 	Treasuries having a
remaining maturity of
greater than 10 years
	 	 	100	%	 	90% (10-20yr)

88% (>20yr)	 	86.9%(10-20yr)

84.6%(>20yr)	 	69.52% (10-20yr)

64.00%(>20yr)

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(E)

	 	Agency Securities:
negotiable debt
obligations of the
Federal National Mortgage
Association (FNMA),
Federal Home Loan
Mortgage Corporation
(FHLMC), Federal Home
Loan Banks (FHLB),
Federal Farm Credit Banks
(FFCB), Student Loan
Marketing Association
(SLMA), Tennessee Valley
Authority (TVA)
(collectively, “Agency
Securities”) having a
remaining maturity of not
more than 1 year.
	 	 	100	%	 	 	99	%	 	 	98.5	%	 	 	78.43	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(F)

	 	Agency Securities having
a remaining maturity of
greater than 1 year but
not more than 5 years.
	 	 	100	%	 	98% (1-2yr)

97% (2-3yr)

96% (3-5yr)
	 	 	98.04	%	 	 	78.43	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(G)

	 	Agency Securities having
a remaining maturity of
greater than 5 years but
not more than 10 years.
	 	 	100	%	 	94% (5-7yr)

93% (7-10yr)
	 	 	92.59	%	 	 	74.07	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(H)

	 	Agency Securities having
a remaining maturity of
greater than 10 years but
not more than 20 years.
	 	 	100	%	 	 	89	%	 	 	81.6	%	 	 	65.28	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(I)

	 	Agency Securities having
a remaining maturity of
greater than 20 years but
not more than 30 years.
	 	 	100	%	 	 	87	%	 	 	81.6	%	 	 	65.28	%

3

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Valuation Percentage:*
	 	 	 	 	 	 	 	 	 	 	 	 	S&P	 	S&P Required
	 	 	 	 	Moody’s First	 	Moody’s Second	 	Approved Ratings	 	Ratings
	 	 	 	 	Trigger Event	 	Trigger Event	 	Downgrade	 	Downgrade
	(J)

	 	FHLMC Certificates.
Mortgage participation
certificates issued by
FHLMC evidencing
undivided interests or
participations in pools
of first lien
conventional or FHA/VA
residential mortgages or
deeds of trust,
guaranteed by FHLMC, and
having a remaining
maturity of not more than
30 years.
	 	 	81.9	%	 	 	81.9	%	 	 	86.4	%	 	 	69.12	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(K)

	 	FNMA Certificates.
Mortgage-backed
pass-through certificates
issued by FNMA evidencing
undivided interests in
pools of first lien
mortgages or deeds of
trust on residential
properties, guaranteed by
FNMA, having a remaining
maturity of not more than
30 years.
	 	 	81.9	%	 	 	81.9	%	 	 	86.4	%	 	 	69.12	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(L)

	 	GNMA Certificates.
Mortgage-backed
pass-through certificates
issued by private
entities, evidencing
undivided interests in
pools of first lien
mortgages or deeds of
trust on single family
residences, guaranteed by
the Government National
Mortgage Association
(GNMA) with the full
faith and credit of the
United States, and having
a remaining maturity of
not more than 30 years.
	 	 	81.9	%	 	 	81.9	%	 	 	86.4	%	 	 	69.12	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(M)

	 	Commercial Paper.
Commercial Paper with a
rating of at least P-1 by
Moody’s and at least A-1+
by S&P and having a
remaining maturity of not
more than 30 days.
	 	 	80	%	 	 	80	%	 	 	99.0	%	 	 	79.20	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(N)

	 	Other. Other items of
Credit Support approved
by each applicable rating
agency with such
valuation percentages as
determined by each
applicable rating agency.
	 	% to be determined
	 	% to be determined      %
	 	to be determined
	 	% to be determined

 

			
	*	 	The Valuation Percentage shall equal the percentage specified under such Rating Agency’s name
above. If Party A is rated by more than one Rating Agency specified above, the Valuation
Percentage shall equal the lowest of the applicable percentages specified above.
	 
	**	 	A parenthetical in the form of (a-b yr) means a security having a remaining maturity greater
than or equal to a years and less than b years.

