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EXHIBIT 4.2
AMENDED AND RESTATED CREDIT ENHANCEMENT AGREEMENT
among
U.S. BANK NATIONAL ASSOCIATION
as Trustee,
GREENWOOD TRUST COMPANY
as Master Servicer, Servicer and Seller
and
DISCOVER RECEIVABLES FINANCING CORPORATION
as Credit Enhancement Provider
-----------------------------
Dated as of April 15, 1999
----------------------------
DISCOVER CARD MASTER TRUST I
SERIES 1993-2
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TABLE OF CONTENTS
PAGE
Section 1. Defined Terms.........................................................................................2
Section 2. New Loan..............................................................................................3
Section 3. Calculation of Amount of Interest Payable on the Loan.................................................3
Section 4. Payment of Interest on the Loan.......................................................................4
Section 5. Repayment of Principal of the Loan....................................................................4
Section 6. Payments to the Holder of the Seller Certificate and the Master Servicer..............................4
Section 7. Deposits to and Withdrawals from the Credit Enhancement Account.......................................6
Section 8. Certain Additional Loans..............................................................................7
Section 9. Limited Obligation; Waiver of Setoff; Obligations Absolute............................................8
Section 10. Investments and Information...........................................................................8
Section 11. Servicing Transfer....................................................................................8
Section 12. Representations and Warranties........................................................................9
Section 13. Covenants............................................................................................10
Section 14. Governing Law........................................................................................10
Section 15. Termination..........................................................................................11
Section 16. Notices..............................................................................................11
Section 17. Bankruptcy...........................................................................................12
Section 18. Limitation of Remedies...............................................................................12
Section 19. No Petition..........................................................................................12
Section 20. Amendments...........................................................................................12
Section 21. Successors and Assigns; Replacement of Credit Enhancement Provider...................................13
Section 22. Participation........................................................................................13
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AMENDED AND RESTATED CREDIT ENHANCEMENT AGREEMENT (the "Agreement"),
dated as of April 15, 1999, among U.S. BANK NATIONAL ASSOCIATION (formerly First
Bank National Association, successor trustee to Bank of America Illinois,
formerly Continental Bank, National Association) as trustee (together with its
successors and assigns as trustee, the "Trustee") for Discover Card Master Trust
I (the "Trust"), GREENWOOD TRUST COMPANY ("Greenwood") as Master Servicer,
Servicer and Seller with respect to the Trust and DISCOVER RECEIVABLES FINANCING
CORPORATION as cash collateral depositor (the "Credit Enhancement Provider").
W I T N E S S E T H
WHEREAS, Greenwood as Master Servicer, Servicer and Seller and the
Trustee have entered into a Pooling and Servicing Agreement dated as of October
1, 1993 (as the same may from time to time be amended, modified or otherwise
supplemented, the "Pooling and Servicing Agreement"), and that certain Series
Supplement, dated as of December 1, 1993 (as the same may from time to time be
amended, modified or otherwise supplemented, the "Series Supplement");
WHEREAS, the Trust, pursuant to the Pooling and Servicing Agreement
and the Series Supplement, issued $833,334,000 in aggregate principal amount of
Investor Certificates of Discover Card Master Trust I, Series 1993-2 (the
"Series"), which will entitle the holders thereof to interest during the
Revolving Period, and interest and principal during the subsequent Controlled
Liquidation Period and Amortization Period, if any;
WHEREAS, the principal and interest payments on the Investor
Certificates are to be funded by Principal Collections and Finance Charge
Collections received by the Trust on the Receivables;
WHEREAS, the parties hereto are parties to that certain Credit
Enhancement Agreement, dated as of December 1, 1993 (the "Credit Enhancement
Agreement");
WHEREAS, it was a condition to the issuance of the Investor
Certificates that on the Series Closing Date, the Credit Enhancement Provider
make a term loan (the "Original Loan") to the Trust, for the benefit of the
Investor Certificateholders of the Series, of $29,166,690 (3.5% of the Series
Initial Investor Interest), for deposit in the Credit Enhancement Account to
provide additional funds to make payments on the Investor Certificates under
certain circumstances, and the Credit Enhancement Provider made such loan on
such date;
WHEREAS, the outstanding principal on the Original Loan has been
reduced to $0.00;
WHEREAS, the parties hereto desire that the Credit Enhancement
Provider make a new term loan in the amount of $25,000,020.00 (the "New Loan");
and
WHEREAS, the parties hereto desire to amend and restate the Credit
Enhancement Agreement to, among other things, permit the Credit Enhancement
Provider to make the New Loan to the Trust, for the benefit of the Investor
Certificateholders of the Series, for deposit in the Credit Enhancement Account.
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NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby expressly acknowledged, the parties hereto agree that the
Credit Enhancement Agreement is hereby amended and restated in its entirety as
follows:
SECTION 1. DEFINED TERMS.
(a) The capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Pooling and Servicing Agreement
or the Series Supplement, as applicable.
(b) The following terms have the definitions set forth below:
"CCA Initial Investor Interest" means an amount equal to the amount of
any Credit Enhancement Drawings applied to the payment of principal of the
Investor Certificates of the Series on the first Distribution Date after the
occurrence of an Economic Early Amortization Event.
"CCA Required Amount" means, for any Distribution Date on and after
the second Distribution Date after the occurrence of an Economic Early
Amortization Event, an amount equal to the sum of (i) the amount of accrued but
unpaid interest on the Loan as of such Distribution Date (as calculated pursuant
to Section 3 hereof) and (ii) the sum of all accrued but unpaid CCA Servicing
Fees as of such Distribution Date.
"CCA Servicing Fee" means, for any Distribution Date on and after the
second Distribution Date after the occurrence of an Economic Early Amortization
Event, with respect to the related Due Period, an amount equal to the product of
(i) the amount of the Investor Servicing Fee for the related Due Period and (ii)
a fraction the numerator of which shall be the CCA Investor Interest and the
denominator of which shall be the Series Investor Interest, in each case as of
the first day of the related Due Period.
"Interest Period" means (i) with respect to the initial Distribution
Date, the period commencing on the Series Closing Date and ending on the day
immediately preceding the initial Distribution Date and (ii) with respect to
each subsequent Distribution Date, the period commencing on the preceding
Distribution Date and ending on the day preceding such Distribution Date.
"Lender Rate" means, with respect to each Interest Period, the prime
commercial lending rate per annum established by the Trustee, as in effect on
each day in the Interest Period.
"LIBOR-Based Rate" means, with respect to each Interest Period, the
per annum interest rate equal to the London Interbank Offered Rate which appears
on Telerate Page 3750 at approximately 11:00 a.m. (London time) two LIBOR
Business Days prior to the first day of such Interest Period for deposits of
United States dollars for a period of time comparable to the Interest Period,
and in an amount comparable to the principal amount of the Loan, plus 0.35%.
"Loan" means the term loan from the Credit Enhancement Provider to the
Trust in an amount equal to the sum of the outstanding principal amount of the
Original Loan on the date hereof plus the principal amount of the New Loan, for
the benefit of the Investor
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Certificateholders of the Series, as such Loan may increase or decrease in
principal amount from time to time in accordance with the terms of this
Agreement.
"Portfolio Yield" means, with respect to any Due Period, the
annualized percentage equivalent of a fraction, the numerator of which shall be
the sum of (i) the amount of Finance Charge Collections received during such Due
Period, (ii) the amount of Series Yield Collections for each Series then
outstanding for such Due Period and (iii) the amount of Series Additional Funds
for each Series then outstanding for such Due Period, and the denominator of
which shall be the total amount of Principal Receivables in the Trust as of the
first day of such Due Period.
"Provider Amount" means, with respect to each Distribution Date, the
lesser of (i) the unpaid principal amount of the Loan (including any amounts
loaned by the Credit Enhancement Provider pursuant to Section 8 hereof) and (ii)
the amount on deposit in the Credit Enhancement Account, in each case before
giving effect to any payments, allocations or distributions on such Distribution
Date.
"Series Interest Payment Amount" means, for any Distribution Date
prior to the second Distribution Date after the occurrence of an Economic Early
Amortization Event, an amount equal to the amount of interest payable on the
Loan on such Distribution Date, including any accrued but unpaid interest with
respect to previous Interest Periods and interest thereon, less the amount paid
to the Credit Enhancement Provider on such Distribution Date pursuant to Section
4(a)(i) hereof. The Series Interest Payment Amount shall be the amount of
interest payable pursuant to this Agreement for purposes of calculating the
"Credit Enhancement Fee" for the purpose of, and as such term is defined in, the
Series Supplement and such amount shall be paid in accordance with the
provisions of the Series Supplement.
SECTION 2. NEW LOAN.
(a) The Credit Enhancement Provider hereby makes the New Loan to the
Trust, for the benefit of the Investor Certificateholders of the Series, on the
date of this Agreement in an amount equal to $25,000,020.00, receipt of which is
hereby acknowledged by the Trustee.