4

 

Notwithstanding the Valuation Percentages set forth in the preceding table, upon the first Transfer
of Eligible Collateral under this Annex, the Pledgor may with the consent of Party B (which consent
will not be unreasonably withheld), at the Pledgor’s expense, revise the Valuation Percentages in
relation to (B) through (M) above, subject to the Rating Agency Condition, and, such Valuation
Percentages shall supersede those set forth in the preceding table.

There shall be no “Other Eligible Support” for Party A for purposes of this Annex.

	 	(iii)	 	Thresholds.

	 	(A)	 	“Independent Amount” means with respect to Party A: Not
Applicable.
	 
	 	 	 	“Independent Amount” means with respect to Party B: Not Applicable.
	 
	 	(B)	 	“Threshold” means with respect to Party A: Infinity;
provided that for (a) so long as the Moody’s First Rating Trigger
Requirements apply and either (i) the Moody’s First Rating Trigger Requirements
have applied since this Annex was executed or (ii) at least 30 Local Business
Days have elapsed since the last time the Moody’s First Rating Trigger
Requirements did not apply, the Threshold shall be zero; or (b) so long as an
S&P Approved Ratings Downgrade has occurred and has been continuing for at
least 10 Local Business Days or since this Credit Support Annex was executed,
the Threshold shall be zero; or (c) so long as an S&P Required Ratings
Downgrade has occurred and has been continuing for at least 10 Local Business
Days, the Threshold shall be zero.
	 
	 	 	 	“Threshold” means with respect to Party B: Not Applicable.
	 
	 	(C)	 	“Minimum Transfer Amount” means with respect to Party A
$50,000.
	 
	 	 	 	“Minimum Transfer Amount” means with respect to Party B $50,000.
	 
	 	(D)	 	Rounding. The Delivery Amount will be rounded up and the
Return Amount will be rounded down to the nearest integral multiple of
$10,000.00, respectively.

	(c)	 	Valuation and Timing.

	 	(i)	 	“Valuation Agent” means Party A; provided, however, that if an Event of Default
shall have occurred with respect to which Party A is the Defaulting Party, Party B
shall have the right to designate as Valuation Agent an independent party, reasonably
acceptable to Party A, the cost for which shall be borne by Party A. All calculations
by the Valuation Agent must be made in accordance with standard market practice,
including, in the event of a dispute as to the Value of any Eligible Credit Support or
Posted Credit Support, by making reference to quotations received by the Valuation
Agent from one or more pricing sources.
	 
	 	(ii)	 	“Valuation Date” means: each Local Business Day.
	 
	 	(iii)	 	“Valuation Time” means the close of business on the Local Business Day before
the Valuation Date or date of calculation; provided that the calculations of Value and
Exposure will be made as of approximately the same time on the same date.

5

 

	 	(iv)	 	“Notification Time” means 1:00 p.m., New York time, on a Local Business Day.

	(d)	 	Conditions Precedent. No event shall constitute a “Specified Condition”.
	 
	(e)	 	Substitution.

	 	(i)	 	“Substitution Date” means the Local Business Day in New York on which the
Secured Party is able to confirm irrevocable receipt of the Substitute Credit Support,
provided that (x) such receipt is confirmed before 3:00 p.m. (New York time) on such
Local Business Day in New York and (y) the Secured Party has received, before 1:00 p.m.
(New York time) on the immediately preceding Local Business Day in New York, the notice
of substitution described in Paragraph 4(d)(i).
	 
	 	(ii)	 	Consent. The Pledgor is not required to obtain the Secured Party’s consent for any
substitution pursuant to Paragraph 4(d).

	(f)	 	Dispute Resolution.

	 	(i)	 	“Resolution Time” means 1:00 p.m., New York time, on the Local Business Day
following the date on which a notice is given that gives rise to a dispute under
Paragraph 5.
	 