(b) On the date hereof, an amount equal to the proceeds of the New
Loan made by the Credit Enhancement Provider pursuant to Section 2(a) hereof
shall be withdrawn from the Credit Enhancement Account and paid by the Trustee
to Greenwood on behalf of the Holder of the Seller Certificate.
SECTION 3. CALCULATION OF AMOUNT OF INTEREST PAYABLE ON THE LOAN.
(a) The Loan shall bear interest for each day during each Interest
Period with respect thereto at a rate per annum determined for such day as
follows. To the extent the unpaid portion of the principal of the Loan during
such Interest Period equals or is less than the amount on deposit in the Credit
Enhancement Account, the rate for such Interest Period on such principal portion
shall be the LIBOR-Based Rate. To the extent any portion of the unpaid principal
of the Loan exceeds such amount on deposit, or in the event that the Credit
Enhancement Account has been terminated as the result of the occurrence of an
Economic Early Amortization Event, the rate for such Interest Period on such
principal portion shall be the Lender Rate; provided,
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however, that if a change in the method of calculating the interest rate on the
Loan is the result of the occurrence of an Economic Early Amortization Event,
such change shall become effective as of the date of the occurrence of such
Economic Early Amortization Event.
(b) Interest shall be payable monthly in arrears on each Distribution
Date. Interest on the Loan shall be calculated on the basis of the actual number
of days elapsed during the applicable Interest Period divided by (i) 360, to the
extent the LIBOR-Based Rate is applicable, or (ii) 365 or 366, as the case may
be, to the extent the Lender Rate is applicable. The Trustee shall, as soon as
practicable, notify the Seller, the Master Servicer and the Credit Enhancement
Provider of each determination of the Lender Rate and of the LIBOR-Based Rate.
Each determination thereof by the Trustee pursuant to the provisions of this
Agreement shall be conclusive and binding on the Seller, the Master Servicer and
the Credit Enhancement Provider, in the absence of manifest error.
(c) If any portion of interest due and payable on a Distribution Date
is not paid on such Distribution Date, the unpaid portion of such interest shall
be due and payable on the next succeeding Distribution Date. Any interest that
is not paid on the due date thereof shall accrue interest from the Distribution
Date on which such interest was due and payable to the date such interest is
actually paid at a rate per annum equal to the Lender Rate.
SECTION 4. PAYMENT OF INTEREST ON THE LOAN.
(a) On each Distribution Date prior to the second Distribution Date
after the occurrence of an Economic Early Amortization Event, the Trustee as
administrator of the Credit Enhancement shall pay or cause to be paid to the
Credit Enhancement Provider the amount of accrued but unpaid interest on the
Loan from the funds and in the order of priority set forth below; provided,
however, that such payments shall not exceed the amount of accrued but unpaid
interest on the Loan and that such payments will be made only to the extent such
funds are available:
(i) interest and earnings (net of losses and investment expenses)
accrued since the preceding Distribution Date on the Provider Amount; and
(ii) the Series Interest Payment Amount, to the extent such amount has
been paid to the Trustee as administrator of the Credit Enhancement
pursuant to the Series Supplement.
(b) On each Distribution Date, beginning with the second Distribution
Date after the occurrence of an Economic Early Amortization Event, if any, an
amount equal to the amount paid by the Trust in respect of the CCA Required
Amount pursuant to Section 9 of the Series Supplement less the amount of accrued
but unpaid CCA Servicing Fees, in each case as of such Distribution Date, shall
be paid to the Credit Enhancement Provider as interest on the Loan.
SECTION 5. REPAYMENT OF PRINCIPAL OF THE LOAN.
(a) The principal amount of the Loan shall be due and payable on the
Series Termination Date. The Trust shall repay the unpaid principal balance of
the Loan in full on or before the Series Termination Date in accordance with the
provisions of this Agreement; provided, however, that the unpaid principal
amount of the Loan shall only be paid from the
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funds described below, and only to the extent such funds are available.
(b) If, as of any Distribution Date before the second Distribution
Date after the occurrence of an Economic Early Amortization Event, after giving
effect to all other deposits to and withdrawals from the Credit Enhancement
Account as of such Distribution Date (or, in the case of the first Distribution
Date after the occurrence of an Economic Early Amortization Event, after giving
effect to all deposits to and withdrawals from the Credit Enhancement Account
prior to withdrawals to make payments of principal on the Investor Certificates
of the Series pursuant to the terms of the Series Supplement), the amount on
deposit in the Credit Enhancement Account exceeds the Total Maximum Credit
Enhancement Amount, (i) the amount of such excess, up to the amount, if any, by
which the amount on deposit in the Credit Enhancement Account exceeds the unpaid
principal amount of the Loan, shall be withdrawn from the Credit Enhancement
Account and paid to Greenwood on behalf of the Holder of the Seller Certificate
and (ii) the remaining amount of such excess, if any, after payment of any
amounts to be paid to Greenwood on behalf of the Holder of the Seller
Certificate pursuant to clause (i) of this Section 5(b), shall be withdrawn from
the Credit Enhancement Account and paid to the Credit Enhancement Provider for
application toward the unpaid principal amount of the Loan.
(c) On the first Distribution Date after the occurrence of an Economic
Early Amortization Event, any amounts remaining on deposit in the Credit
Enhancement Account after withdrawals from such account have been made on such
Distribution Date to make payments of principal on the Investor Certificates of
the Series pursuant to the terms of the Series Supplement, up to the unpaid
principal amount of the Loan, shall be withdrawn from the Credit Enhancement
Account and paid to the Credit Enhancement Provider for application toward the
unpaid principal amount of the Loan.
(d) On each Distribution Date, beginning with the second Distribution
Date after the occurrence of an Economic Early Amortization Event, amounts paid
by the Trust pursuant to the provisions of the Series Supplement in respect of
the CCA Investor Interest shall be paid to the Credit Enhancement Provider, up
to the unpaid principal amount of the Loan, for application toward the unpaid
principal amount of the Loan.
(e) In the absence of the occurrence of an Economic Early Amortization
Event, on the earlier to occur of (i) the Series Termination Date or (ii) the
day on which the Class Invested Amount with respect to each Class of the Series
is paid in full, and after payment of any amounts to be paid on such day from
the Credit Enhancement Account to or for the benefit of the Investor
Certificateholders of the Series, all amounts remaining on deposit in the Credit
Enhancement Account, up to the amount of the unpaid principal amount of the
Loan, shall be withdrawn from such account and paid to the Credit Enhancement
Provider for application toward the unpaid principal amount of the Loan.
SECTION 6. PAYMENTS TO THE HOLDER OF THE SELLER CERTIFICATE AND THE
MASTER SERVICER.
(a) On each Distribution Date prior to the Second Distribution Date
after the occurrence of an Economic Early Amortization Event, the Trustee as
administrator of the Credit Enhancement shall pay or cause to be paid to
Greenwood on behalf of the Holder of the Seller Certificate (i) the interest and
earnings (net of losses and investment expenses) accrued since the
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preceding Distribution Date on an amount equal to the positive difference, if
any, between (x) the amount on deposit in the Credit Enhancement Account and (y)
the Provider Amount and (ii) the positive difference, if any, between (x) the
amount of interest and earnings (net of losses and investment expenses) accrued
since the preceding Distribution Date on the Provider Amount and (y) the amount
paid to the Credit Enhancement Provider on such Distribution Date pursuant to
Section 4(a)(i).
(b) On each Distribution Date, an amount equal to the amount, if any,
paid to the Trustee as administrator of the Credit Enhancement pursuant to
Section 9(b)(27) or 9(c)(34) of the Series Supplement, as applicable, shall be
paid to Greenwood on behalf of the Holder of the Seller Certificate.
(c) If, on the first Distribution Date after the occurrence of an
Economic Early Amortization Event, and after any payment to the Credit
Enhancement Provider pursuant to Section 5(c) has been made, any amounts remain
on deposit in the Credit Enhancement Account, such amounts shall be withdrawn
from such account and shall be paid to Greenwood on behalf of the Holder of the
Seller Certificate.
(d) On each Distribution Date, beginning with the second Distribution
Date after the occurrence of an Economic Early Amortization Event, any amounts
paid by the Trust pursuant to the provisions of the Series Supplement in respect
of the CCA Investor Interest that are not paid to the Credit Enhancement
Provider pursuant to Section 5(d) hereof shall be paid to Greenwood on behalf of
the Holder of the Seller Certificate.
(e) In the absence of the occurrence of an Economic Early Amortization
Event, on the earlier to occur of (i) the Series Termination Date and (ii) the
day on which the Class Invested Amount with respect to each Class of the Series
is paid in full, and after payment of any amounts to be paid on such day from
the Credit Enhancement Account to or for the benefit of the Investor
Certificateholders of the Series, any amounts remaining on deposit in the Credit
Enhancement Account that are not paid to the Credit Enhancement Provider
pursuant to Section 5(e) hereof shall be withdrawn from such account and paid to
Greenwood on behalf of the Holder of the Seller Certificate.