	 	(ii)	 	Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of Posted Credit
Support will be calculated as follows: for Cash, the U.S. dollar value thereof (except
as modified in the definition of “S&P Value” in Paragraph 13(n) below), and for each item
of Eligible Collateral (except for Cash), an amount in U.S. dollars equal to the sum of
(x) the product of (i) either (A) the bid price for such security quoted on such day by a
principal market-maker for such security selected in good faith by the Secured Party or
(B) the most recent publicly available bid price for such security as reported by a
quotation service or in a medium selected in good faith and in a commercially reasonable
manner by Secured Party, multiplied by (ii) the percentage figure listed in Paragraph
13(b)(ii) hereof with respect to such security and (y) the accrued interest on such
securities (except to the extent Transferred to the Pledgor pursuant to Paragraph
6(d)(ii) or included in the applicable price referred to in the immediately preceding
clause (x)) as of such date.
	 
	 	(iii)	 	Alternative. The provisions of Paragraph 5 will apply.

	(g)	 	Holding and Using Posted Collateral.

	 	(i)	 	Eligibility to Hold Posted Collateral; Custodians. Secured Party will not be
entitled to hold Posted Collateral itself, and instead the Secured Party will be entitled
to hold Posted Collateral through the Indenture Trustee which Posted Collateral (i) shall
not be
commingled or used with any other asset held by the Indenture Trustee but shall be
held in a separate trust account for this purpose only and (ii) shall not be
transferred to any other person or entity but Party A pursuant to the provisions
herein except (x) in any case contemplated by Paragraph 8(a) of this Annex with
respect to Party A or (y) as directed by Party A; provided, however, that if the
Indenture Trustee does not have a short-term debt rating of at least “A-1” by S&P,
then, within 60 days, a third party custodian 

6

 

	 	 	 	organized under the laws of the United
States maintaining the account with a domestic office with a short-term debt rating
of at least “A-1” by S&P must hold such Posted Collateral.

	 	(ii)	 	Use of Posted Collateral. The provisions of Paragraph 6(c) will not apply to
Secured Party and without prejudice to Secured Party’s rights under Paragraph 8 of the
Credit Support Annex, Secured Party will not take any action specified in such Section
6(c).

	(h)	 	Distributions and Interest Amount.

	 	(i)	 	The “Interest Rate”, with respect to Eligible Collateral in the form of Cash,
for any day, will be the rate of interest actually received on such Cash.
	 
	 	(ii)	 	The “Transfer of Interest Amount” will be made within 3 Local Business Days
after the last Local Business Day of each calendar month in an amount not to exceed the
interest actually received.
	 
	 	(iii)	 	Alternative Interest Amount. The provisions of Paragraph 6(d)(ii) will apply.

	(i)	 	Additional Representations. None.
	 
	(j)	 	Other Eligible Support and Other Posted Support. Not Applicable.
	 
	(k)	 	Demands and Notices. All demands, specifications and notices made by a party to this Annex
will be made to the following:

	 	 	 	 	 
	 

	 	Party A:
	 	As set forth in the Schedule.
	 
	 	 	 	 
	 

	 	Party B:
	 	As set forth in the Schedule.

	(l)	 	Addresses for Transfers.

	 	 	 	 	 
	 

	 	Party A:
	 	To be provided in written instructions at time of request for Transfer.
	 
	 	 	 	 
	 

	 	Party B:
	 	Contact Indenture Trustee in the event Transfers are required.

	(m)	 	Other Provisions.

	 	(i)	 	This Credit Support Annex is a Security Agreement under the New York UCC.
	 
	 	(ii)	 	Paragraph 1(b) of this Annex is amended by deleting it and restating it in full as
follows:
“(b) Secured Party and Pledgor. All references in this Annex to the “Secured
Party” mean Party B, and all references in this Annex to the “Pledgor” mean Party A;
provided,
however, that if Other Posted Support is held by Party B, all references herein to
the Secured Party with respect to that Other Posted Support will be to Party B as
the beneficiary thereof and will not subject that support or Party B as the
beneficiary thereof to provisions of law generally relating to security interests
and secured parties.”
	 
	 	(iii)	 	Paragraph 2 of this Annex is amended by deleting the first sentence thereof
and restating that sentence in full as follows:

7

 

	 	 	 	“Party A, as the Pledgor, hereby pledges to Party B, as the Secured Party, as
security for the Pledgor’s Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against all
Posted Collateral Transferred to or received by the Secured Party hereunder.”
	 
	 	(iv)	 	Only Party A makes the representations contained in Paragraph 9 of this Annex.
	 