(f) On each Distribution Date, beginning with the second Distribution
Date after the occurrence of an Economic Early Amortization Event, an amount
equal to the lesser of the amount of the accrued but unpaid CCA Servicing Fees
and the amount paid by the Trust in respect of the CCA Required Amount on such
Distribution Date shall be paid to the Master Servicer.
SECTION 7. DEPOSITS TO AND WITHDRAWALS FROM THE CREDIT ENHANCEMENT
ACCOUNT.
(a) The proceeds of the New Loan made by the Credit Enhancement
Provider pursuant to Section 2 hereof, and the proceeds of any additional loan
made by the Credit Enhancement Provider pursuant to Section 8 hereof, shall be
deposited into the Credit Enhancement Account. In addition, any amounts paid to
the Trustee as administrator of the Credit Enhancement on any Distribution Date
with respect to the Total Available Credit Enhancement Amount, the Available
Shared Credit Enhancement Amount or the Available Class
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B Credit Enhancement Amount pursuant to the terms of the Series Supplement also
shall be deposited into the Credit Enhancement Account upon receipt of such
funds by the Trustee.
(b) Any withdrawals from the Credit Enhancement Account for the
benefit of the Investor Certificateholders pursuant to Section 9 of the Series
Supplement may be made by the Master Servicer or by the Trustee as administrator
of the Credit Enhancement and shall be deemed to be made first from amounts on
deposit in the Credit Enhancement Account as a result of payments of Series
Excess Servicing and other amounts to the Trustee as administrator of the Credit
Enhancement to fund the Total Available Credit Enhancement Amount, including any
Series Excess Servicing or other such amounts on deposit in the Credit
Enhancement Account as a result of an Alternative Credit Support Election having
been made or as a result of the occurrence of a Supplemental Credit Enhancement
Event, and only after such amounts are exhausted shall any such withdrawals be
deemed to be made from amounts on deposit in the Credit Enhancement Account that
are attributable to the Loan.
(c) On or before any Distribution Date on which Greenwood is the
Master Servicer, all payments made pursuant to this Agreement or the Series
Supplement between the Master Servicer or the Holder of the Seller Certificate
and the Credit Enhancement Account, may be aggregated for such Distribution Date
such that Greenwood, acting as Master Servicer and as agent of the Holder of the
Seller Certificate, may make only one payment to the Credit Enhancement Account
in satisfaction of all payments of the Master Servicer and the Holder of the
Seller Certificate pursuant to this Agreement or the Series Supplement, to the
extent that all payment obligations of the Master Servicer and the Holder of the
Seller Certificate to the Credit Enhancement Account on such Distribution Date
exceed all payment obligations of the Credit Enhancement Account to the Master
Servicer and the Holder of the Seller Certificate on such Distribution Date.
SECTION 8. CERTAIN ADDITIONAL LOANS.
(a) ALTERNATIVE CREDIT SUPPORT ELECTION. In the event that an
Alternative Credit Support Election is made pursuant to the provisions of the
Series Supplement, Greenwood on behalf of the Holder of the Seller Certificate
may cause the Additional Credit Support Amount to be funded by Series Excess
Servicing and other amounts paid to the Trustee as administrator of the Credit
Enhancement to fund the Total Available Credit Enhancement Amount, pursuant to
Section 9 of the Series Supplement, or may request that the Credit Enhancement
Provider make an additional loan in the amount of the Additional Credit Support
Amount. If Greenwood on behalf of the Holder of the Seller Certificate makes
such request, and if the Credit Enhancement Provider elects to make such loan,
the amount of such loan shall be added to the unpaid principal amount of the
Loan. In the event that the Alternative Credit Support Election does not become
effective, the Additional Credit Support Amount (or, if the entire amount of the
Additional Credit Support Amount is not then on deposit in the Credit
Enhancement Account, the portion of the Additional Credit Support Amount that is
then on deposit) shall be withdrawn from the Credit Enhancement Account and
repaid to Greenwood on behalf of the Holder of the Seller Certificate (or, if
such amount was loaned by the Credit Enhancement Provider, returned to the
Credit Enhancement Provider).
(b) SUPPLEMENTAL CREDIT ENHANCEMENT EVENT. In the event that a
Supplemental Credit Enhancement Event occurs, Greenwood as Servicer may cause
the
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Supplemental Credit Enhancement Amount to be funded by Series Excess Servicing
and other amounts paid to the Trustee as administrator of the Credit Enhancement
to fund the Total Available Credit Enhancement Amount, or may request that the
Credit Enhancement Provider make an additional loan in the amount of the
Supplemental Credit Enhancement Amount. If Greenwood as Servicer makes such a
request, and if the Credit Enhancement Provider elects to make such loan, the
amount of such loan shall be equal to the Supplemental Credit Enhancement Amount
and shall be added to the unpaid principal amount of the Loan.
(c) NOTICE. The Credit Enhancement Provider shall give prior written
notice to Xxxxx'x of the making of any loan by the Credit Enhancement Provider
other than the additional loans described in this Section 8.
SECTION 9. LIMITED OBLIGATION; WAIVER OF SETOFF; OBLIGATIONS ABSOLUTE.
(a) Notwithstanding any provision in any other section of this
Agreement to the contrary, the obligation to repay the Loan, together with
interest thereon, shall be without recourse to any Seller, the Master Servicer,
any Servicer, the Trustee, the Trust, any Certificateholder, or any affiliate,
officer, director, employee or person acting on behalf of any of them, and the
obligation to pay such amounts shall be limited solely to the application of
funds pursuant to this Agreement, in the manner and to the extent such funds are
available, except for the direct recourse indemnification obligation of each
successor Master Servicer pursuant to Section 11 hereof. The Credit Enhancement
Provider agrees that its interest in funds on deposit in the Credit Enhancement
Account is subordinated to the interests of the Investor Certificateholders of
the Series, as provided in this Agreement and in the Series Supplement. The
Credit Enhancement Provider further agrees that it shall have no right of setoff
or lender's lien against any Seller, the Master Servicer, any Servicer, the
Trustee, the Trust, or any Certificateholder.
(b) The obligations of the Seller, the Trustee, the Credit Enhancement
Provider and the Master Servicer under this Agreement shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement.
SECTION 10. INVESTMENTS AND INFORMATION.
(a) The Trustee shall from time to time during the term of this
Agreement invest all amounts on deposit in the Credit Enhancement Account as the
Master Servicer shall direct, which investments shall at all times be made in
compliance with the terms of the Pooling and Servicing Agreement and the Series
Supplement.
(b) The Master Servicer shall provide the Credit Enhancement Provider
with such background information and data with respect to the Credit Enhancement
Account as the Credit Enhancement Provider may reasonably request.
SECTION 11. SERVICING TRANSFER. In the event that a successor Master
Servicer is appointed pursuant to the Pooling and Servicing Agreement, from and
after the effective date of such transfer of servicing, the successor Master
Servicer appointed pursuant to the Pooling and Servicing Agreement, and not the
former Master Servicer, shall (i) be responsible for the performance of all
servicing functions to be performed from and after such date, (ii) agree to be
bound by the terms, covenants and conditions contained herein applicable to the
Master Servicer
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and be subject to the duties and obligations of the Master Servicer hereunder,
and (iii) agree to indemnify and hold harmless the Credit Enhancement Provider
from and against any and all claims, damages, losses, liabilities, costs or
expenses whatsoever which the Credit Enhancement Provider may incur (or which
may be claimed against the Credit Enhancement Provider) by reason of the gross
negligence or willful misconduct of the successor Master Servicer in exercising
its powers and carrying out its obligations under the Pooling and Servicing
Agreement and the Series Supplement. Such transfer of servicing shall not affect
any rights or obligations of the former Master Servicer under this Agreement
that arose prior to the effective date of the transfer of servicing, except that
such former Master Servicer shall have no obligation to indemnify the Credit
Enhancement Provider as a result of any act or failure to act of any successor
Master Servicer in the performance of the servicing functions.
SECTION 12. REPRESENTATIONS AND WARRANTIES.
(a) The Credit Enhancement Provider hereby represents and warrants to
the Master Servicer and the Trustee that:
(i) The Credit Enhancement Provider has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Delaware, and has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement.
(ii) This Agreement has been duly authorized, executed and delivered
on the part of the Credit Enhancement Provider.
(iii) When executed and delivered, this Agreement will constitute a
valid and binding agreement of the Credit Enhancement Provider enforceable
against the Credit Enhancement Provider in accordance with its terms,
except (A) as the same may be limited by insolvency, bankruptcy or
reorganization or other laws relating to or affecting the enforcement of
creditors' rights and (B) as the same may be limited by general equity
principles (whether considered in a proceeding at law or in equity) and by
the discretion of the court before which any proceeding therefor may be
brought.