	 	(v)	 	Paragraph 12 of this Annex is amended by deleting the definitions of “Pledgor”
and “Secured Party” and replacing them with the following:
	 
	 	 	 	“‘Secured Party’ means Party B.

‘Pledgor’ means Party A.”
	 
	 	(vi)	 	Paragraph 12 is hereby amended by adding, in alphabetical order, the following:
	 
	 	 	 	“Moody’s” means Moody’s Investor Services, Inc., or any successor to the rating
business of such entity.”
	 
	 	 	 	“S&P” means Standard and Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor to the rating business of such entity.”
	 
	 	(vii)	 	Notwithstanding anything to the contrary in Paragraph 10, the Pledgor will be
responsible for, and will reimburse the Secured Party for all transfer and other taxes
and other costs involved in any Transfer of Eligible Collateral.

	(n)	 	S&P Criteria
	 
	 	 	“S&P Credit Support Amount” means, if the Threshold is zero for any Valuation Date, (a) if
an S&P Approved Ratings Downgrade has occurred and has continued for 10 Local Business Days
or since this Annex was executed, the Exposure; (b) if an S&P Required Ratings Downgrade has
occurred and has continued for 10 Local Business Days, an amount equal to 125% of the
Exposure or (c) if the Threshold is Infinity, zero.
	 
	 	 	“S&P Value” means, on any date and with respect to any Eligible Collateral, the product of
(A) the bid price (or face value with respect to Cash) obtained by the Valuation Agent for
such Eligible Collateral and (B)(i) if the S&P Approved Ratings Downgrade has occurred and
been continuing for at least 10 Local Business Days or since this Annex was executed, the
S&P Approved Ratings Downgrade Valuation Percentage or (ii) if a S&P Required Ratings
Downgrade has occurred and been continuing for at least 10 Local Business Days, S&P Required
Ratings Downgrade Valuation Percentage, as applicable, for such Eligible Collateral set
forth in Paragraph 13(b)(ii). For purposes
here, for Cash: the amount thereof: multiplied, in the case of the S&P Value, if an S&P
Required Ratings Downgrade has occurred and been continuing for at least 10 Local Business Days, by the S&P Required Ratings Downgrade Valuation Percentage set forth in
paragraph 13(b)(ii) above.
	 
	(o)	 	Moody’s Ratings Criteria.
	 
	 	 	“Moody’s First Trigger Event” means that no Relevant Entity has credit ratings from Moody’s at least
equal to the Moody’s First Trigger Ratings Threshold.

8

 

“Moody’s First Trigger Ratings Threshold” means, with respect to Party A, the guarantor
under an Eligible Guarantee or an Eligible Replacement, (i) if such entity has a short-term
unsecured and unsubordinated debt rating from Moody’s, a long-term unsecured and
unsubordinated debt rating or counterparty rating from Moody’s of “A2” and a short-term
unsecured and unsubordinated debt rating from Moody’s of “Prime-1”, or (ii) if such entity
does not have a short-term unsecured and unsubordinated debt rating or counterparty rating
from Moody’s, a long-term unsecured and unsubordinated debt rating or counterparty rating
from Moody’s of “A1”.

“Moody’s Second Trigger Event” means that no Relevant Entity has credit ratings from Moody’s
at least equal to the Moody’s Second Trigger Ratings Threshold.

“Moody’s Second Trigger Ratings Threshold” means, with respect to Party A, the guarantor
under an Eligible Guarantee or an Eligible Replacement, (i) if such entity has a short-term
unsecured and unsubordinated debt rating from Moody’s, a long-term unsecured and
unsubordinated debt rating or counterparty rating from Moody’s of “A3” and a short-term
unsecured and unsubordinated debt rating from Moody’s of “Prime-2”, or (ii) if such entity
does not have a short-term unsecured and unsubordinated debt rating from Moody’s, a
long-term unsecured and unsubordinated debt rating or counterparty rating from Moody’s of
“A3”.