(b) The Master Servicer hereby represents and warrants to the Credit
Enhancement Provider and the Trustee that:
(i) The Master Servicer has been duly incorporated and is validly
existing as a banking corporation in good standing under the laws of the
State of Delaware, and has the corporate power and authority to execute,
deliver and perform its obligations under the Pooling and Servicing
Agreement, the Series Supplement and this Agreement.
(ii) This Agreement, the Pooling and Servicing Agreement and the
Series Supplement have been duly authorized, executed and delivered on the
part of the Master Servicer.
(iii) When executed and delivered, each of this Agreement, the Pooling
and Servicing Agreement and the Series Supplement will constitute a valid
and binding agreement of the Master Servicer enforceable against the Master
Servicer in accordance with its terms, except (A) as the same may be
limited by insolvency, bankruptcy,
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receivership or reorganization or other laws relating to or affecting the
enforcement of creditors' rights and (B) as the same may be limited by
general equity principles (whether considered in a proceeding at law or in
equity) and by the discretion of the court before which any proceeding
therefor may be brought.
(c) The Trustee hereby represents and warrants to the Credit
Enhancement Provider and the Master Servicer that:
(i) The Trustee is organized, existing and in good standing under the
laws of the United States of America.
(ii) The Trustee has full power, authority and right to execute,
deliver and perform this Agreement, the Pooling and Servicing Agreement and
the Series Supplement, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement, the Pooling
and Servicing Agreement and the Series Supplement.
(iii) Each of this Agreement, the Pooling and Servicing Agreement and
the Series Supplement have been duly executed and delivered by the Trustee.
SECTION 13. COVENANTS. Greenwood, as Master Servicer and on behalf of
the Holder of the Seller Certificate, covenants and agrees that, so long as this
Agreement shall remain in effect or any monetary obligation arising hereunder or
under the Series Supplement shall remain unpaid, it will change the terms and
provisions of a Credit Agreement with respect to a Greenwood Discover Card
Account or any other Account with respect to which it is the Servicer
(including, without limitation, the calculation of the amount, or the timing, of
charge-offs) only if it does not believe, after a good faith assessment of the
expected effects of such change, that such change will result in a reduction of
the Portfolio Yield, for any Due Period beginning prior to the termination of
the Series, to less than the Base Rate unless such change (i) is required by any
Requirements of Law or (ii) is deemed necessary by Greenwood in its sole
reasonable judgment to maintain its credit card business on a competitive basis.
For purposes of this Section 13, "Base Rate" shall mean (i) the weighted average
of the Certificate Rates for each Class of each Series then outstanding plus
(ii) 1% per annum. For purposes of the immediately preceding sentence, the
Certificate Rate for each Class that does not have a fixed Certificate Rate
shall be the actual Certificate Rate for such Class for the Interest Accrual
Period commencing in the immediately preceding Due Period. In the event that any
Additional Seller shall transfer Receivables in Additional Accounts to the
Trust, Greenwood on behalf of the Holder of the Seller Certificate shall cause
the Servicer with respect to such Additional Accounts to make the covenant set
forth above with respect to such Additional Accounts.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 15. TERMINATION. This Agreement shall terminate on the date on
which the Series terminates in accordance with the provisions of the Pooling and
Servicing
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Agreement and the Series Supplement; provided, however, that this Agreement may
be terminated by the Master Servicer at any time, without penalty, provided that
such termination does not cause the ratings of the Investor Certificates to be
lowered or withdrawn by either of the Rating Agencies; and provided, further,
that all amounts owing to the Credit Enhancement Provider hereunder with respect
to principal and interest on the Loan shall have been paid in full.
Notwithstanding the foregoing, the Credit Enhancement Provider shall have no
rights under this Agreement, and shall not be entitled to any payments
hereunder, if and for so long as there is no Loan outstanding hereunder and no
accrued but unpaid interest.
SECTION 16. NOTICES. Unless specifically indicated otherwise herein,
all notices and other communications provided for hereunder shall be in writing
and, if to the Credit Enhancement Provider, addressed to:
Discover Receivables Financing Corporation
00 Xxxx'x Xxx
Xxx Xxxxxx, Xxxxxxxx 00000
Attn: Executive Vice President and Secretary
Phone: (000) 000-0000
Fax: (000) 000-0000
or, if to the Seller or the Master Servicer, addressed to:
Greenwood Trust Company
00 Xxxx'x Xxx
Xxx Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
or, if to the Trustee, addressed to:
U.S. Bank National Association
One Illinois Center
000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
or as to any party at such other address as shall be designated by such party in
a written notice to the other parties.
Any notice or other communication shall be sufficiently given and
shall be deemed given when delivered to the addressee in writing or when
transmitted by telecopier, receipt of which by the addressee is confirmed by
telephone.
SECTION 17. BANKRUPTCY. To the extent that the Trustee, the Master
Servicer or Greenwood on behalf of the Holder of the Seller Certificate makes a
payment to the Credit Enhancement Provider or the Credit Enhancement Provider
receives any payment or proceeds
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with respect to the Loan, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
state or federal insolvency or bankruptcy law then, to the extent such payment
or proceeds are set aside, the amount or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by the Credit Enhancement Provider.
SECTION 18. LIMITATION OF REMEDIES. The Credit Enhancement Provider
shall not have the right to cause the Loan or any portion thereof to become due
and payable prior to the due date for the Loan as set forth herein.
SECTION 19. NO PETITION.
(a) The Credit Enhancement Provider, by entering into this Agreement,
hereby covenants and agrees that it will not at any time institute, join in or
otherwise cause the institution of, against any Seller, the Master Servicer or
the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state or similar law prior to a year and a day after the final payment of all
investor certificates issued by any trust with respect to which Discover
Receivables Financing Corporation or Greenwood is the seller.
(b) Each of Greenwood and the Trustee, by entering into this
Agreement, hereby covenants and agrees that it will not at any time institute,
join in or otherwise cause the institution of, against the Credit Enhancement
Provider, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state or
similar law prior to a year and a day after the final payment of all investor
certificates issued by any trust with respect to which Discover Receivables
Financing Corporation or Greenwood is the seller.
SECTION 20. AMENDMENTS. This Agreement shall not be amended or
modified without the written consent of each of the parties hereto. No amendment
hereto shall become effective without prior confirmation from the Rating
Agencies that such amendment will not cause a lowering or withdrawal of the then
current ratings of the Investor Certificates of the Series. The Master Servicer
shall provide a copy of any amendment hereto to the Rating Agencies.
SECTION 21. SUCCESSORS AND ASSIGNS; REPLACEMENT OF CREDIT ENHANCEMENT
PROVIDER.
(a) This Agreement shall be binding upon, and inure to the benefit of,
the Trustee, the Sellers, the Servicers, the Master Servicer and the Credit
Enhancement Provider and their respective successors and permitted assigns.
(b) No Seller shall assign its interests hereunder and under the
Pooling and Servicing Agreement or the Series Supplement, or any portion of such
interests, except by an assignment that transfers each such interest to the same
assignee.
(c) In the event that a successor trustee is appointed pursuant to the
provisions of the Pooling and Servicing Agreement to replace the then current
Trustee, such successor
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trustee, from and after its appointment, shall be the Trustee for purposes of
this Agreement and shall assume all of the rights and obligations of the Trustee
hereunder.
(d) The Credit Enhancement Provider may not assign any of its rights
or obligations hereunder without the prior written consent of Greenwood on
behalf of the Holder of the Seller Certificate and without prior written
confirmation from the Rating Agencies that such assignment will not result in
the lowering or withdrawal of the rating of any Class of any Series then
outstanding.
SECTION 22. PARTICIPATION. Any successor Credit Enhancement Provider
that is not a special-purpose corporation that is an affiliate of Greenwood may,
without the consent of the Trustee, the Trust, any Seller, the Master Servicer,
any Servicer or any Certificateholder of the Series, sell participations to one
or more banks or other entities in all or a portion of its rights under this
Agreement (including all or a portion of the Loan); provided, however, that (i)
the Credit Enhancement Provider's obligations under this Agreement shall remain
unchanged, (ii) the Credit Enhancement Provider shall remain solely responsible
to the other parties hereto for the performance of such obligations, (iii) the
Trustee, the Trust, the Sellers and the Master Servicer shall continue to deal
solely and directly with the Credit Enhancement Provider in connection with the
Credit Enhancement Provider's rights and obligations under this Agreement, and
(iv) the Credit Enhancement Provider shall retain the sole right to enforce the
obligations of the Trustee, the Trust, the Sellers or the Master Servicer under
this Agreement and to approve any amendment, modification or waiver of any
provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be duly executed and delivered by the undersigned thereunto duly authorized as
of the day and year first above written.
DISCOVER RECEIVABLES FINANCING
CORPORATION,
as Credit Enhancement Provider
By /s/ Xxxxxxx X. York
----------------------------------------
Name: Xxxxxxx X. York
Title: Vice President
GREENWOOD TRUST COMPANY,
as Master Servicer, Servicer and Seller
By /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President, Chief Accounting
Officer and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
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