Moody’s Credit Support Amount. With respect to a Moody’s First Trigger Event or a Moody’s
Second Trigger Event relating to an action taken by Moody’s, the “Credit Support Amount”
shall mean with respect to a Pledgor on a Valuation Date the sum of:

	 	(i)	 	With respect to a Moody’s First Trigger Event:
	 
	 	 	 	The greater of (A) $0 and (B)(I) the Secured Party’s Exposure, plus (II) the
Notional Amount times the relevant percentage set out in Table B below.

	 	(ii)	 	With respect to a Moody’s Second Trigger Event:
	 
	 	 	 	The greater of (A) $0, (B) the amount owed by Party A on the next Payment Date
(as such term is defined in the Confirmation for each outstanding Transaction under
this Agreement) and (C)(I) the Secured Party’s Exposure plus (II) the Notional
Amount times the relevant percentage set out in Table B below.

TABLE B

	 	 	 	 	 	 	 	 	 
	 	 	Moody’s First Trigger	 	Moody’s Second Trigger Event
	Weighted Average Life of Hedge in Years	 	Event has Occurred	 	has Occurred
	1
	 	 	0.15	%	 	 	0.50	%
	2
	 	 	0.30	%	 	 	1.00	%
	3
	 	 	0.40	%	 	 	1.50	%
	4
	 	 	0.60	%	 	 	1.90	%
	5
	 	 	0.70	%	 	 	2.40	%
	6
	 	 	0.80	%	 	 	2.80	%
	7
	 	 	1.00	%	 	 	3.20	%
	8
	 	 	1.10	%	 	 	3.60	%
	9
	 	 	1.20	%	 	 	4.00	%
	10
	 	 	1.30	%	 	 	4.40	%

9

 

	 	 	 	 	 	 	 	 	 
	 	 	Moody’s First Trigger	 	Moody’s Second Trigger Event
	Weighted Average Life of Hedge in Years	 	Event has Occurred	 	has Occurred
	11
	 	 	1.40	%	 	 	4.70	%
	12
	 	 	1.50	%	 	 	5.00	%
	13
	 	 	1.60	%	 	 	5.40	%
	14
	 	 	1.70	%	 	 	5.70	%
	15
	 	 	1.80	%	 	 	6.00	%
	16
	 	 	1.90	%	 	 	6.30	%
	17
	 	 	2.00	%	 	 	6.60	%
	18
	 	 	2.00	%	 	 	6.90	%
	19
	 	 	2.00	%	 	 	7.20	%
	20
	 	 	2.00	%	 	 	7.50	%
	21
	 	 	2.00	%	 	 	7.80	%
	22
	 	 	2.00	%	 	 	8.00	%
	23
	 	 	2.00	%	 	 	8.00	%
	24
	 	 	2.00	%	 	 	8.00	%
	25
	 	 	2.00	%	 	 	8.00	%
	26
	 	 	2.00	%	 	 	8.00	%
	27
	 	 	2.00	%	 	 	8.00	%
	28
	 	 	2.00	%	 	 	8.00	%
	29
	 	 	2.00	%	 	 	8.00	%
	30
	 	 	2.00	%	 	 	8.00	%

[signature page follows]

10

 

Accepted and agreed:

	 	 	 	 	 	 	 	 	 	 	 
	HSBC BANK USA, N.A.	 	 	 	VOLKSWAGEN AUTO LOAN ENHANCED TRUST 2008-1	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Pierre N. McDonnaugh	 	 	 	By: DEUTSCHE BANK TRUST COMPANY DELAWARE,	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 	 	Name: Pierre N. McDonnaugh, JD, LL.M	 	 	 	not in its individual capacity but solely in its capacity as	 	 
	 	 	Title: Vice President
Date: May
9, 2008	 	 	 	 Owner Trustee 
	 	 
	 

	 	 	 	 	 	By:
	 	 /s/ Michele HY Voon
 

Name: Michele HY Voon
	 	 
	 

	 	 	 	 	 	 	 	Title: Attorney-in-Fact	 	 
	 

	 	 	 	 	 	 	 	Date: May 9, 2008	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	 /s/ Susan Barstock
 

Name: Susan Barstock
	 	 
	 

	 	 	 	 	 	 	 	Title: Attorney-in-Fact	 	 
	 

	 	 	 	 	 	 	 	Date: May 9, 2008	 	 

VALET 2008-1
Credit Support Annex

S-1

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